Is California on Track to Legalize Sports Gambling?

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Based on federal law, sports gambling outside of Nevada is illegal. That’s applicable to wagering online or in land-based betting facilities. However, it’s no secret that billions of dollars are being wagered every year by US citizens with online bookmakers. The loss of potential tax revenues has certainly made a number of state legislatures sit up and take notice. With the New Jersey sports betting case currently heading to the US Supreme Court, several states, including California, are considering legislation that could open up single-game sports gambling to the residents in each respective state.

The Numbers
The state of Nevada relies heavily on tourism for it’s gaming related revenues. In 2016, Nevada sports betting generated $4.5 billion in handle and $219 million in gross revenues. Considering the size of California’s population (40 million people), it’s reasonable to assume that the bordering state accounts for a significant portion of the sports wagering revenues for Nevada’s top sports books.

California is currently in debt to the tune of almost $22,000,000,000 with no end in sight. Considering the tax revenues that are being lost to Nevada and offshore sports books, the legislature is looking at the gaming industry as a possible source of significant revenues. This has led assembly member Adam Gray to start the process of developing the legislation necessary to legalize sports gambling in California.

The Obstacles
For a variety of reasons, the legalization of sports gambling in the US has consistently been an uphill battle for proponents. In California, there’s certain realities these proponents have to navigate. First and foremost, other gaming providers currently operating within the state are pushing back. This include Indian casinos, poker rooms, racetracks and the state lottery. These parties have no interest in having its revenue streams savaged by sports betting operations. With that said, it’s likely sports betting would be run out of the state’s horse racing facilities, which could prompt that industry to support sports betting legalization if a portion of the revenues were directed towards them.

Second, the State of Nevada has much to lose if neighboring California was to legalize sports betting. They will surely pour millions into the hands of lobbyists to try and prevent the state’s Casino revenues from being lost to California.

The third obstacle is pushback from within the legislature. To date, any attempts to get online gaming approved have been met with a certain amount of apathy. The state has failed to approve the legalization of online poker or fantasy sports while many other states have already moved in that direction.

There is a cost associated with the addition of each and every new gambling site. Eventually, California voters are going to have to decide on winners and losers. The reality is sports betting will eventually be legalized at the federal level. When that happens, the California legislature will probably take its que and approve the legalization of sports gambling for the state’s residents. Until then, it’s anyone’s guess how things will unfold.

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