Should a ballot measure to allow sports betting at California’s tribal casinos and racetracks be adopted, the state stands to generate “tens of millions” in new revenue, but face higher regulatory and enforcement costs, a new report says.
The analysis of the ballot proposal put forward by a coalition of 18 Native American tribes in November last year was carried out by the Legislative Analyst’s Office (LAO) and offered a mixed picture of its potential impact.
According to the LAO, if the state were permit such an expansion, its unclear as to how much more would be spent on gambling, but spending could reach tens of millions of dollars each year from sports betting.
The proposal would not only allow sports betting at tribal casinos and state racetracks, but also give tribal operators the right to offer roulette and dice games. At present, tribal casinos are only permitted to offer slot machines, lottery games and banking and percentage card games.
Sports betting would be taxed at 10% of gross revenue, which would be deposited in the California Sports Wagering Fund.
While customers were likely to participate in sports betting post-launch, the LAO suggested that this could be at the expense of other forms of gambling, which could see revenue cannibalised as a result of shifting customer habits.
The launch of the new forms of gambling will also increase the workload, and subsequent spending, for state agencies tasked with implementing and regulating sports wagering, the LAO added.
These costs could reach the low tens of millions of dollars annually, it predicted. However, it also said that some or all of these costs would be offset by revenue deposited into the CSWF and from reimbursement payments required by tribal-state compacts.
Similarly, the LAO warned of increased state enforcement costs, as a result of a new civil enforcement tool, as proposed in the tribal plans. This would focus on violations of certain state gaming laws, with persons or entities that breach laws facing penalties of up to $10,000.
In addition, state courts could experience increased workload to adjudicate any civil actions that are filed. The LAO said that the overall increase in costs would depend primarily on how often this new tool is used, but is not likely to exceed several million dollars annually.
Other fiscal effects could include impacts on the state and local governments, such as increased revenue from new economic activity generated by individuals from out of state visiting gaming facilities to place bets and spending more in the state as a result.
However, at the same time, the LAO said local governments could experience decreased revenue. It said this could be the case if the new civil enforcement tool negatively affects cardrooms, with the local governments that currently receive revenue from these facilities facing a possible reduction in such revenues.
Should more people visit gaming facilities, local government costs could also increase, with the need to spend more on law enforcement.
Away from tribal lands, California permits horse racing betting at four approved tracks, as well as certain gaming within 86 licensed cardrooms. In addition, the California Lottery oversees 23 retail locations across the state.