When Will California Legalize Sports Betting?

As of January 1, 2020, the state of California officially legalized sports betting for its residents. However, the law has several restrictions including:

  • it is allowed only at casinos located in Nevada
  • wagering limits of five percent of gross income
  • and it is not permitted on local and charitable sports events
  • expired sports bets become void
  • and there is no provision for taxation

These rules are likely to change as the state lawmakers seek to create uniform regulations for all types of sports wagering. As the law stands today, it is a win–win for sports fans in the state of California, who will have another option for wagering other than the traditional betting spots.

Why 2019?

The year 2019 was pivotal for sports betting in the United States, as several key events unfolded that dramatically changed the landscape of professional and collegiate sports. Here are the major stories that shaped sports betting in the country in the coming year:

NFL Players Union Wants to End ‘Irreparable Harm’ to Free Agency

On March 25, 2019, the National Football League (NFL) Players Association filed a lawsuit against the National Football League (NFL) challenging the constitutionality of its anti-trust exemption, which is required for the league to be able to operate as a legal sports organization. The lawsuit alleges that the NFL’s restrictive contracts and territorial restrictions on free agency substantially limit competition and cause “irreparable harm to the players, their families, and the communities they serve.” Essentially, the NFL is attempting to unionize in order to gain greater leverage when negotiating restrictive contracts with the teams that employ them. This includes taking sides in potentially expensive legal disputes with other leagues or sports organizations.

While it is difficult to ascertain exactly how much betting activity there is on the NFL, it is safe to assume that many fans had to break out their credit cards and place bets on the Super Bowl, given the association’s significant investment in advertising and broadcasting rights during the playoffs and championship game. In fact, the Super Bowl saw a 55% increase in bets last year compared to 2018. The odds of the Pittsburgh Steelers winning the Super Bowl were 1 in 7.8, while those of the Los Angeles Rams were 1 in 5.1.

NASCAR Bans Betting On Its Events

On March 6, 2019, NASCAR banned sports wagering at its tracks, preventing fans from placing bets on the outcome of the races. The organization cited risks to the integrity of the sport due to ‘front running’ and ‘back running,’ which occur when a bettor is aware of the outcome before the event is finished. Front running and back running are a feature of online sports gambling, where users can interact with each other leading up to, and during, a sporting event. However, as states move towards legalizing sports betting, it is likely that this policy will be changed to allow for ‘prohibited’ or ‘no’ bets at NASCAR tracks as long as the activity does not appear to be affecting the outcome of the races. The integrity of the sport is indeed a pivotal issue, as evidenced by NASCAR’s decision to make a stand against sports wagering, which is particularly harmful to the middle-class families who follow the sport. According to a study by the American Gaming Association, 22% of all American adults engaged in some form of wagering in the year 2018, with the majority of those (55%) being recreational sports bettors.

MLB Bans Sports Betting

On February 18, 2019, Major League Baseball (MLB) introduced a new policy that will impact the way its players, managers, and coaches can interact with fans. The new policy will prohibit them from participating in sponsored activities that correspond with wagering, including team-related activities such as fantasy sports leagues and contests, betting on games, or sharing in any way their statistics or personal information with a third party. The main reason for this policy is to prevent athletes from being sponsored by legal entities likebookmakers that pay them to appear in advertisements. This type of activity can create the appearance of a conflict of interest and may damage the integrity of the game. MLB is seeking to protect its players by preventing them from being influenced by external factors, including wagering interests, which could affect their performances on the field.

Concerns Over Microtransactions

A relatively new development in online sportsbooks is the inclusion of ‘microtransactions,’ which allow users to make small, periodic payments to betting pools rather than payouts to winning bettors. The inclusion of these microtransactions makes it easier for users to bet on events they are not physically capable of betting on, like horse racing and certain types of football, due to the increasing popularity of esports and mobile sports betting. There is also the potential for microtransactions to create greater financial and competitive uncertainty, as the winning percentage for users dropping fractions of a penny is essentially the same as winning percentages found in traditional sportsbooks. Last but not least, the ease of making quick, anonymous online payments with microtransactions makes child safety a key consideration for all online sportsbooks.

The year 2019 was a pivotal one for sports betting in the United States, as several major events shaped the way we will see the industry develop in the coming years. These events included the NFL suing the league, NASCAR banning betting at its tracks, and MLB limiting the interactions its players can have with fans. However, as states move towards legalizing sports betting, it is clear that the industry has come a long way from its days of being frowned upon as a form of gambling.