The Pandemic Disrupts One Sports Betting Effort; May Boost Another

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

A number of California Native American tribes joined in a lawsuit to get more time to gather signatures to qualify a sports betting measure for the California ballot. The lawsuit charges that the state’s stay-at-home order in wake of the coronavirus pandemic interfered with practicing the state’s cherished right of direct democracy. Initiative qualifications have been disrupted before in California, but none turned to the courts seeking more time. It’s hard to imagine courts will approve such a precedent setting lawsuit.

In 1989, the Loma Prieta earthquake not only shut down the Bay Bridge World Series between the Oakland A’s and San Francisco Giants, it messed with the late signature drive to qualify a split roll property tax measure for the ballot. Proponents of the measure said their most potent signature gathering locale was the Bay Area. Without the ability to mine signatures in that region in the wake of the earthquake, the tax measure failed to qualify. 

The tribes want to convince voters to allow sports betting at their casinos and they fear if the initiative measure doesn’t qualify the legislature would proceed with a sports betting measure of its own that would allow sports betting online and at racetracks to join the casinos and compete with them for the sports wagering dollar. The online feature could keep visitors out of the casinos, the tribes fear. 

The bill to permit sports betting in California, SCA 6 by Senator Bill Dodd, is making its way through Senate committees. The pot of gold at the end of the rainbow for the state is the potential tax take at a time with the state government is thirsting for new revenue, another circumstance created by the pandemic.

While the initiative would tax sports waging at 10%, the Dodd bill would tax the casino and racetrack waging at 10% but boost the tax rate to 15% on online betting. The author predicts an initial take for the state of $200 million a year, eventually increased to around $700 million.

That is, of course, once sports start up again.

There is no doubt the legislature is looking under every rock and between the seat cushions for loose change of any kind to help fill the budget gap left by the coronavirus effects on commercial activity and the state’s stay at home health rules. General taxes would seem to be a tough mountain to climb given the recent Public Policy Institute of California poll which showed that voters opposed tax increases by a two to one margin.

 But a form of “sin” taxes that are voluntary in a sense –you are taxed only if you play– may not raise as many objections from the public.

Sports betting bills have been introduced in the legislature in the past and have failed. Even this current plan faces many obstacles, not the least of which is the two-thirds vote required on a constitutional amendment.

 But SCA 6 also has something going for it—ironically the same thing that seemingly derailed the Indians’ initiative effort—effects of the pandemic.

 While the coronavirus forced voters to stay hidden and for signature gatherers to put away their clipboards hurting the chances to get the approximate 1.5 million signatures needed to safely qualify a constitutional amendment ballot measure, the same virus so drastically and unexpectedly reduced government revenue that supporting sport wagering and the tax attached to it is more appealing to legislators than past efforts have been.

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