Ahead of the first substantive hearing to legalize California sports betting, the proposed initiative filed by the state’s leading Indian gaming tribes took its first small step toward the November ballot.
California’s Department of Finance and Legislative Analyst’s Office submitted a fiscal impact estimate report for the tribal initiative, which would legalize sports betting only at the state’s Indian casinos and racetracks.
Along with that estimate comes previously unclear detail on CA sports betting revenue potential from one of the state’s most influential tribes.
Jacob Mejia, vice president of public affairs for Pechanga, told Legal Sports Report that his and most of the state’s other leading gaming tribes intend to contribute the same 10% of revenue from sports betting into the California Sports Wagering Fund established in the initiative as the racetracks.
What’s next in CA sports betting?
The next step for the tribes’ sports betting initiative is for Attorney General Xavier Becerra to give it a 100-word circulating title and summary.
Becerra has 15 days from the issuance of the fiscal statement to complete the petition language. With the fiscal statement submitted Jan. 3, that puts the deadline at Jan. 18.
Once the petition language is ready, the tribes may begin collecting the 997,139 signatures needed to get the measure on the ballot in November.
Highlights of California’s review of tribal initiative
Here’s a look at what’s in the fiscal impact report:
- The 65 tribal casinos in the state would be authorized to offer roulette, dice games (such as craps) and sports betting only if added to their tribal-state compacts.
- Sports wagering wouldn’t be authorized until Jan. 1, 2022, giving tribes time to work out agreements with the state.
- State revenues could increase by tens of millions of dollars, resulting in a higher minimum spending level for public schools and community colleges.
- The analysis qualifies that some portion of the increased state revenues would reflect a shift from other existing state and local revenues. For example: “Some individuals who wager on sports would spend less on other revenue-generating activities — such as the State Lottery or shopping.”
Wait, what’s this about shopping?
California’s legislative analyst and director of finance apparently believe that sportsbooks could divert mall-goers to tribal casinos and racetracks. That’s a new one from what we’ve read.
As for the state lottery, Michigan’s executive office was very concerned about how internet casino gambling could affect its iLottery but had no worries about sports betting this year. Rumors indicated concerns of lottery cannibalization helped scuttle last year’s bill with former Gov. Rick Snyder.
Mobile sports betting is not at issue with lotteries or this particular initiative in California. As written, the tribal plan would not allow mobile CA sports betting.
Tribes plan to cut state in on CA sports betting
The analysis notes that it is unclear what payments to the state and/or local governments would be negotiated in tribal-state compacts in order for tribal casinos to offer sports wagering.
As sovereign governments, tribes cannot be taxed directly by the state. They have tribal-state compacts that individually determine payments related to gaming.
Mejia clarified that the initiative couldn’t uniformly establish that all CA tribes would contribute 10% of sports betting revenue to the fund because it’s up to each tribe to work that out with the state, and some tribes have their own ideas about tribal-state contributions.
However, Pechanga and most tribes intend to contribute 10% of sports betting revenue to the state.
Is an initiative needed for California sports betting?
There wasn’t too much excitement at the informational hearing on sports betting held Wednesday in the Joint Assembly and Senate Governmental Organization committees. Rather than focusing on in-state industry disagreements on how sports betting should be done in California, the hearing looked at how sports betting works in successful markets across the country.
One hot topic that seemed to pique the interest of Assemblyman Adam Gray was the opinion of gaming attorney Daniel Wallach that the legislature could authorize California sports betting without a constitutional amendment.
Wallach opined on the key anti-gambling provision of the California constitution that declares the legislature has no power to authorize and shall prohibit casinos of the type currently operating in Nevada and New Jersey.
Citing a 1999 California Supreme Court case, he argued that the ban does not apply to categories of gambling, and particularly not to forms of gambling that weren’t taking place in both Nevada and New Jersey when the constitutional amendment was approved in 1984.
During public comments, prominent Indian gaming lawyer Glenn Feldman, who won a seminal case for tribal gaming in front of the US Supreme Court in 1987, warned the legislature that taking that path wouldn’t be so straightforward.
“I’m not prepared to say that Mr. Wallach is wrong in that opinion, but I can tell you that it is contrary to the conventional wisdom of most lawyers who have been dealing with gaming issues in California for [decades],” Feldman said. “So before the legislature rushes to enact legislation to authorize sports betting, I would recommend that you have your lawyers look at that issue pretty carefully.”
