BILL ANALYSIS �
SB 1390
Page 1
Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1390 (Wright) - As Amended: July 3, 2012
Policy Committee: Governmental
Organization Vote: 13 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill establishes a statutory framework for authorizing
sports betting in California at any licensed gambling
establishment, horse racing track, and satellite wagering
facility, and authorizes a federally recognized Indian tribe to
conduct sports wagering. The proposed framework is contingent on
a federal law change. Specifically, this bill:
1)Requires an owner or operator of a gambling establishment
seeking to conduct sports wagering to apply to the California
Gambling Control Commission (CGCC) for authorization to
conduct sports wagering.
2)Requires an owner or operator of a horse racing track or
satellite wagering facility seeking to conduct sports wagering
to apply to the California Horse Racing Board (CHRB) for
authorization to conduct sports wagering.
3)Provides that a federally recognized Indian tribe may conduct
sports wagering on Indian lands consistent with the
requirements of the federal Indian Gaming Regulatory Act of
1998 (IGRA).
4)Requires CHRB and CGCC to adopt regulations for the
administration pursuant to this bill. Requires CHRB and CGCC
to consult with each other, in the adoption of regulations,
and allows CHRB and CGCC to adopt joint regulations.
5)Allows CHRB and CGCC to establish fees in a reasonable amount
necessary to recover costs incurred relating to the
administration of sports wagering pursuant to this bill.
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6) Requires DOJ to be responsible for the enforcement of sports
wagering activities conducted at a gambling establishment.
7)Allows the DOJ to establish fees in a reasonable amount
necessary to recover costs incurred by the department relating
to the enforcement of this bill in connection with gambling
establishments.
8)Requires CHRB to be responsible for the enforcement of sports
wagering activities conducted at a horse racing track or a
satellite wagering facilities.
FISCAL EFFECT
1)DOJ estimates a 20% or more increase in the number of gambling
establishments it oversees, both brick and mortar facilities
and on-line. Annual oversight costs would likely be between $7
and $8 million GF per year, partially offset by licensing fee
revenue.
2)Costs for CHRB to oversee and administer sports wagering at
horse racing venues would be approximately $200,000 per year.
If licensing fees do not adequately cover the cost, funding
would likely need to come from the GF.
3)On-going costs of approximately $60,000 GF per year for GCC to
process applications to conduct sports wagering and determine
whether or not applicants are in good standing. Those costs
may be partially offset by application fee revenue.
4)DOJ estimates that within five years of authorization, $4 to
$5 billion a year will be wagered on sports. The language in
the bill, however, does not allow the state to capture any of
that revenue outside of the state's regular tax structure.
Therefore, the state would likely not see a significant
increase in state revenue as a direct result of the increased
wagering activity. In fact, to the extent individuals shift
their discretionary spending from taxable goods to sports
wagering, it could result in a loss of revenue to the state.
COMMENTS
1)Purpose . In the event that the federal Professional and
Amateur Sports Protection Act (PASPA) is amended to allow
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California to offer sports wagering, this bill would authorize
the owner or operator of a gambling establishment, tribal
casino, horse racing track, or horse racing association with a
current license to conduct wagering on most sports events or
athletic events.
2)Background . Existing federal law, enacted by the Professional
and Amateur Sports Protection Act (PASPA) of 1992, prohibits
sports wagering except in four states: Nevada, Oregon,
Montana and Delaware. Specifically, PASPA makes it a)
unlawful for a governmental entity to sponsor, operate,
advertise, promote, license, or authorize sports wagering by
law or compact; or b) unlawful for a person to sponsor,
operate, advertise, or promote, pursuant to the law or compact
of a governmental entity, any wagering or gambling scheme
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, 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 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
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short period of time within which to authorize sports wagering
in California.
3)Supporters of the bill claim that successful passage could
have a positive impact on the future of horse racing and help
address the underground sports economy. Supporters further
state that the enactment of SB 1390 would authorize the state
to offer sports wagering in advance of the possible new
federal window, which would guarantee California will not miss
the opportunity to take advantage of the revenues and
employment associated with the economic benefits that will
occur with the successful passage of this legislation.
4)Opponents of the bill claim SB 1390 violates both federal and
state law. The California Police Chiefs Association states
that, "gambling on sports events is unwise public policy and
that even though there are some states in the country that
have federal permission to conduct sports gambling activities,
California does not appear to be one of them."
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081