California Sports Betting Moves Forward With Opposition

California Sports Betting Moves Forward With Opposition
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Lines were drawn Tuesday at a California Senate committee hearing over a constitutional amendment calling for a statewide sports betting referendum on the November ballot.

The Senate Governmental Organization committee voted 9-3 Tuesday to refer SCA-6 to the Senate Appropriations committee, but not without passionate testimony on both sides of the issue.

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As it has been through the years when it comes to gambling in California, it was the card rooms against the state’s tribes. And there was no gray area in the support and opposition.

Sen. Bill Dodd, who is chair of the committee and a co-sponsor of the amendment said there will be more discussion before it reaches the Senate floor.

”I said I would not move this bill on the floor until we’ve had those good-faith discussions with the tribes,” he said, adding that he believes the amendment represents a fair compromise.

Adam Gray, a state assemblyman and co-sponsor, said “we’re better off for having had this discussion.” He said there needs to be full consultation and respect for all stakeholders.

”Today we can reset these discussions so we can move forward,” he said.

Why the Tribes Are Opposed to the Amendment

Although the tribes would be allowed to offer sports betting, both at their brick-and-mortar casinos and through mobile, the card rooms would continue to operate as they have. The tribes believe they have exclusive rights to offer those games.

The tribes aren’t necessarily keen on offering mobile sports betting. They prefer to have people visit their physical casinos.

Even before testimony Tuesday, the California Native Indian Gaming Association came out against the amendment when it was re-introduced last week, posting a statement on its website from James Siva, the chair of CNIGA.

“After initial review of Senator Dodd’s recently updated language to amend the State Constitution to allow sports wagering, we have some concerns. First , while on its face this language seeks to amend the constitution to legalize and regulate sports wagering in California, this language also provides California’s commercial card room industry with a massive expansion of games, by legalizing the use of proposition players to serve as the bank, a notion that has been rejected by California's voters and fundamentally changes the legal structure of California's peer-to-peer gaming industry.

“While we appreciate Senator Dodd’s attempt to address sports wagering, we are vehemently opposed to including an expansion of gaming to a segment of the gaming industry that has proved, for decades, to be unwilling to follow the rules and regulations that guarantee a fair and safe gambling environment.”

Those statements were echoed by opposition speakers on Tuesday, who urged that the amendment be withdrawn.

Sen. Steve Glazer (D-Contra Costa) said he has had a special relationship with the tribes for more than 20 years.

“I have a special appreciation for this history,” he said, adding that he looks at two things when examining a bill.

He said the two key issues are whether or not it protects the sovereignty of the tribes and is there economic security for them.

”When I look at this bill, I don’t think it protects the franchise of the tribes,” Glazer said. “It troubles me greatly.”

Why Card Rooms Favor the Amendment

In short, the amendment would allow card rooms to continue to operate and offer games such as blackjack and poker just like you see in Las Vegas casinos. The dispute with the tribes would essentially end.

The tax revenue generated from the card rooms in turn helps the communities where they exist. They provide jobs and tax revenue for the towns, which are also reeling from the coronavirus pandemic, according to many of the speakers in favor of the bill Tuesday.

Ernie Hernandez, city manager for Hawaiian Gardens, spoke Tuesday and said he strongly supports the amendment.

”Our casino partner Gardens Casino has helped transform the community in a positive manner,” Hernandez said, adding that 70% of the city’s general fund comes from the casino. “Further losses would be devastating. It could impact public safety. We simply do not have the resources.”

Hernandez’s comments resounded during the teleconference portion of the hearing with many of the communities throughout California with card rooms.

Joe Patterson, executive director of the California Gaming Association, wasn’t in attendance at the hearing, but on the teleconference said his group is in favor of the bill.

In addition, speakers representing professional sports teams and leagues like MLB, the NBA and the PGA voiced their support for the measure.

How Does the State Benefit?

California is facing a huge budget deficit — $54 billion was mentioned in the hearing — amid the coronavirus pandemic and all revenue streams and budget cuts are being considered.

The state would tax sports betting gross revenue at 10% for retail gaming and at 15% for mobile or online if sports betting is legalized.

Chris Grove of Eilers and Krejcik, a research and consulting firm focused on gaming, said legal sports betting could bring in $282 million in the first six months in taxes and licensing fees and see $503 million annually.

“It would be one of the most productive sports betting markets in the world,” Grove said via telephone Tuesday, adding that it would be one of the top-tier global markets. “The California market could ramp up quickly, faster than a normal market.”

Sen. Steven Bradford (D-Gardena), said he does not see any losers from expanding gaming in California.

”I see winners on both sides,” he said. “The expansion of gaming, I think, is being afforded to our Native American brothers and sisters. I ask them to stand united. This is a common-sense measure.”

Jeff Grubbe of the Agua Caliente Band of Cahuilla Indians, said he did not think any tribe would approve it.

”It amends the California constitution to strip away our exclusive right to offer banked games,” he said. Tribes have been trying to get their own referendum on the ballot.

The California legislature, which had recessed because of the pandemic, must pass a budget by June 15 and Gov. Gavin Newsom has to sign it before July.

It would take a two-thirds vote of both chambers of the legislature to put the sports betting measure before voters in November. It would then have to be approved by a majority of voters.

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