Pressure Growing for California to Legalize Sports Betting

Is the Golden State about to miss a golden opportunity?

The California Nations Indian Gaming Association (CNIGA) has spent millions to protect the state’s massive tribal gaming market. Their efforts have led Attorney General Rob Bonta to begin cracking down on daily fantasy sports and sweepstakes platforms, deeming both industries to be an illegal form of gambling. 

The goal is to have customers of these platforms visit tribal casinos to get their gambling fix. However, there will no longer be a way for California residents to bet on sports. While sweepstakes platforms and DFS aren’t traditional gambling, they allow customers to win money from their sports fandom. With both industries facing bans, it will leave residents without any legal option.

With the state and tribes remaining far apart in negotiations over regulated sports betting, those seeking to wager on sports are looking for alternative options. This will significantly increase the risk of problem gambling for bettors as they seek out unregulated platforms. Those operators don’t pay state taxes on gambling revenue, meaning California gets nothing.

The NFL, America’s busiest betting season, is set to kick off in just over a month. Once it does, we will have a clearer idea of the revenue lost for California and the tribes.

Tribal Gaming Facing Biggest Threat Yet

California tribes have been experiencing considerable success at the state level, but now face a far greater threat from sports prediction markets. These platforms are not considered to be a form of gambling, allowing them to operate in states without legal sports betting, such as California. With the Commodity Futures Trading Commission (CFTC) having sole authority to regulate these operators, states are powerless to stop them.

Three California tribes filed a lawsuit against Kalshi and Robinhood over their prediction platforms. They join a growing list of states and tribes that have done so, but those efforts seem unlikely to succeed. A soon-to-be-approved nominee to take over the CFTC has deep ties to the industry, as does the White House.

If sports prediction markets are protected, it will force tribes to compete with commercial operators across the US. That would be a significant blow to the protections provided by the Indian Gaming Regulatory Act (IGRA) and could pave the way for the expansion of commercial gambling.