California sports betting
be currently operating online sports betting in ten (10) US States or Territories or operating online sports betting in at least five (5) US States or Territories and operate or manage at least twelve (12) casinos (equivalent of Class III gaming) physically located in the US. A third option for an online sports betting operator license is an online sports betting platform provider operator license. Under this scenario, the platform provider would need to enter into an operating agreement with a gaming Tribe and would provide to the Tribe an online sports betting platform. An online sports betting operator license would authorize the holder to operate one online sports betting platform. A 10 percent tax would be paid by the tribal casino offering sports betting under its name and a 10 percent tax would be paid by the sports betting companies that are operating the sports book at the tribal casino. The initial licensing application fee would be a minimum of US$150,000, but not to exceed US$250,000. Once certain requirements are met and information is confirmed by the state regulators, a temporary license shall be issued by the regulators within 30 days of the request. Such requirements include, but are not limited to, payment of the application fee, payment of the one-time fee and provision of a complete application to the regulators confirming a history of compliance in the sports betting gaming industry. The applications would also cover issues such as criminal history and bankruptcy. The renewal licensing application fee is US$50,000 after the initial five-year period. A supplier would need to obtain an online sports betting supplier license . The initial licensing application fee is US$25,000, but not to exceed US$40,000. There is a one-time fee of US$100,000 for the supplier license and the license is valid for five years. The renewal fee would be US$10,000 after the initial five-year period. There would also be a temporary license option if the supplier submits a completed application and can demonstrate that it is offering the same services to online operators in two other states. Once a temporary license is requested after meeting the prerequisites, the regulators shall issue a temporary license within 30 days of the request. Key persons would be required to pay a minimum application fee of US$2,400, but not to exceed US$10,000. A licensing fee of US$750 would also be required. If the key person is licensed in another jurisdiction with online gaming, it is possible the key person will receive a temporary
license. The multijurisdictional form used in other jurisdictions would be used by the regulators in California. The renewal fee would be US$500 and the license fee US$750. There is discussion of approvals by independent testing labs. Companies such as GLI and BMM have vast experience in testing, not only in the US but around the world. A Division of Online Sports Betting Control (the “Division”) would be established under the California Department of Justice to regulate mobile and online sports betting. The Division would issue the online sports betting operator licenses, sports betting platform provider operator licenses, supplier licenses and approve key persons under the categories described above. The Division would have exclusive power, authority and jurisdiction over sports betting in California. An Online Sports Betting Independent Advisory Committee (the “Committee”) within the Division would be created. The Committee would, among other things, recommend technology to prevent wagers being placed by persons under 21, best online practices and drafting new regulations. Compensation of Committee members would be US$150 per diem, not to exceed 40 days in a calendar year. The effective date of Proposition 27 would be January 1 following the approval of California voters. Conclusion The Proposition 27 initiative from the sports betting operators is very detailed and clearly lays out what it takes to enter the sports betting market in California. It is also solely regulated by a new Division of the California Department of Justice. There would be no primary jurisdiction given to the Tribes as there is under the current compacts in California. Wagers cannot be accepted from tribal lands. That said, the Proposition 27 initiative has exclusionary language which will keep out competitors. The US$100 million dollar license fee is huge and severely restricts competition. The requirement to have a Qualified Gaming Entity operating in a certain number of jurisdictions present is an onorous one. Only a small number of sports betting operators can meet that burden due to the fact that competition is fierce for existing skins in states that have legalized mobile and online sports betting. This also cuts out the many operators that have been successfully operating mobile and online sports betting businesses in overseas jurisdictions.
IMGL Magazine • July 2022 • 45
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