California sports betting
US, but the limited number of opportunities makes it very difficult to meet an arbitrary standard that big operators know cannot be met except by a few, namely themselves. It is also, quite frankly, insulting to the regulatory review process in California, the taxpayer, and the consumer. Competition breeds creativity and innovation and the opportunities for sports betting operators in California are endless. This in turn creates a rich robust market for the consumer. Still another barrier to entry would be language that takes the discretion away from the regulatory review process and under certain circumstance bars entry based on prior bad events. Discussion of the proposed initiatives After considering the aforementioned discussion, it is important to understand what the voters in California are going to be presented with in the November ballot. At the outset there were four initiatives but that has been reduced to two. The cardrooms had an initiative but were unable to generate enough signatures to appear on the November ballot. The cardrooms are not included as potential sports betting locations in either of the two surviving initiatives. In fact, Proposition 26, the tribal initiative, appears to place restrictions on the current operations of the cardrooms. This is disappointing as the cardrooms are vital from a tax and employment perspective to the local communities they serve. Proposition 26 The California Sports Wagering Regulation and Unlawful Gambling Enforcement Act (known as Proposition 26) is supported by many Native American Tribes. Passage of Proposition 26 would allow the tribal casinos and the four horse race tracks in California to offer sports betting. In addition, it would allow the tribal casinos to offer roulette and games played with dice which are currently prohibited in tribal casinos. There is also discussion of allowing civil suits to be brought against entities for violations beginning with Section 330 of the Penal Code. This is an interesting addition because it appears the underlying purpose is to make it easier to bring lawsuits against the cardrooms if it appears the cardrooms are offering banking games. The initiative requires sports bettors to physically go to the race track or tribal casino to place wagers. There is no mobile or online wagering component. The approved race track operators would pay a 10 percent
tax based on wagers placed minus payouts. The tracks are operated by private entities and are located in Alameda County, Los Angeles County, Orange County and San Diego County. The approved race tracks do not include tracks at state designated fairs. The Tribes would be required to reimburse the State of California for the costs to enforce and regulate the sports betting industry. The 10 percent tax does not apply to the Tribes, only the race track operators. The initiative prohibits the placing of wagers on college teams located in California. Proposition 27 The California Solutions to Homelessness and Mental Health Act (known as Proposition 27) is supported by large sportsbook operators currently operating in many other states. The sportsbook operators include DraftKings, BetMGM, and FanDuel. Proposition 27 would allow sports betting over the internet and on mobile devices for persons aged 21 years or older physically present in the state but outside of Indian lands. It is state regulated in contrast to current regulation over the tribal casinos. Nothing will change with the current regulation over the tribal casinos, the respective Tribal Gaming Agencies are still the primary regulatory body. In contrast to Proposition 26, sports betting would be done remotely and will not occur on Indian lands. Registration for an online account can also be done remotely. The race tracks are not included in the online sports betting bill. The California gaming Tribes currently do not have exclusivity over sports betting, unlike casino style gaming. The gaming Tribe that wants to offer sports betting under their name would pay a one-time fee of US$10 million dollars and a renewal fee of US$1 million dollars every five years. Under this scenario, the gaming tribe would be issued an online sports betting operator license, tribal operator license. Each of the gaming companies that qualifies to be an online sports betting operator in California would pay a one-time fee of US$100 million dollars and a renewal fee of US$10 million dollars every 5 years. Under this scenario, the sportsbook operators would be issued an online sports betting operator license, would need to negotiate a market access agreement with a gaming Tribe to operate a sportsbook, and would receive a qualified gaming entity operator license. It must be noted that a Qualified Gaming Entity must also
44 • IMGL Magazine • July 2022
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