California Reintroduces Bill to Legalize Sports Betting

by Snell & Wilmer
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For the second year in a row, the California State Legislature will consider Senate Bill 190 to legalize sports betting within the state.

Last year’s Senate Bill 1390 passed in the California State Senate, but stalled in the Assembly Appropriations Committee. The new bill is almost identical to last year’s Senate Bill 1390.

The proposed legislation will add Chapter 4.7 to the Business and Professions Code to enable licensed gambling establishments, horse racing tracks and federally recognized Indian tribes to accept wagers on almost all sporting events. SB 190 will prohibit betting on collegiate athletic events in California or collegiate athletic events that involve academic institutions based in California.

Unlike last year’s bill, however, Senate Bill 190 will require any licensed operator to pay a 7.5 percent tax on its gross revenues attributable to its sports book.

The eventual passage of this bill does not mean that Californians will be able to place bets on their favorite professional sports teams any time soon. Senate Bill 190 faces some unique and serious federal and state law obstacles. Mainly, federal law, the Professional and Amateur Sports Protection Act of 1992 (PASPA), makes it illegal to sponsor, operate, advertise, promote, license or authorize wagering or gambling on competitive sporting events. The constitutionality of PASPA is a central issue in a pending federal district court case between New Jersey and the NFL, NBA, MLB and NCAA.

On the state level, the bill may face constitutional challenges. For instance, last year, the California Nations Indian Gaming Association alleged that sports betting violates Article 4, Section 19(e) of the constitution. That section prohibits “casinos of the type currently operating in Nevada and New Jersey.” The author of the bill argued that since New Jersey did not offer legalized sports betting at the time this section was added, Senate Bill 190 may survive this constitutional challenge. In any event, there are other legal problems the bill may face including California’s Tribal-state gaming compacts.

SB 190 is the latest attempt by California’s lawmakers to infuse much-needed revenues to the state’s treasury.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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