BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1390 (Wright) - Gambling: Sports Wagering.
Amended: April 19, 2012 Policy Vote: GO 13-0
Urgency: No Mandate: No
Hearing Date: May 24, 2012 Consultant: Maureen Ortiz
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 1390 establishes a statutory framework for
authorizing sports betting in California at any licensed
gambling establishment, horse racing track, and satellite
wagering facility, as well as authorizes a federally recognized
Indian tribe to conduct sports wagering on professional and
collegiate sports or athletic events.
Fiscal Impact: Total costs in excess of $2 million annually
(General/Special Fund) as follows:
Preliminary estimates by the Department of Justice indicate
the need for 14 PYs (three administrative positions and
eleven enforcement agents) at a cost of approximately $1.7
million in the first year of implementation, and $2.2
million annually thereafter. (Special Fund).
The California Gambling Control Commission has estimated
costs of $92,000 over a two year period to develop
regulations and minor, ongoing costs to process applications
(General Fund).
Estimates by the California Horse Racing Board indicate the
need for a minimum of 2 PYs for promulgating regulations and
processing license applications at an estimated cost of
$130,183 (General Fund).
SB 1390 does not provide for any new license fee revenue to
support the functions noted above. For instance, the Gambling
Control Commission currently licenses gambling establishments
that pay fees to the Gambling Control Fund based on the number
of tables and/or gross revenues. Gross revenue is defined as a
total of all compensation received for conducting any controlled
game. Sports wagering is not a controlled game and
consequently, the Commission does not have a source of funding
to support its administrative functions under this bill.
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Background: Existing federal law, enacted by the Professional
and Amateur Sports Protection Act (PASPA) of 1992, prohibits
sports wagering except in 4 states: Nevada, Oregon, Montana and
Delaware. Specifically, PASPA makes it unlawful for 1) a
governmental entity to sponsor, operate, advertise, promote,
license, or authorize by law or compact, or 2) a person to
sponsor, operate, advertise, or promote, pursuant to the law or
compact of a governmental entity, any wagering or gambling
scheme that is based on competitive games in which amateur or
professional athletes participate.
In 2009, several parties in New Jersey sued the federal
government, seeking to invalidate PASPA on several
constitutional grounds, including violations of the Commerce
Clause, the Equal Protection Clause, and the Tenth Amendment.
However, the U.S. District Court in New Jersey granted the
motion to dismiss filed by the government because the plaintiffs
lacked standing to bring the action. New Jersey lacked
"standing" because the State had not enacted any statute
authorizing sports betting; therefore they could not be harmed
by the statute they sought to overturn.
In response to this ruling, the State of New Jersey enacted
legislation in January 2012 legalizing sports betting in New
Jersey casinos. In addition, on January 23, 2012, Rep. Frank
LoBiondo (D-NJ) introduced H.R. 3797, the "Sports Gaming
Opportunity Act of 2012," which is now pending in the US
Congress. H.R. 3797 amends PASPA to allow all states a new
window of opportunity to approve and establish sports betting
within their borders, which would thereby abolish the federal
ban on sports betting in those states.
The passage of SB 1390 would serve two important purposes in
connection with PASPA. Absent a codified statute, California
would also lack the legal standing to challenge the law in
federal court. Additionally, should Congress re-open a window
of opportunity for states to approve sports betting, this bill
would place the state in a position to take advantage of what
might be a short period of time within which to authorize sports
wagering in California.
Proposed Law: SB 1390 authorizes the owner or operator of a
gambling establishment with a current license issued by the
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California Gambling Control Commission (CGCC) and the owner or
operator of a horse racing track or satellite wagering facility
with a current license issued by the California Horse Racing
Board (CHRB) to conduct wagering on professional and collegiate
sports or athletic events.
SB 1390 also authorizes a federally recognized Indian tribe to
conduct sports wagering on Indian lands consistent with the
requirements of the federal Indian Gaming Regulatory Act of
1988.
The owner or operator of each facility will have to apply to
their respective licensing entity (CGCC or CHRB) for
authorization to conduct sports wagering. The board or
commission must hear and decide promptly all applications to
conduct sports wagering from owners and operators of license
gambling establishments, license horse racing tracks, and
satellite wagering facilities. SB 1390 specifies that an
authorization to conduct sports wagering shall not be
unreasonably withheld for any applicant that is currently
licensed and in good standing.
The CGCC and the CHRB will be required to adopt regulations for
the administration and enforcement of sports wagering and must
consult each other during promulgation. Applications for the
authorization must be made on forms furnished by the board and
the commission. The regulations must provide for the approval
of wagering rules and equipment to ensure fairness to the public
and compliance with state law.
SB 1390 additionally requires provides the Department of Justice
with the following responsibilities:
a) Investigate any request made by the CGCC or CHRB in
connection with an application for authorization, and to
recommend the denial or the limitation, conditions or
restriction of any authorization.
b) Monitor the conduct of all licensed operators and other
persons having a material involvement, directly or
indirectly, with sports wagering.
c) Investigate suspected violations of sports wagering
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rules.
d) Investigate complaints against licensed operators or
other persons associated with a sports wagering operation
by members of the public.
SB 1390 authorizes the CGCC or CHRB to impose fines and
penalties for violations of the sports wagering rules of up to
$20,000 for each separate violation.
Related Legislation: SR 49 (Wright) 2010 urged the President and
Congress to remove the ban on sports wagering by repealing
PASPA, and urged the California Attorney General to take legal
action on behalf of the State of California to challenge
enforcement of PASPA.
Staff Comments: SB 1390 will not become effective until the
federal government repeals the current prohibition on sports
wagering.
Author's Amendments: Proposed amendments provide authorization
for the Department of Justice and the California Horse Racing
Board to charge a fee in an amount sufficient to cover the
administrative costs incurred.