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Opening Salvos Fired in Battle for CA Sports Betting Market

Posted on by John Lathram

CaliforniaIf you thought the battle for regulated online poker in California was messy, you ain´t seen nothing yet. Potential stakeholders in California´s regulated sports betting market have already fired their opening shots and, with much more at stake, the battle is likely to be much bloodier than before.

Following the Supreme Court´s ruling in May that the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional, some of the media in California went crazy over the fact it would soon be possible to legally bet on the 49ers. Other media outlets were a little more restrained – pointing out a constitutional amendment was required before regulated sports betting in California could become a reality.

Nonetheless, hopes were high for a regulated environment within twelve months. Assemblyman Adam Gray (remember him online poker fans?) had already done much of the groundwork and prepared a constitutional amendment. Due to the revenues that would be generated for the state by the regulation of sports betting in California there appeared to be little political opposition to getting the amendment on the November ballot, but it never made it. Why?

Usual Suspects Start Battle for Control of Market

Initially everything looked rosy in the Golden State. The California Gaming Association – which represents California´s cardrooms – and DraftKings both issued statements welcoming the opportunity and pledging to work with other stakeholders in order to create a new framework that will protect consumers, engage fans, and generate revenue to bolster local economies.

Then California´s tribal interests made their position clear. Steve Stallings – Chairman of the California Nations Indian Gaming Association – issued a statement claiming that casinos should have exclusivity to offer sports betting under their existing compacts. He argued that the regulation of sports betting in California should not become “a backdoor way” to infringe upon tribal rights.

The horseracing industry – which was offered a $60 million bribe to withdraw from the battle for online poker – claims it too has a right to offer sports betting. Speaking with San Diego Magazine, Greg Avioli – President of the Thoroughbred Owners of California – said regulated sports betting should be restricted to existing betting locations, effectively eliminating European bookmakers and DFS operators.

However, not only does the horseracing industry want to ensure it gets its share of the regulated sports betting market in California, it also wants to have a say in how it is run. Rick Baedeker – Executive Director of the California Horse Racing Board – told San Diego Magazine

We’re the only body that regulates wagering on sports. We have more experience than anyone else in the state.

Shaping Up to be a Bloodier Battle than Before

Estimates vary about the revenue that a regulated sports betting market in California could generate. Based on the limited data available from the first month of operations in New Jersey, it is fair to guesstimate a regulated sports betting market in California would be worth in excess of $325 million per year before tax, although some in the industry have predicted revenue as high as $1 billion by 2023.

Compared to the amount of money regulated online poker was forecast to generate (c. $75 million), it is not difficult to understand why the usual suspects are staking their claims well in advance – and why potential stakeholders will be unwilling to relinquish their perceived rights to their share of the market when regulators get around to deciding who gets to participate in it.

The likely outcome is a mirror of what happened when attempts were made to regulate online poker in California. Nothing. That´s not only bad for gamblers who want to bet on the 49ers legally but also bad for online poker players who were hoping for online poker legislation to be piggy-backed onto sports betting legislation. California´s politicians didn´t even bother pursuing online poker legislation this year. You wonder if they are going to bother with sports betting legislation next year.

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