California is facing a budget deficit in excess of $50 billion. Assemblyman Adam Gray reportedly pitched the idea of legalizing sports betting to help eliminate some of the proposed cuts.
California sports betting hadn’t gained traction in the legislature previously, while the state enjoyed a budget surplus for years before the coronavirus came along and devastated the state’s economy. Tax collections are expected to be way down because of the months of economic shutdown.
Gov. Gavin Newsom’s budget proposal Tuesday included $14 billion in cuts to critical areas such as public education, health care and environmental protections.
Cal Matters reported that Gray suggested the state could bring in more money by permitting sports betting, boosting taxes on e-cigarettes and taxing lottery winnings.
How sports betting could help CA
Assembly members spoke out at a committee of the whole meeting Tuesday with members of the Newsom administration. Gray reportedly criticized the cuts as being “more painful than necessary while offering little in the way of creative revenue generation.”
An Associated Press article reported that Gray proposed the state could generate an extra $2 billion with legalized sports betting. But that would be an unprecedented number for any state. A representative for Gray seemed to dispute him mentioning that figure in talking with Legal Sports Report.
The representative indicated that nothing is imminent regarding the inclusion of sports betting. He said, “Nothing to report at this time but with a $54 billion deficit … you never know.”
The legislature needs to approve a spending plan by June 15.
Where California sports betting stands
The legislature and governor likely can’t just put legalizing sports betting in the budget package.
The issue appears to require a constitutional amendment that must first go in front of voters. However, other states have found or have considered ways to circumvent what looked like constitutional roadblocks. Online poker in the state was considered for nearly a decade in the state in terms of just regular legislation not tied to an amendment.
Earlier this year, Gray introduced ACA 16 as a bill to put the question of legalizing sports betting on the November ballot.
Sen. Bill Dodds introduced a companion bill in the Senate, and the two chaired an informational hearing on sports betting in a Joint Governmental Organization Committee meeting in January.
Putting a constitutional amendment on the ballot takes a steep two-thirds vote in the legislature.
The legislative effort stalled as California Indian tribes broke off to pursue their own ballot initiative.
California stakeholders not involved thus far
It now seems unlikely that the tribal initiative will make the ballot. The required signatures can’t be changed and the governor has not extended deadlines on gathering signatures.
The deadline for signature verification is June 25. The initiative isn’t officially dead until the spokesman for the effort says it is or the deadline passes.
Industry stakeholders tell Legal Sports Report that they have not been included in any discussions of a renewed legislative effort.
There’s one key question that could determine if an inclusive legislative effort for sports betting can reach the ballot. Can the critical need for revenue generate enough support to reach the two-thirds threshold without all the stakeholders on board?