Legal

California Hits a Roadblock

Any momentum the state of California had in moving toward legal sports betting has been shot down. A proposed initiative to authorize California sports betting expired without enough of the required signatures to qualify for the state’s 2020 ballot. The deadline for new sports betting proposals also passed last month in the state legislature. One has to question the movement’s ground-game with this one as a statehouse the size of California shouldn’t come up short on petitions. However, as the petition’s filer, it seems the legal sports betting effort never got off the ground. All initiatives require around 623,000 signatures to qualify for the ballot.

Zero Signatures

Russell Lowery is a consultant for Californians for Sports Betting, who filed the petition last June gave the straight answer. He stated, “We never advanced to get a single signature.” With that, legal sports betting is dead in CA. However, Lowery remains optimistic about the future of the issue in the not-so-near future: “It started a conversation in California gaming on what is the right path forward, and those conversations will continue until they figure out the puzzle.”

A Ballot Initiative is Necessary

Lowery said he originally planned to push for signatures on the initiative and that the filing wasn’t just for show. However, in discussions which followed his filing, many of the stakeholders who support sports betting were hoping to get legislation done. “The difference between June and today is everyone understands it’s not going to happen legislatively without some sort of pressure from an initiative,” Lowery said. “In the cardroom and sports betting industry, I think everyone now understands that if it’s going to happen, it’s going to be through an initiative.”

Lowery doesn’t have any plans to file another initiative, yet there is still time to get sports betting on the 2020 ballot. As it turns out, initiatives can be circulated for 180 days but will need to be certified at least 131 days prior to the election, which would be around June 25, 2020. However, with this latest round of complete inaction, it’s hard to see that happening.

What’s the Problem Here?

Every state on the road to legal sports betting faces its own set of specific issues, and California is no different. Their problem stems from the number of parties who want to have a say in the legislation and the two trouble makers have been the state’s tribes and the cardrooms. This latest sports betting initiative attempted to find a compromise between the two parties as it would have allowed tribes to operate roulette and craps at their casinos, with the tribes and cardrooms both getting sports betting.

Perhaps more importantly, though, this initiative would have amended the state constitution, which, as of now, completely prohibits gambling unless the exact type is specified. The amendment would simply add the line that the legislature “may authorize banking and percentage games including and not limited to sports wagering.” This would have permitted cardrooms to move to traditional banked card games and may have driven the initiative.

No Donors, No Initiative

Gathering voter signatures for the initiative takes a lot of manpower, and gathering that much manpower takes a lot of money. The lack of donors was due in part to the fact that many outside gaming interests were focusing on other states where legal sports betting is more of a snowball’s chance. Some have estimated it would take upwards of $2 to $3 million. Lowery maintains that the money problem was only partially true. A lack of funding was the reason the initiative didn’t move forward, but financing to get on the ballot wasn’t the problem. “Anyone can get to the ballot, that was never the challenge,” Lowery said. “You’ve got to get to the ballot with something that can win.” At the end of the day, it all boils down to the fact that this initiative didn’t have the support of the tribes, and, therefore, it didn’t have a donor large enough to overcome the money the tribes would have spent to defeat it.

No Tribes, No Nothing

For many reasons, the tribes are hesitant to redo their agreements with the state in a way that would potentially force them to share the market with other players, especially the cardrooms and racetracks. They are an $8 billion industry and want to keep it that way. They would take a monopoly on sports betting but don’t want it at cardrooms, racetracks, and lottery retailers. California Nations Indian Gaming Association is in dispute with cardrooms and doesn’t want to see more competition by opening a debate over California sports betting. “We feel like protecting the industry in California is more important,” Steve Stallings, the group’s chairman, told the newspaper.

With this news, California remains one of only 19 states not to have a bill related to legal sports betting ready for 2019. And with all of these roadblocks to overcome, one wonders if it ever will.

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