Opinion

Opinion: Lack of online options holds California back in Wedge Index rating

A legislative effort by a coalition of 18 Native American tribes to regulate land-based sports-betting in California would go some way towards pushing the Golden State further up the Wedge Index.

However, a lack of online and mobile betting and gaming options will continue to hold the state back.

The state with the biggest economy and most citizens in the US, California would represent a huge market for the US online gaming industry, but so far all attempts to regulate have failed largely due to opposition between the many stakeholders interested in the sector.

California sits at number 19 in the Wedge Index ratings with a total of 8 points with land-based casinos, online horse racing and the availability of lottery contributing to its total.

Seeking signatories

Native American tribes are currently trying to get enough signatories so that the California Sports Wagering Regulation and Unlawful Gambling Enforcement Act can get onto the 2022 state ballot and introduced into the legislature.

However, the Act would only regulate offline in-person sports betting and when considering the wave of regulation that has occurred across many states since the repeal of PASPA in 2018, California’s reluctance to support broad-ranging regulation is difficult to understand.

And despite social-distancing rules and reduced footfall likely to continue, the California Native Indian Gaming Association (CNIGA) recently told CDC Gaming: “COVID hasn’t affected our position on sports wagering. We remain dedicated to protecting the inherent sovereign rights of tribes. Tribal governments remain committed to protecting their brick-and-mortar facilities, CNIGA opposes any effort to expand gaming beyond brick-and-mortar facilities.”

Online channels would be optimal for addressing COVID limitations across tribal casinos and would provide licensing fees and revenues from skins and sub-licenses. CNIGA is aware of the potential revenues that could be generated by online betting and gaming in the state but says it doesn’t want to take the risk of seeing problem gambling rise exponentially as a result, although it doesn’t back up those calls with any data.

“Tribes could easily profit from a state-wide online sports wagering market, but we believe it is at too high a societal cost,” said CNIGA. “Good public policy and maintaining the support of voters is far more important than making a few extra dollars. Problem gambling proliferation, underage gambling, and threats to established brick and mortar facilities are deep concerns for us and the voters that must not be taken lightly.”

Revenue potential

But as the American Gaming Association (AGA) has shown, revenues across regulated states totalled nearly $778m from January to July 2020, a rise of nearly 200% on the same period in 2019 and sportsbooks in regulated states reached $394m in revenues during the same period, up 19% on 2019. That was despite retail sportsbooks being largely closed from March to June.

Data consultancy H2 Gambling Capital has also forecast that in its first full year of operation a regulated market in California would generate $1.4bn and would reach $2bn within six years, by which point it would account for nearly 21% of the total US sports betting market nationally.

Such figures show the potential of a properly regulated online gaming industry in the Golden State. In addition, a lack of legal online portals on which to play does not stop gamblers accessing unregulated offshore sportsbooks. 

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Jake Pollard

Jake Pollard is an experienced journalist and editor who has covered the online gaming and betting industry for many years. He has written for the leading media outlets as well as operators and suppliers in the igaming space. His current areas of focus are wide-ranging and include regulatory developments in the US, emerging markets in South America and how European countries are adapting to a decade of igaming regulation.

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