When Will California Legalize Online Gambling Inside the State?

By Jennifer Hassan in Laws and Regulation
| January 29, 2020 2:39 pm PST
When Will California Legalize and Regulate Online Gambling

California is on the leading edge of so many timely issues that we are surprised that they are lagging behind in creating guidelines for online betting within the state. (There is even a 2020 California ballot proposal to legalize psychedelic mushrooms.)

The state is not opposed to gambling; there are numerous “Indian” casinos in the state, as well as low buy-in poker rooms where gambling is legal, a state lottery, and allowances made for charitable raffles and gambling fundraisers.

But when will California legalize online gambling within the state?

Current California Gambling Laws

The California gambling law sourcebook makes no reference to online gambling.

There is some general consensus among online gambling resources that no individual who gambles online has been prosecuted or will be prosecuted, but that one may not create an online gambling business in California without threat of prosecution.

The California Franchise Tax Board explicitly states that taxes must be paid on wins from lotteries, raffles, horse races, and casinos. No mention is made regarding income from online gambling.

There is some conversation in California that suggests the lag in creating online gaming rules is not because California has issues with online gaming but because there is a power struggle between the state government, the California Gaming Industry, and the Native American casino tribes as to who will be allowed to offer (and profit from) online gaming.

The Native tribes who have casino interests hold a great deal of political sway in California.

In places such as Nevada and New Jersey, people have options when it comes to casinos and sports betting and how and where to place their bets.

Not so in California, where the Native tribal casinos provide the 40 million residents of California with the only Vegas-style casino experience in the state.

It’s a Billion-Dollar Power Struggle

Online gaming is directly at odds with Native interests. Given the Native lobbying power, online gaming legislation appears to be at a standstill because tribes don’t want the competition.

As it stands, anyone in California who wants to gamble for serious money has to walk into a tribal casino, whether it’s the Pachanga Casino Resort in Temecula, Thunder Valley outside of Sacramento, or Cache Creek Casino in the Capay Valley.

California has 69 tribal casinos, which reportedly bring in more than $8 billion per year. According to a nonprofit political center that tracks spending on lobbying, tribal casinos in the US spend upwards of $25 million a year on high-dollar lobbyists to protect gaming monopolies in places like California.

You may be wondering why public poker games for money played in card rooms throughout the state are legal. According to the Legislative Analyst’s Office, it’s because these cardrooms have been around since before California was even granted statehood.

The power of tradition is hard to buck, no matter where you are in the world, even in a place as progressive as the West Coast.

However, despite all of these issues between the tribal and political players in California, many Californians gamble online using an offshore casino, with no negative consequences.

As of the time of this writing, there is no evidence that any individual has been prosecuted by the State of California for online gambling.

The law that concerns this activity, Penal Code 330: Gaming, was established in 1872 and mentions games that have gone the way of the dodo, such as Fan-Tan, Monte, and Hokey Pokey. Obviously, there is no mention of internet gambling.

The fact that this 1872 statute was established as part of a group of morality codes and is only a misdemeanor makes it unlikely that much effort will be made to enforce any controls on individual players.

Sports Betting in California

A coalition of Native American tribes who own casinos in California has created a ballot initiative that will be put to the vote in California later this year. If passed, bettors would be able to wager on college and professional games at tribal casino locations.

Whether or not this would include the ability to engage in remote online betting using their proprietary servers is unclear.

The California Gaming Association is committed to keeping the future of cardrooms secure, and therefore, they want California’s cardrooms to be able to offer sports betting.

As noted above, the tension between these two groups, as well as other interests in California, is preventing any real movement forward in the industry as gambling evolves.

At the Winter Meeting, 2020, that took place in San Diego among the National Council of Legislators from Gaming States, a Committee on Emerging Forms of Gambling met. Yet, according to speakers at the event, 2020 is looking bleak for sports betting, which would also include online sports wagering.

Why the Status Quo Is Bad for CA

California is a huge state with a population of around 40 million citizens. Billions are made at the local tribal casinos on everything from slots to poker to roulette. Clearly, Californians love to gamble and are willing to travel and pay to do so.

Also, there are numerous major league sports teams within the state. If online sports betting were available, it would render a significant income stream into the state via the tax system.

As it stands, with such a timely issue being pushed back and pushed back, people are finding other channels through which to place their bets. Either they are making casual, off-the-book bets, or they are gambling online from California anyway, or they are telling bookmakers that they reside in states where online gambling has been legalized.

At any rate, California is hemorrhaging money by not attending to this issue.

In Conclusion

There is no conclusion.

Right now, online gambling in California is not expressly legal. Neither is sports betting within the state. It doesn’t look like there will be any explicit resolution anytime soon, either for or against.

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