Sports Betting Is On The Menu In California But Major Hurdles Remain

At a recent panel discussion at the 2019 Sports Betting USA Conference, the prospect that legal California sports betting could be in play for sports betting in 2020 was raised.

But anyone that followed the state’s decade-long effort to legalize online poker will caution you to ignore the chatter and wait for action.

The comments came from a very reliable source, Victor Rocha, the Editor of Pechanga.net and president of Victor Strategies. Rocha is also a member of the Pechanga Band of Luiseno Indians and is considered by many to be one of the foremost experts on California tribal gaming.

As reported by CDC Gaming Reports, “The tribes want to bring people in (for sports betting),” Victor Rocha, said during the panel at the Sports Betting USA conference. “But sports betting in California will happen the way the tribes want it, not the way (anyone else) wants it,” Rocha said.

But as Rocha highlighted on Twitter, he is “cautiously optimistic” sports betting can get done in California.

The headline is incorrect. I didn't say there "will" be gaming. I said I was cautiously optimistic. https://t.co/zuPUFqzMmt

— Victor Rocha (@VictorRocha1) November 8, 2019

Standing in the state’s way is a diverse group of tribal gaming operators, dozens of licensed cardrooms, and the racing industry, which has the support of labor unions.

The Three-Headed Monster That Is California Gaming

When it comes to gaming expansions, California is the biggest prize in the US. And it seems like a solid idea, as the state’s gaming operators would certainly benefit from the legalization of sports betting or online poker.

The problem is, California has a trio of competing interests. And there’s a better chance of herding 200 cats in a hurricane than getting California’s gaming interests to see eye-to-eye.

Further complicating matters, gaming expansions with tax components need a two-thirds majority to pass the California legislature. That stipulation means each group (tribes, cardrooms, and racing) possesses enough clout to stand in its way.

Anyone that followed the online poker debates knows how much sway several California tribes have over gaming issues. And while California’s racing industry may be in decline, with the support of multiple labor unions, racing has an outsized influence in the legislature.

And then there are the cardrooms. Singularly, or in small blocs they wouldn’t have much clout, but banded together they can apply pressure on lawmakers up and down the state.

In a recent press release, the California Gaming Association touted an economic impact analysis report that placed the “total annual economic impact of California’s cardroom industry to be $5.6 billion dollars, providing over 32,000 in total local jobs.”

The CGA report is the group’s annual reminder of how big the industry is, and a clear message to politicians not to mess with California cardrooms.

The Sports Betting Ball Is in the Tribe’s Court

Circling back to Rocha’s comment about ‘sports betting happening the way the tribes want it to happen’ helps elucidate the main issue that will plague California sports betting talks: exclusivity.

Unlike the Class II game of poker, sports betting is designated a Class III game, and in California, tribes have exclusive rights to offer Class III gaming. That puts the tribes in the driver’s seat.

California can’t legalize sports betting without the blessing of the tribes, or it would violate the existing compacts. And since tribes are unlikely to be in a sharing mood with cardrooms or the racing industry, those two industries are unlikely to support any effort to legalize sports betting that doesn’t cut them in.

Toss in the ongoing fight over “house-banked” games spread in cardrooms, and it’s hard to see tribes and cardrooms coming to any agreement on sports betting.

That doesn’t mean sports betting is impossible in California; it simply means that as presently constituted there isn’t a navigable path to legalization.