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What Does The Future Hold For Sports Betting In California?

  • December 19, 2022

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Sports betting

Voters in California strongly rejected sports betting propositions on the November 2022 general election ballot. However, there is still hope for sports fans in the state who want to make wagers on games legally. It may take a few years before California sports betting becomes available. However, executives in the industry and Native American leaders of tribes that own casinos believe legal sports wagering will come eventually.

The Wave of Sports Betting Approvals and California’s Financial Stakes

Since 2018 when the Supreme Court reversed a federal ban on sports betting, a wave of legislation legalizing the activity began to gain momentum across the nation. About two-thirds of states now have laws on the books that allow some form of sports wagering.

California’s two most recent ballot propositions would have either legalized retail sports betting at casinos and horse racetracks or permitted online sportsbooks in the state. 

However, after campaigns that saw tens of millions of dollars spent on an onslaught of negative tv, print, and direct ads, voters were turned off, leading to landslide defeats of the propositions.

Even though California voters seem to be cool with the idea of sports betting at the moment, other states are joining the wave of approving gambling on games. Five more states, including big markets like Ohio and Maryland, have approved sports wagering in just the last year and a half. Maryland saw record-breaking transactions when online sports betting launched on November 23, 2022. New York leads the country in sports wagering revenue, and California has twice as many people as the Empire State.

The potential for wagering revenue in the third-largest state is astounding. Consequently, it is hard to believe that California will sit idly by as other states gain financial windfalls from a billion-dollar industry. The state’s nearly 70 tribal casinos generate about $9 billion annually. Research firm Eilers & Krejcik Gaming estimates that retail sports would add another $3.1 billion.

Compromises On the Horizon

While the tribes in the state and mobile sports betting operators were at odds with competing propositions on the ballot in the last election, both groups want sports betting in the state.

"It's gonna happen. I mean, everyone wants it, Chicken Ranch Tribal Chairman Lloyd Mathiesen said.

The majority of tribes were opposed to the corporate-backed Prop. 27, which was in favor of introducing online sports betting to the state. On the other side, Prop. 26 favored retail sportsbooks at tribal casinos and racetracks. Mobile operators are already looking ahead to the next election cycle, set for Tuesday, November 5, 2024. Given the power that California’s tribes wield in the gambling industry in the state, online sportsbooks will most likely have to make concessions or make partnerships with tribes.

“It’s clear voters don’t want a massive expansion of online sports betting, and they trust Indian tribes when it comes to responsible gaming,” Mark Macarro, Tribal Chairman of the Pechanga Band of Indians, said after the November 2022 general election. “As tribes, we will analyze these results, and collectively have discussions about what the future of sports wagering might look like in California.”

The work to get another sports betting proposition on the ballot will have to begin in early 2023 to be on the November 2024 ballot. Prop 26 proponents began collecting signatures to get the measure on the ballot in January 2020. The state’s deadline for collecting valid signatures is strict. Signatures need to be verified 131 days before the general election. The number of signatures required is equivalent to eight percent of the votes cast in the preceding governor’s race. 

In the case of the November 2022 election, that amounted to 997,139 valid signatures.

Even if sports betting fails in November 2024, that doesn’t mean it won’t pop up again. Propositions on single issues can show up in multiple election cycles. Citizens in the state have been voting on repeat measures sponsored by dialysis clinics and other opponents since 2018.

In the Meantime…

Until sports betting legislation gets approved in the state, illegal sports betting will continue to thrive with criminal betting rings run by organized crime factions. In the Oakland area alone, since 2020, law enforcement has uncovered over a dozen illegal gambling rings related to drug trafficking and other criminal activity.

Furthermore, with the proliferation of low-cost and free virtual private networks, bettors can circumvent geo-tracking protocols of sportsbetting apps based in the U.S. and abroad.

In a statement released the night of the election, a spokesperson for Prop 27 highlighted this issue.

"Californians are currently placing billions in bets each year on illicit offshore sport betting websites — unsafe and unregulated enterprises that offer no protections for minors or consumers and generate no support for state priorities.”

If sports wagering became legal in California, bettors would not have to resort to unlawful activity. The question is not if sportsbetting will come to the state, but when.

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