Proposed California Sports Betting Initiative Fails Before It Ever Starts

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California sports betting

Momentum for California sports betting will not come this year from the legislature or the ballot.

A proposed initiative to authorize CA sports betting expired without enough signatures to qualify for the 2020 ballot. The deadline for introduction of new sports betting bills also passed last month in the state legislature.

According to the petition’s filer, the legal sports betting effort never really got off the ground. Initiatives need about 623,000 signatures to make the ballot, based on 5 percent of the most recent gubernatorial vote total.

The sports betting initiative gathered a grand total of zero signatures.

“We never advanced to get a single signature,” said Russell Lowery, a consultant for a group calling itself Californians for Sports Betting, who filed the petition last June. “It started a conversation in California gaming on what is the right path forward, and those conversations will continue until they figure out the puzzle.”

Ballot initiative a necessary proposition

Lowery said he originally planned to push for signatures on the initiative. The filing wasn’t just for show.

However, in discussions following the filing, he found his stakeholders who support sports betting were still holding out hope to get legislation done.

“The difference between June and today is everyone understands it’s not going to happen legislatively without some sort of pressure from an initiative,” Lowery said. “In the cardroom and sports betting industry, I think everyone now understands that if it’s going to happen, it’s going to be through an initiative.”

While Lowery indicated that he does not have current plans to file another initiative, there is still plenty of time to get CA sports betting on the 2020 ballot.

In California, initiatives can be circulated for 180 days and need to be certified at least 131 days prior to the election, which would be around June 25, 2020.

What the CA sports betting initiative contained

The California sports betting initiative tried to find a compromise in the longstanding standoff between the state’s tribes and cardrooms.

It would have allowed tribes to operate roulette and craps at their casinos, with the tribes and cardrooms both getting sports betting.

The summary filed for the petition was as follows:

Allows federally recognized Native American tribes to operate roulette and craps games on tribal lands, subject to compacts negotiated by the Governor and ratified by the legislature.

Allows licensed gambling establishments, such as card rooms, to conduct on-site sports wagering and to operate Nevada-style card games, and may result in authorization of sports wagering on tribal lands because of federal law.

Prohibits (the) governor from approving gaming on newly acquired off-reservation tribal lands and negotiating gaming compacts with non-federally recognized tribes.

The initiative also would have amended the state constitution — which prohibits gambling unless the type is specified — to add the line that the legislature “may authorize banking and percentage games including and not limited to sports wagering.”

That line would have allowed cardrooms to move to traditional banked card games, which might have driven the initiative as well.

No money, no ballot initiative

The San Diego Union-Tribune wrote that the reason for the sports betting initiative’s failure was a lack of donors willing to pay for the manpower needed to gather voter signatures. That is mainly because the outside gaming interests are focusing on other states where the climate for gambling expansion is more favorable.

Lowery, who previously told Legal Sports Report that getting the initiative on the ballot would take $2 to $3 million, indicated that the money contention was only partially true.

A lack of funding was the reason the initiative didn’t move forward, but financing to get on the ballot wasn’t the problem.

“Anyone can get to the ballot, that was never the challenge,” Lowery said. “You’ve got to get to the ballot with something that can win.”

This initiative didn’t have the support of the tribes, and it didn’t have a donor large enough to overcome the money the tribes would have spent to defeat it.

Lack of tribal support dooms CA sports betting

In California, tribal interests that control most casino gambling are reluctant to reopen their agreements with the state and potentially share the gambling market with other players, including cardrooms and racetracks.

To them, the revenue from sports betting isn’t worth putting their $8 billion industry at risk. They would take a monopoly on sports betting but don’t want it at cardrooms, racetracks and lottery retailers.

The Washington Examiner recently noted that the California Nations Indian Gaming Association is in dispute with cardrooms and doesn’t want to see more competition by opening a debate over California sports betting.

“We feel like protecting the industry in California is more important,” Steve Stallings, the group’s chairman, told the newspaper.

Gambling revenue not motivating factor

With the tribes wielding influence, legislative efforts to authorize California sports betting or put a constitutional amendment in front of voters from Assemblyman Adam Gray have gone nowhere.

California is one of only 19 states in the country not to have a bill related to sports betting either under consideration or on the books for 2019.

Another issue is that California isn’t getting as much money from Indian gaming these days.

The Union-Tribune noted that because revenue-sharing agreements between the tribes and state were thrown out by a federal court, the $330 million that tribal gaming contributed to the California general fund in 2016 is down now to $3.6 million.

Following a record tax windfall and with a rapidly filling “rainy day” budget reserve, the paper wrote that gambling revenue isn’t currently a priority.