All bets are on: Sports wagering on the table

It’s a safe bet that legalized sports wagering will be an important issue this year in California.

There’s a lot more than table stakes in play: In neighboring Nevada, where sports betting is currently legal, fans bet a record $98.9 million on the 49ers-Ravens Super Bowl game. That’s a hefty piece of change. And the winners include more than the bettors — the casinos kept about $7 million for themselves.

As California’s economy starts tentatively to recover, backers of legalized sports wagering are betting that this is the year that the practice becomes lawful.

State Sen. Rod Wright, an Inglewood Democrat and the lawmaker viewed as the most knowledgeable on gaming issues, is crafting a new version of SB 1390, a bill he submitted last year that was blocked. His legislation allowed card clubs, casinos, horse racing tracks and other designated locations to offer sports wagering. The bill, supported by the tracks and a number of card clubs but opposed by some tribal interests, required that all bets be made by those of legal age, done in person and cannot be conducted over the phone or online.  He’s now retooling the proposal for this year.

The measure is separate from major online gaming legislation that Wright has authored, although he has explored the idea of legalizing online poker tournaments and this year, early in the session, he introduced SB 51 for online poker.

“The idea is that, A,  we would get a piece of the action  and, B, we would have better control of protecting California consumers,” Wright said earlier.

An online gaming bill was introduced this year by Sen. Lou Correa, D-Santa Ana, SB 678, although it was uncertain whether the measure would play a major role in this year’s gaming debate.

Wright’s SB1390 failed to pass last summer and many opponents were quick to note that he had more than just a statewide fiscal interest.

His 35th Senate District houses Hollywood Park – one of the biggest horse tracks in California. He also serves as the chairman of the powerful Governmental Organization committee, or “G.O.,”  which oversees a variety of activities, including horse racing, alcoholic beverages, public gaming, disaster preparedness and even the National Guard.

Meanwhile, the GOP also is concerned with sports wagering and the potential for revenue to the state.

A recent report by the Senate Republican Caucus notes that “less than $3 billion in sports wagers take place in legal environments. In Nevada, for instance, legal sports wagering represents less than one-percent of all sports betting nationwide. “ Other states that monitor — and benefit from — sports wagering include Delaware, Montana and New Jersey. The question in California is whether the Golden State should follow suit.

An estimated $80 billion to $100 billion is wagered annually across the country on professional football alone, which means California’s sports wagering — legal or not — may be in the $12 billion to $15 billion range.

Nevada destination gaming cities at Lake Tahoe, Reno and Las Vegas thrive on gambling dollars and have already felt the competition of the booming popularity of resort-style resources developed by California’s tribal gaming communities. But as far as sports betting in California is concerned, the threat — if any — to traditional casino revenue is unclear.

David G. Schwartz, the director of the Center for Gaming Research at University of Nevada – Las Vegas, told the Las Vegas Review-Journal that he “doubts customers would skip a Las Vegas experience” when it comes to popular sporting events.

He also said that outside gambling companies would be smart to invest in the earning potential that sports betting could offer.

“Companies with a big Las Vegas presence would stand to benefit from California legalization because they could extend operations there,” he said.

There are questions about the economic impact of sports gambling.

For example, would it have any impact on California’s nascent economic recovery? What is the cultural impact of legalizing a practice that some find morally objectionable? If people routinely play Fantasy Football, March Madness and Super Bowl pools at the office, why shouldn’t they play them out in public?

Some say that, even if it were legal, they wouldn’t change the way they place their bets.

“Most of the sports betting I do is of a friendly nature with family and close friends,” says Callie O’Leary, a sales coordinator from Sacramento. “Californians are already disgruntled by how much we give to the state in taxes, tickets, etc. People won’t be inclined to fork over more.”

It’s not just individuals questioning the State’s place in a growing gambling system. If it were to be legalized, sports betting could also potentially blur the line of California budgetary needs and tribal sovereignty.  How would expanded versions of legalized gambling challenge some of the well established gambling systems, like tribal gaming?

David Quintana, Political Director for the California Tribal Business Alliance, said the initial version SB 1390 was “very dangerous for tribes” and urged then that further restrictions be put into place.  Presumably, Wright will deal with those concerns in his new  legislation.

David Quintana of the California Tribal Business Alliance says that while there were initial tensions about SB 1390, the fact that all bets would have to be made in person could be a real benefit to California’s casino-owning tribes.

“The introduction of this new bill feels much more collaborative,” says Quintana. “The mood is different, which means that there’s a greater likelihood of tribes taking a closer look of what this bill means for everyone.”

Quintana says that a closer examination of the overall market impact, especially for urban card rooms, could be the best way to find out if a sports-betting bill could be successfully placed into law.

“Of course increased gaming is always a good thing, but ultimately, it’s going to come down to ‘do the benefits outweigh the costs?’”

—

Ed’s Note: Updates 5th graf to include reference to Wright’s online poker bill, SB 51.