Legal sports wagering in California an interesting proposition

Should Congress or the U.S. Supreme Court reverse federal law prohibiting sports wagering, there appears to be a difference in opinion as to who might benefit most from sports books in California: American Indian tribes, card clubs or thoroughbred racetracks.

Nevada, Delaware, Oregon and Montana – four states which conducted sports wagering before passage in 1992 of the Professional and Amateur Sports Protection Act (PASPA) – have a monopoly on the games.

But New Jersey voters recently amended their state constitution to legalize sports betting, daring the courts or federal government to stop the state from getting into the business. Professional sports leagues and the National Collegiate Athletic Association promptly filed lawsuits.

California Sen. Rob Wright last month failed to convince the state Legislature to enact a similar bill that would authorize tribes, tracks and card clubs to take wagers on football, baseball, basketball and collegiate events other than those involving California colleges and universities. The legislative session ended Aug. 31.

Oklahoma and New York have also considered sports-betting bills this year, though none appear close to passage.

Wright’sbill was approved by the California Senate and supported by Californian race tracks and card club members of the California Gaming Association.

But the bill faced opposition from law enforcement agencies, anti-gambling groups and tribal governments, many holding the belief card clubs and racetracks would get the bulk of the business.

More important, tribal governments and the California Nations Indian Gaming Association said the bill would violate a 1999 amendment to the state constitution giving tribes the exclusive right to offer casino-style gambling, which includes roulette, craps and sports books.

The Proposition 1A ballot initiative, approved by some 64 percent of the voters, was a major political and moral victory for tribal governments not only in California but throughout the country.

The significance of the election victory and the economic and social progress achieved through that constitutional amendment is not lost on California Indians. It’s precious.

Regardless, it’s interesting to contemplate legal sports wagering in California.

Sports books would likely be an enhancement to California’s tribal casinos. Although books in Las Vegas generate less than 5 percent of a casino’s revenues, they are a tremendous marketing tool for hotel/casinos seeking to lure younger and skilled gamblers.

Because some 85 percent or more of a tribal casino’s revenue comes from largely middle-aged, unskilled slot players, sports wagering would help tribes generate younger customers who when not laying down a bet might wander to the table games.

It also would generate a lot of casino traffic during the Super Bowl and college bowl games, NCAA basketball tournament, World Series and other major sporting events, particularly for tribal operations with hotels.

Anyone who has tried to maneuver through the humanity at a Strip sports book during NCAA’s March Madness knows what I’m talking about.

A sports book with wide-screen televisions, stadium seating and a restaurant and bar also would be a major entertainment venue for a casino resort, generating traffic to the golf course and other amenities.

“Sports wagering for the Augustine tribe would be very, very good,” said Michael Lombardi, gaming commissioner for the Augustine Band of Cahuilla Indians, generating holiday customer traffic in a region with quality demographics.

“Our place would be packed,” he said, as would other regional resorts operated by the Morongo Band of Mission Indians, Pechanga and Rincon bands of Luiseno Indians, Agua Caliente Band of Cahuilla Indians and others.

But some tribal leaders fear California card clubs and race tracks would benefit more than the tribes, and perhaps lure business away from the casinos.

“I’ve heard some people say if the card rooms and race tracks got sports betting, it would hurt Indian gaming; that it would be better to have no sports wagering at all,” Lombardi said.

That’s difficult to believe if tribes market the books with weekend hotel packages for major sporting events. Only the Commerce Club card room has a hotel and the tracks are not a 7/24 business.

“[Tribes] will probably be divided along the same lines we’re divided on Internet poker,” Lombardi said.

“Some people look into the future and see one thing and others see something totally different,” he said. “That’s what makes life interesting.”

Sports books also would likely cut into the illegal sports wagering business, one of the largest segments of the nation’s gambling market, generating from $80 billion to $380 billion a year in wagers, depending on who is doing the estimate. The FBI believes annual illegal sports’ gambling is a $100 billion industry.

The American Gaming Association estimates that 1 to 3 percent of the sports wagering in the U.S. comes from Nevada sports books. Because the vast majority of wagers are illegal, it is difficult to asset the true size of the market.

Of course, it’s not likely states looking to offer sports wagering will hurdle the federal prohibition.

“PASPA has to be unconstitutional in order for any state other than Nevada to offer ‘straight’ sports betting,” Joe Kelly, a professor of business law at State University of New York College in Buffalo, told GamblingCompliance.com.

“Everybody is waiting to see if New Jersey can win this fight,” Kelly said. “California is not the only one.”