California sports betting
The language that requires licensing fees to be capped is interesting. It is best to leave discretion in the statute and allow the regulators to do their jobs, including costs to investigate respective applicants. From a pure compliance point of view, approval of Proposition 27 would mean that California would be getting some of the most compliant sports betting operators on the planet and that bodes well for the state. The customer is important, and these companies understand that. The online and mobile sports betting component is critical to keeping future sports betting tax dollars in California. The Proposition 26 tribal initiative is very straight forward and does not have the same detail as Proposition 27. Most significantly, there would be no online and mobile gaming and the race tracks are included. The sports bettor would be forced to physically place wagers in person at the respective race tracks or tribal casinos. The Bureau of Gambling Control would have oversight from the state perspective, and it appears the Tribal Gaming Agencies would still be the primary regulatory body for the tribal casinos. Only the race tracks would pay a 10 percent tax and the tribal casinos would reimburse the Bureau of Gambling Control for the state regulatory oversight of sports betting. There is no provision for one time licensing fees in Proposition 26. The artificial barriers discussed in Proposition 27, such as very high licensing fees and requirements that sports betting operators be currently operating in other jurisdictions, are not present. It appears that the tribal casinos and race tracks can negotiate contracts without such disqualifiers. The mobile and online option will provide significantly greater tax revenues (many
millions of dollars) than the in-person option. It is difficult to comprehend how a debate can exist on this particular issue. In all events, the big losers are the California cardrooms. This is important because the cardrooms exist in a highly regulated environment in California and, as noted already, are in some cases the biggest taxpayers to the local communities. They are also employers providing real wages to employees. It is possible that both Propositions could be approved by the California voters. If so, what happens then? Will there be ensuing litigation? The big issue is if the initiatives are in conflict with each other; if not and both Propositions are approved then both could become law. In that case, do some of the tribal casinos enter into contracts with the sports betting operators? The answer is in all likelihood yes. In a perfect world, California voters should have the option to approve both on site and mobile and online sports betting at the tribal casinos, race tracks and cardrooms as well as on independent mobile and online sports books. Moreover, the US$100 million license fee should be reduced to a more reasonable level to open up competition for the licenses. This would maximize California’s tax revenues from sports betting and establish a well-regulated sports betting industry that would effectively compete with and largely eliminate the unregulated offshore sports betting industry in California. But that is not what the California voters have before them in the November election. Nonetheless, passage of both Proposition 26 and Proposition 27 would be a clear message that California voters want to have a broad spectrum of on site and mobile and online sports betting venues available for placing legal, well-regulated sports bets in California.
John K Maloney is Principal Attorney at the Law Offices of John K. Maloney. For more information contact: +1 (702) 387-9397 jmaloney@johnkmaloneylaw.com
46 • IMGL Magazine • July 2022
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