License Fee Doubles In California Sports Betting Amendments

Posted on June 18, 2020

While the California sports betting bill remains in suspense, the wait for language on proposed changes to the legislation is over.

Sen. Bill Dodd and Assemblyman Adam Gray revealed the proposed amendments to SCA 6 to stakeholders Thursday.

The biggest change related to CA sports betting is a doubling of the initial license fee to $10 million. In return, the authors halve annual renewal fees to $500,000.

The move brings more upfront money with the state currently dealing with a $54 billion budget deficit caused by economic effects of the coronavirus pandemic. By increasing the initial license fee, the legislature helps make up for the loss of near-term revenue from phasing in mobile wagering over three years.

SCA 6 was pulled from a suspense hearing in the Senate Appropriations Committee on Thursday. The authors hope to move the bill through Appropriations on Tuesday.

Phase-in of mobile California sports betting

As previously reported by Legal Sports Report, the amendments phase in online sports wagering over three years.

Beginning in September 2021, CA sports betting could take place onsite at tribal casinos and horse racetracks. A year later, online wagering may start with in-person registration. In September 2023, people in California can register remotely.

The delay for online California sports betting attempts to address tribal concerns on the effect online wagering may have on their casinos.

Fairs and non-gaming tribes addressed

California fairs were vocal about being left out of the sports betting bill at a hearing in the Senate Governmental Organization Committee.

The bill addresses their concerns by appropriating 1% of state revenue from sports betting to the Department of Food and Agriculture for the financial support of California fairs. An amendment adds the California Exposition and State Fair in Sacramento to the four racetracks allowed to offer sports betting.

The Indian Gaming Revenue Sharing Trust Fund, which shares gaming revenue with nongaming tribes, gets 1% of the state take.

The bill also directs the remaining revenue in the California Sports Wagering Fund to the general fund. Previously, it was to be appropriated by the legislature to assist the state in recovering from the health and economic damage caused by COVID-19 and to fund priorities related to education, public health and public safety.

SCA 6 taxes sports betting at 10% for in-person wagering and 15% for online.

Cardrooms willing to accept restrictions

Many of the proposed changes have nothing to do with sports betting but are key to the efforts. The amendments add significant restrictions on cardrooms to address, though not alleviate, tribal concerns.

Cardrooms do not get sports betting under the bill. The most significant changes relate to how cardrooms use third-party proposition player services (TPPPS) in the player-dealer position at blackjack, pai gow, and other tables.

Cardrooms offer the position to players every two hands. Typically, they decline and play continues much like a house-banked game. An amendment forces an actual player at the table to take over as player-dealer for one hand every hour. If no one accepts, the table must shut down for two minutes.

Another amendment requires each player at the table to pay a 25-cent rake per hand. Currently, the TPPPS pays the fees for the table.

Steven Maviglio, a political consultant for the cardrooms, says most of them are willing to make these concessions to end tribal dispute of the way they offer banked table games.

“While the industry is not a monolith, most are willing to consider them if that’s what it takes for lawmakers to reach an agreement with tribal governments that results in needed revenue for the state and elimination of the illegal sports betting market in California.”

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Matthew Kredell

Matthew started his career as a sportswriter at the Los Angeles Daily News, where he covered the NFL, Kobe-Shaq three-peat, Pete Carroll’s USC football teams, USC basketball, pro tennis, Kings hockey and fulfilled his childhood dream of sitting in the Dodgers’ dugout. His reporting on efforts to legalize sports betting began in 2010, when Playboy Magazine flew him to Prague to hang out with Calvin Ayre and show how the NFL was pushing US money overseas by fighting expansion of regulated sports betting across the country. A USC journalism alum, Matt also has written on a variety of topics for Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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