Gaming the System

The Supreme Court just ruled states can legalize sports betting. One lawmaker wants California in on the action.

People bet on sports at Caesar’s Palace in Las Vegas, NV. Courtesy photo

All bets are on in the world of sports gambling. Last week, the U.S. Supreme Court struck down the law that limited sports betting to just Nevada, and one California legislator immediately unveiled a plan to put the support of sports gambling in voter’s hands for this November’s state ballot.

Assemblymember Adam Gray (D-Merced) has been on a gambling legislation kick since his 2015 bill that tried to legalize online poker. He’s pushed several bills to legalize sports gambling before, but with the latest move from the Supreme Court, he’s got an emboldened gaming industry to back a possible statewide November ballot initiative.

“It is time to bring this multibillion-dollar industry out of the shadows,” Gray says in a statement he put out just hours after the Supreme Court ruling. “We need to crack down on illegal and unregulated online gaming and replace it with a safe and responsible option which includes safeguards against compulsive and underage gambling, money laundering, and fraud.”

Currently, the only legal forms of gambling in California are relatively penny-ante pursuits like the state lottery, tribal casinos, card clubs, and horse racetracks. But Gray’s bill could allow sports betting at those venues, on your smartphone, or each time you go get another beer at the Giants game.

This sports gambling gambit faces longshot odds to make the November ballot, since the deadlines for traditional signature-gathering are already long past. Gray would need a two-thirds supermajority vote in both the state Senate and Assembly, since this law proposes changing the state constitution. And he’s only got six weeks to pull that off, or else the bill would be shelved until 2020.

But he seems optimistic despite the odds, particularly if powerful casino and gambling lobbies lay their bets down in support of the bill. The main problem is that it’s still unclear who would get how much of the potential billion-dollar gambling jackpot.

Tribal casinos argue that sports gambling should be their sole jurisdiction.

“We also want to make very clear that California voters have, on numerous occasions, confirmed the exclusive right of California tribal governments to operate casino-style games,” California Nations Indian Gaming Association Chairman Steve Stallings says. “Legalization of sports betting should not become a backdoor way to infringe upon that exclusivity.”

They might win. The tribal casinos are a far more powerful lobby than the racetracks or card parlors, and spent more than $30 million in 2004 to prohibit those other venues from getting slot machines. The tribes also have established ties with the megabucks Las Vegas casino industry, connections that the smaller gaming establishments simply don’t have.

But the wild cards in this deal are the smartphone-based “daily fantasy sports” apps like DraftKings and FanDuel. Both have fallen on hard times since their 2014 heyday when they were broadcasting nonstop TV commercials during football games. But they still have hundreds of millions in venture capital that they’ve been saving for opportunities like this, and legal sports gambling could bring them another sure-bet windfall of revenue and investment.

It’s an open question whether the California legislature would go so far as to allow widespread, on-demand gambling to anyone with a smartphone. That decision would likely come down to a state gaming commission that does not yet even exist, but which Gray’s legislation would create.

Black market gambling of this sort is already pretty widespread, thanks to shady internet and offshore sportsbook sites. The American Gaming Association estimates that Americans spend $150 billion every year on illegal gambling, which Gray’s bill hopes to tax and regulate here in California.

It would take a legislative miracle for legal sports gambling to make California’s November ballot. But plenty of well-established special interests stand to make a ton of money if Gray can get two-thirds approval from both chambers of the state house. And when casino lobbies and other powerful interests start offering goodies to legislators, then the house always wins.

Joe Kukura is an SF Weekly contributor.
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