California, Texas and Florida Highly Unlikely to Pass Sports Betting Legislation

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+/- 40% of the country is expected to pass legalized sports gambling legislation by the end of 2019, but California, Texas and Florida – the 3 most heavily populated states – are highly unlikely to be among them. In Texas, gaming lobbyists face opposition from social conservatives who consider gambling “a regressive tax on the poor” and local tribes in both California and Florida are hesitant to open-up existing compacts that give them control over state casino gambling, fearful that increased competition (think: card rooms, race tracks) would cut into their profits. It’s believed that for sports betting legislation to be added to the state constitution in all 3 of the states, a statewide vote in its favor would need to occur (see: highly unlikely).

Howie Long-Short: California and Florida are encountering strong opposition from the Indian tribes because of the potential revenue at stake. Chris Grove (Eilers & Krejcik) explained, “the larger the opportunity – the more complex the stakeholder environment and the more political stasis sets in”; and in this case, we’re talking about the country’s “brass rings given the size of the populations” (Sara Slain, AGA). 26% of U.S. residents call California (40 million) or Florida (21 million) home.

The California Nations Indian Gaming Association and the Seminole Tribe of Florida – both politically powerful collectives – formally oppose expansion of states gaming laws, believing that the risks associated with increased competition from card rooms, race tracks and lottery dealers (and any concessions the states might require as part of negotiations) outweighs any additional profits they could earn from sports betting. That’s debatable. For a lot of tribes in a lot of states, adding a new form of gaming might not make sense – depending on the existing gaming climate”, but as Dustin Gouker, Analyst for LegalSportsReport.com told me, “if they’re fully on board, want to do mobile and retail sports books, the upside outweighs any threats a lottery or commercial casino might pose to their business.” 

The problem is that “a lot of them don’t see the upside. They see sports betting as a low margin business. Many Tribes are based in remote locations, so retail sportsbooks aren’t viable and mobile gaming is a problem for them. They’re concerned about its legality under federal law – about whether maintaining servers on tribal land would even permit them to take bets statewide.”

8 states now have legalized sports betting laws on the books and Arkansas, D.C. and New York have all “legalized sports gambling in some form and are working on regulations before bets can be placed.” By the end of 2019, as many as 33 states could be taking wagers on sporting events – though legislation is unlikely to pass in at least 10 of those locales; tribes in North Carolina, Minnesota, Wisconsin and Arizona are all vehemently opposed to sports betting unless they’re to retain control of the market, making new legislation in those states unlikely. Dustin pointed out that “despite all of the momentum for sports betting right now, it’s still politically tricky legislation to get passed. The states that have legalized sports betting thus far had a relatively easy lift – they really don’t have powerful tribal gaming lobbyists.”

I certainly don’t expect California, Texas or Florida to be among the states passing legislation this year. In fact, Eilers & Krejcik doesn’t expect Florida or Texas to have sports betting by 2023 (it does anticipate CA having it). In Florida, the Seminole Tribe (in collaboration with Disney) recently pushed a constitutional amendment through that requires 60% voter approval to expand gaming legislation in the state – all but ending any chance at legalized sports betting there. As for Texas, the political climate, along with a shortened legislative period – just once every 2 years – makes it that difficult to pass a new legislative effort.

Fan Marino: The 4th biggest state population wise, New York, has matching bills with both the assembly and the senate right now allowing for sports betting at the 4 commercial casinos upstate, but Dustin said after “reading the tea leaves and following online poker and daily fantasy sports legislation within the state the last five years, nothing gets done until the end of the session – so something passing would wait until June – and even then you face the potential of a veto from Governor Cuomo which would put them back at square one. I put the prospects of New York passing a law in ’19 at less than a coin flip.”

Assemblyman Gary Pretlow said earlier this week that he would be sponsoring a new bill that would allow for in-person betting at Yankee Stadium and MSG. That’s an interesting thought, but legislators would likely have to pass a new law to do it and remember, “they just now implemented regulations allowing for a retail sports betting almost a year after PASPA was struck down.” In other words, don’t hold your breathe waiting for it.

Fun Fact: 27% of all NFL, MLB, NBA & NHL franchises are in California, Texas or Florida.

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Author: John Wall Street

At the intersection of sports & finance.

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