California, Texas, and Florida Unlikely to Legalize Sports Betting

Sports Betting California - Florida Bookmakers - Texas Sportsbooks

One financial analysis firm predicted 32 states would have legal sports betting by the year 2025. Texas, California, and Florida are likely to be among the other 18 states.

The Associated Press recently did a survey of all 50 U.S. states to see the likelihood they would legalize sports betting in the near future. One of the big takeaways was the three most potentially lucrative states — California, Texas, and Florida — were unlikely to embrace legal sports betting anytime soon.

The three states have a vital connection to American sports. 27% of the major sports franchises in the United States are located in the three states. The three of them represent a huge block of sports fans.

Some of the most successful sports franchises are located in those three states. Over the past three years, over 50% of the championship games or final series in the Big 4 sports had a team from California, Texas, or Florida. All ten NBA Finals series had a team from one of the states (Warriors, Spurs, Heat).

Thus, it would be a huge boon if one or more of those states legalized, regulated, and taxed sports betting. Devoted gamblers and handicappers would make wagers, but so would casual sports fans who do not otherwise gamble on anything other than the lottery. The mass market in those states is bigger, and they would represent a vast untapped demographic.

AGA on California, Texas, Florida Sports Betting

Sara Slane, a spokeswoman for the American Gaming Association, said California, Texas, and Florida would make a huge impact on sports betting in America. To emphasize her point, Slane said, “These states are the brass rings given the size of the populations and the potential opportunity.”

That is not likely to happen. Though the three states are much different politically, each has major obstacles to legalized sports betting. The reasons for each vary.

Florida Sports Betting Unlikely

In Florida and California, Native American tribes dominate the gambling industry. While commercial gaming interests exist in both states, they play at the margins compared to tribes like the Seminoles in Florida and the Pechanga, Agua Caliente, and Morongo tribes in California.

In both states, legalizing sports betting would require reopening gaming compacts with the state. That would be a huge roll of the dice, began high-level negotiations would be required. The tribes might have to share the sports betting market with card rooms or race tracks.

If that happened, competitors would have more cash to fight other battles over gaming. The Seminoles’ large-scale gaming monopoly in Florida is not worth risking for the sake of sports betting, which has low margins.

California Sports Betting Bill?

California’s huge casino industry and liberal government might suggest it would embrace sports betting, but the size of the California tribal casino industry makes it more complicated. Tribes might compete amongst themselves for dominance, like they did during the long and fruitless debate over online poker.

Chris Grove of the respected Eilers and Krejcik gaming analysis firm said, “The dynamic at work here is the larger the state, the larger the market, the larger the opportunity — the more complex the stakeholder environment and the more political stasis sets in.”

Thunder Valley Casino Resort

That is not to say it is impossible that California might legalize sports betting. Some tribes have hedged their bets. Howard Dickstein, a lawyer for the United Auburn Indian Community, arranged a sports betting partnership between Sacramento’s Thunder Valley Casino Resort and a joint venture between MGM Resorts and GVC Holdings. If ever sports betting is legalized in California, then MGM Resorts/GVC Holdings will operate the sportsbook at Thunder Valley Casino Resort.

Still, the tribes do not want that happening anytime soon. Mr. Dickstein said, “The tribe is not a strong advocate of legalizing sports betting under any circumstance. The agreement with MGM is an insurance policy to become allied with a leader if and when it becomes legal in California.”

Steve Stallings of the California Nations Indian Gaming Association put the case succinctly, stating, “We feel like protecting the industry in California is more important.”

Out-of-State Casino Interests in Texas

Gaming interests are flush with cash to fund lobbying efforts to defeat any gaming initiative they do not want, which is one similiarity the Golden State and Sunshine State have with Texas. The only difference is the gaming interests who lobby the legislature in Texas are out-of-state entities.

In Texas, social conservatives have major influence on draft legislation involving “vices” like gambling. So do out-of-state casino operators in Oklahoma and Louisiana. For decades, casinos in the Shreveport-Bossier City area have depended on traffic from the Dallas-Fort Worth (DFW) Metroplex. Lake Charles casinos depended on traffic from Houston.

More recently, the WinStar World Casino in Thackerville, Oklahoma and the Choctaw Casino in Durant, Oklahoma have relied on customers from DFW. The WinStar Casino is, by sheer volume of gaming space, the largest casino in the world. A vast proportion of its revenue comes from Dallas gamblers.

Texas Voted Down Fantasy Sports

Whenever the Texas state legislature considers any kind of gambling, those many out-of-state casino interests hire a bevy of lobbyists to keep gambling out of Texas. Ironically, they are joined by social conservatives; if they cannot stop gambling entirely, they want to push it out of the state.

For proponets of gambling expansion, it is a deadly combination. In 2017, a bill to legalize traditional fantasy sports — not daily fantasy sports, but the traditional kind — was voted down by the Texas legislature. If local fantasy football leagues are deemed as things to be banned, sports betting has zero chance of being legalized.

From one who has covered gaming law in California, Texas, and Florida for many years, it is easy to see why the AP decided those three stated will not legalize sports betting in the near future. That leaves 73% of the potential sports bettors in the United States, but leaves gaping holes in the strategic maps for sportsbooks and live gaming app companies.