Sports Betting in California

The federal Professional and Amateur Sports Protection Act of 1992, also known as PASPA, outlawed sports betting across the entire nation except for Nevada, Oregon, Delaware, and Montana. In May 2018, the United States Supreme Court issued a ruling on Murphy v. National Collegiate Athletic Association and declared that PASPA violates the Tenth Amendment by commandeering power from the individual states.

As PASPA was removed from the books, California regained the right to regulate online and land-based sports betting. However, unlike New Mexico or Pennsylvania, the Golden State didn’t have pre-existing regulations that could facilitate legal sports betting within its borders; passing such regulations would require amending the state’s constitution.

This issue needs to be addressed by local legislators and voters if California is to have its own bookmaking industry.

Sports betting fact sheet:

Land-based betting:No
Online betting:No
Sports betting bill:Expected to be introduced in 2020
DFS contests:Yes, all major platforms available
Horse race betting:Yes. Online betting allowed as well.

Current legal status of sports betting in California

Gambling in California is regulated by California Penal Code Section 330 et seq. Section 337a explicitly prohibits local companies from operating sportsbooks under the penalty of up to one year in jail or state prison, a fine of up to $5,000, or both. Even worse, the very act of “laying, making, offering, or accepting” a wager upon the result of a trial or contest constitutes a violation of Section 337a.

Thus, gamblers who engage in internet betting via offshore platforms can find themselves in serious legal jeopardy. The fines for subsequent offenses are even higher – up to $10,000 on the second conviction and up to $15,000 on the third and subsequent convictions. However, the maximum jail sentence remains unchanged.

These laws do not apply to pari-mutuel horse race betting, which is perfectly legal as long as it takes place on-site.

Will California get a sports betting bill?

There is a substantial effort to legalize sports betting in California in 2020. In 2018, Russell Lowery, a political consultant representing an undisclosed group of lobbyists, proposed a ballot measure to amend the state constitution and allow betting on sports contests within state lines.

The state attorney has already approved the title and summary for this potential measure, which means that Lowery needs to collect at least 585,407 voter signatures by February 2019 to put it on the November 2020 ballot.

Unfortunately, Lowery’s measure is bundled with regulations that would significantly expand the list of games that can be offered by local card clubs, which are operated by non-tribal businesses. Even though the casino-operating tribes aren’t opposed to the idea of legalizing sports betting, some of them will most likely resist this initiative tooth and nail.

Mark Macarro – chairman of the Pechanga Luiseno Indians, who operate the Pechanga Casino & Resort – stated that Lowery’s proposition “is not keeping with California’s longstanding policy of limited gaming,” adding that the tribe “will vigorously oppose this measure.”

Other tribes have shown more restraint in issuing public statements regarding this issue, but there’s no doubt that they aren’t thrilled about the prospect of facing new competition for casino-style card games. This sentiment was perhaps best expressed by David Quintana, a lobbyist working on behalf of Viejas Kumeyaay Indians, who said that the tribes’ priority with sports wagering is to “ensure that brick-and-mortar casinos are protected.”

Lowery’s initiative isn’t the first attempt at legalizing sports betting in California in the post-PASPA era. In May 2018, Asm. Adam Gray (D) introduced an unrelated bill that focused exclusively on this form of gambling, but he failed to build a consensus in time to put a measure on the November 2018 ballot.

Potential sports betting operators

Things might be looking sketchy for sports betting proponents at the moment, but that doesn’t stop local business from preparing for the end of prohibition. In October 2018, MGM GVC Interactive LLC and the United Auburn Indian Community signed a partnership deal which would allow the UIAC to offer MGM GVC sports betting products following potential legalization.

Gene Whitehouse, Chairman of UIAC, admitted that “it is not yet clear if California will authorize sports betting or interactive games generally,” adding that the tribe “wants to be well-situated, and this agreement with the national leader in the field does just that.”

The MGM GVC-UIAC deal is the first of its kind in California, but if legalization becomes more likely, other tribes are guaranteed to follow in UIAC’s footsteps.

DFS as a legal alternative to traditional betting

Because sports betting isn’t currently available in California, many people are turning to paid Daily Fantasy Sports contests as a legal alternative. DFS sites allow their customers to select a fantasy team and compete against other players for money, but unlike in traditional fantasy sports, the contests are resolved within a week or less.

While this might sound like an excellent way to satisfy your sports betting cravings before the ban on traditional bookmaking is lifted, the legality of paid DFS contests is disputable. The 2015 bill that was designed to legalize this form of gambling passed through the Assembly after a 62-1 vote, but everything indicates that it died in the Senate.

The Attorney General’s office never addressed the issue of the DFS contests’ legality, and no Californian has been prosecuted for using DFS sites so far. However, that shouldn’t be treated like a guarantee that using such platforms doesn’t constitute a violation of Section 330, which outlaws most forms of unregulated gambling in California.

The law doesn’t grant DFS contests any special status, so it’s possible that a court would treat them like any other form of gambling that isn’t mentioned in Section 330. In the worst case scenario, DFS players could face a fine of up to $1,000 and up to six months in jail.

None of the major DFS platforms have blacklisted California so far, so most people assume that using them in California is perfectly legal.