California making headway in push to legalize sports betting

Lawmakers in California recently set up a preliminary hearing on sports betting with a view to legalizing the practice. With the number of states that are looking into the issue, by the end of 2020 half of the United States could have legal sports betting.

The preliminary hearing, which was overseen by California senators and members of the state assembly, included speeches from experts in the sports betting industry regarding legislative issues. According to Legal Sports Report, California Senator Bill Dodd and Assemblyman Adam Gray will use the information given by the industry experts to come up with a bill to be included in the state ballot this November.

Nine states are looking into the possibility of legalizing sports wagering this year, according to the American Gaming Association (AGA) lobby group. Since the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) in May of 2018, some 20 states, as well as Washington DC, have legalized sports betting. Michigan was the last to do so, sealing the deal in December of last year.

Chris Grove, the managing director of sports and emerging verticals at Eilers & Krejcik, said, “We will likely approach a total of 30 states with some form of legal sports betting by the end of 2020.”

Even though for many states legal sports wagering is its infancy, there has been rapid growth in the industry. According to the AGA, American bettors wagered $1.86 billion in November 2019, which is an 88% increase over the same month in 2018.

With nearly 40 million residents, California is the most populous state in the US and has more residents than the 20 least populous states combined. There are also quite a few affluent regions in the Golden State, meaning legalized wagering would provide a huge boost to both the American gambling industry and state coffers.

Those in favor of legal sports betting have made the argument that a regulated gambling industry would be safer for everyone. It would also help authorities deal with illegal gambling and black market operations.

Trackers of sports betting have forecast solid projection for the industry in the United States. Morgan Stanley, citing legal experts, made a projection in November of last year that the US sports betting market could have an annual handle of $7 billion by 2025.

In California there are currently two movements to legalize sports betting, with Bill and Gray taking the lead in one of them. They are in support of a regulatory framework where mobile betting would be legal. In states where online gambling is allowed, mobile bets make up the biggest percentage of wagers made by a significant margin.

In June of last year Dodd stated, “By legalizing sports wagering, we can avoid some of the problems associated with an underground market, such as fraud and tax evasion, while investing in problem gambling education.”

In another California initiative, which is backed by 18 Native American tribes in the state, supports live sports betting at racetracks and land-based casinos but not mobile wagering. According to Grove, passage of a bill to legalize sports betting is not likely this year since there are glaring differing opinions between the two parties as well as other stakeholders.

Grove stated, “Large states suffer from this dynamic in general. The states are large, meaning the potential market is large and the relevant stakeholders are many and diverse. Given the size of the prize at stake, those stakeholders are more willing to dig in and less willing to compromise on their preferred vision for legal sports betting. That’s a recipe for legislative stasis.”

Any bill that would legalize sports betting in California would need approval by two-thirds from the California Senate and the General Assembly. If that happened, the bill would be on the ballot in November and put to the voters where a simple majority would put the bill into law.