California State Lawmakers Meet to Discuss Legal Sports Betting

  • Joint meeting saw both parties admit to a prominent black market for sports betting in California
  • Consensus reached on the idea that legal sports betting would protect consumers
  • Major sports betting companies and leagues represented at the informational meeting
lifeguard cabin on Santa Monica beach in California
California state lawmakers held a preliminary hearing on sports betting Wednesday, organized by Senator Bill Dodd and Assemblyman Adam Gray. [Image: Shutterstock.com]

Signs of progress on the matter

A joint meeting of members of the California Senate and Assembly took place on Wednesday. The discussion regarded the potential of legalizing sports betting, with both parties seemingly coming to a consensus. The idea was for the two groups to educate themselves on aspects of sports betting legalization.

The informational meeting for the Assembly and Senate Governmental Organization committees was organized by Senator Bill Dodd and Assemblyman Adam Gray. The event, held in Sacramento, was previously supposed to take place in November 2019 at the Staples Center in Los Angeles.

Lawmakers agree on fundamental points

By the end of the joint hearing, the lawmakers in attendance were in agreement that black market sports betting is already prominent in the state of California.

Illegal activity currently occurs inside land-based establishments as well as over the phone and online. 

The parties agreed that if sports betting were to be legalized in the state, then there would be proper protection in place for those partaking in sports betting, in addition to ensuring more transparency.

Participation of key representatives

The activity saw key representatives from other states discussing their experiences with legal sports betting to date. Integrity advocates and major sports leagues spokespeople from the Major League Baseball (MLB) and the National Basketball Association (NBA) were also present to give presentations.

a move towards a legal framework for sports betting would result in the “highest integrity standards”

Jake Williams, the vice president of legal and regulatory affairs at the sportsbook data company Sportradar, said a move towards a legal framework for sports betting would result in the “highest integrity standards.”

Sportradar has an official deal in place with the National Football League (NFL). This makes the company the official data partner for the league, which gives it access to exclusive data from NFL games.

Oregon Lottery information officer Matt Shelby highlighted the improvements in protections since legalization in Oregon, saying “Because we are a legally regulated market there is transparency there.”

California’s potentially lucrative market

A gaming industry analyst with Eilers & Krejcik Gaming, Chris Grove, said the current annual revenue generated by the legal sports betting sector is $1bn. He maintained this figure will grow exponentially as more states legalize the activity and the market matures, believing it will reach $6bn by the end of 2023.

the state could garner $2.5bn from legal sports betting each year

As California has four NFL teams, four NBA teams, and five MLB teams, Grove estimates the state could garner $2.5bn from legal sports betting each year. 

Some lawmakers present expressed skepticism about these estimates as California has experienced blowbacks when legalizing activities with a previously strong black market presence. Tax revenues from the state’s legalization of marijuana have fallen considerably short of what was initially forecast. 

Grove responded by underlining that tax rates would need to be kept reasonably low, under the 20% mark. The average current tax rate on sports betting in states where it is legal is 19%. 

The majority of speakers at the meeting were adamant that legalizing online sports betting, not just allowing retail sportsbooks, would be a must.

The chances of legalization

California is the most populated state in the US. This means there would be a significant market for legalized sports betting, especially considering the large number of professional sports teams that base themselves in the state. 

The tribes in California operate all the casinos and hold a lot of political influence. Many of them support a bill that would exclusively grant them and racetracks in the state the ability to offer retail sports betting. 

Another proposed bill calls for a regulated but non-exclusive online sports betting market in the state.

Whatever the case may be, amending the state constitution to allow legal sports betting would need to be voted on by public ballot. For a measure to get on the ballot, it will require the support of at least two-thirds of both the state Senate and the Assembly.