California lawmakers shelve effort this year to legalize sports betting

SACRAMENTO —  Two years after the U.S. Supreme Court opened the door for states to allow sports betting, political squabbles between rival gambling interests have left California stalemated on the issue, with the latest effort fizzling this week in the state Legislature.

While betting on sports has been legalized in nearly two dozen other states, including New York, New Jersey and Oregon, efforts have bogged down in California, where influential Native American tribes that operate more than 60 casinos have clashed with competing card clubs over how to share the nation’s largest gambling market.

Advisers to Gov. Gavin Newsom have tried to broker a compromise, but this week, state Sen. Bill Dodd (D-Napa) said there was not enough time to finish the complicated negotiations to get a sports betting measure on the November ballot. So he is shelving legislation for the year.

“Given the deadlines for getting a measure on the November ballot and the impact of COVID-19 on the public’s ability to weigh in, we were not able to get the bill across the finish line this year,” Dodd said in a statement. “It remains important that we lift this widespread practice out of the shadows to make it safer and to generate money for the people of California.”

Dodd’s constitutional amendment needed a two-thirds vote of both houses of the Legislature by Thursday to make the ballot this year, but the Assembly will not be back in session until Friday.

The senator said he would try again next year with the aim of putting a measure on the 2022 ballot, noting his legalization proposal would generate up to $700 million a year in tax revenue for state coffers.

The deadlock in California is not surprising to Chris Grove, a gambling industry analyst and partner with Eilers and Krejcik Gaming, which has advised the Legislature on the issue.

“The bottom line in California is that too many stakeholders in the state’s gambling industry have too many existing high-stakes conflicts to allow sports betting to move forward,” Grove said Tuesday. “In many ways, sports betting is a footnote for tribal and commercial gambling interests in the larger conversation around gambling in California.”

Newsom said Friday that his office had been involved in working with legislators and the various gambling interests for almost a year.

“It’s more complicated than it appears because there’s so many different players,” the governor said. “And we’ve got to accommodate for those concerns — card rooms, tribal interests — [and] obviously address all those issues together.”

Dodd’s bill was opposed by a coalition of 25 Native American tribes that argue that the legislation would allow competing card clubs to continue offering card games that the tribes say violate their exclusive compacts with the state. The tribes objected that the bill would offer online sports betting, which members were concerned could take business away from brick-and-mortar tribal casinos.

“We appreciate that legislators saw through the smoke and mirrors and stopped SCA 6 — the effort to break yet another agreement between California and Native American Tribes and expand Nevada-style games to card rooms,” said a statement by the tribal group, the Coalition to Authorize Regulated Sports Wagering.

The coalition has proposed its own ballot measure, which would limit sports betting to tribal casinos and horse-racing tracks, but the coronavirus pandemic forced it to stop collecting signatures before it reached the 997,139 needed to make the 2020 ballot.

The initiative would also expand the tribal gaming compact to allow craps and roulette at tribal casinos, and to pay for state enforcement of sports betting with a 10% tax on sports gaming revenue at the racetracks.

The tribes say they too are now aiming to get a measure on the 2022 ballot, and they are awaiting a court decision on their request for an extension of a July 20 deadline to add to the 971,373 signatures they had collected by mid-March. A court hearing has been set for July 2.

The tribal initiative is opposed by card clubs, which have formed a political committee called “No on the Gambling Power Grab.”

The card clubs said Dodd’s bill could have provided hundreds of millions of dollars to avoid cuts in state programs caused by reduced revenues amid California’s pandemic-triggered recession.

“Yet, the will of a few rich tribes with Vegas-style casinos, that don’t pay taxes, have prevailed in the Legislature in preventing a desperately needed new source of revenue from flowing to the state,” said Steven Maviglio, a spokesman for the card club committee.

The tribal initiative, by barring online sports betting, “incentivizes the online black market to continue,” Maviglio said, adding, “Californians should know their interests in this time of crisis have been spoiled by powerful special interests.”

Native American tribes have long been major players in Sacramento. Five of the biggest tribal donors pushing the initiative spent a total of $2.1 million on political contributions last year, as well as $1.1 million on lobbying state government.

In 2004, the tribes spent $33 million to defeat a ballot measure that would have allowed racetracks and card clubs to operate slot machines, preserving the law that allows the machines to be operated only at tribal casinos.

Dodd’s bill had support from some cities, law enforcement groups and professional sports leagues, and card clubs plan to continue pushing for the legislation, according to Kyle Kirkland, president of the clubs’ California Gaming Assn.

“The failure to pass this legislation is the loss of the opportunity for the state to generate billions in revenues that are desperately needed for housing, homeless, health care and emergency services,” Kirkland said in a statement. “As representatives of the cardroom industry, we will continue to support comprehensive proposals that benefit Californians, not just one special interest.”