Many US States are reaping the benefits of taxable online gambling revenue. Yet California remains defiantly against it. We discuss why in the article below.
California is one of the many states that still do not allow online casinos or sportsbooks. It has some of the strictest rules regarding gambling in the US. This is one of the few states where you can still not even buy a lottery ticket. As one of the wealthiest and most populous states in the whole of the US, this could be an extremely lucrative market for operators. So why is there so little to show that this will change in the future?
The Interested Parties in California
One of the reasons California has remained steadfast on the concept of online gambling is its situation. There are many unique factors and groups that each have different interests.
At the head of this are the tribes. Tribal compacts are agreements between the native tribes of the US and the state. This allows them to operate casinos on their reservations. Thus, these are huge money makers and anything that threatens this is something they are against.
Another factor is that, should online casinos arrive, they will bring with them a high level of competition from outside the state. This has been shown in how well the tribes have managed to keep major commercial companies out of the state so far. Any move to online gambling would have to come from within the tribal casino operators themselves.
To make matters more complex, California also has places known as card rooms. Under its laws, they are allowed to operate gambling games where players are against each other, such as poker. They do not have slot machines or any sort of banked games. Tribal casinos have been against them for some time. Card rooms are also against bringing in outside forces through online play.
Thirdly, there are the racetracks. These are places where you can legally place a sports bet. However, this is only in horse racing. This provides three different sections of California, which do not even include the state itself, that all want a say and have different attitudes towards online gambling.
The Rise of Offshore and Sweepstakes Casinos
The result of this is that many people play their gaming offshore. In the age of the internet, this is easier than ever. Most of these operators are registered in Costa Rica or Curacao. While there is no exact figure on how many residents use offshore sportsbooks, a recent study found that 33.9% of Americans have an account with them. While some of them are good, there are also inherent dangers and major problems with this.
Firstly, these casinos can operate however they wish. The best ones will follow licensing set out by the Curacao Gaming Board or the Malta Gaming Authority. Yet they can do whatever they wish and this may include unfair practices, a lack of transparency, or even make paying out tough.
Another option is that they simply go over the state borders to do their gambling. In total, 39 states have now legalized online sports betting. Outside of California, this has provided a thriving US online ecosystem of top providers who use fairness and transparency in their operations. With their provision of casino bonuses to attract new customers, they are a service many Americans have come to rely on.
Both of these options present one more problem, in that this is a lot of taxable revenue lost to the state. While exact figures lost to offshore sportsbooks are hard to get, you only need to put into context how much is spent. States that legalize sports betting are making around $1.8 billion in tax revenue each year.
In the state of Michigan, $451.4 million was paid in iGaming tax revenue alone last year. Much of this went to causes such as schools, emergency services, and other charities. Added to the potential to create jobs that the industry could generate, the amount the state is losing out on starts to stack up.
Another result has been the proliferation of sweepstakes casinos. These websites operate using a legal loophole and work under the law governing lotteries and prize giveaways. They offer casino games, which are very much like you would get in an online casino. Yet they can be played for free, allowing people to win digital coins. These can then later be cashed in for prizes.
Attempted Changes to California Gambling Laws So Far
In 2017 Reggie Jones-Sawyer attempted to bring in the Internet Poker Consumer Protection Act. In many ways, this was slightly ahead of its time in the US and attempted to create a framework for online poker operators. It would have seen them pay a 15% tax. To be registered, they would have to pay a $12.5 million initial fee to be licensed and registered.
The road began way back in 2018. The US Supreme Court overturned the Professional and Amateur Sports Protection Act. This meant that states were now free to create their own rules about gambling. It included both physical premises, such as bookmakers and casinos, and their online counterparts. However, this led to a huge fragmentation in the gambling markets. From state to state, rules became complex and convoluted, with each one applying its own laws.
In 2019, a bill was passed in California to legalize online gambling, though this did not come to fruition. The tribes then launched their own bid to allow sports betting at their casinos. A further bill was put forward to pursue legalization without the involvement of the tribes, though this did not get past the Senate.
The closest California came was in the years 2021 and 2022. A California iGaming bill was passed in the former year and held in the latter. However, the residents of the state voted against it. This put to bed the possibility of online sports betting and online casinos. This year, the California Nations Indian Gaming Association has said they will not pursue any online sports betting in 2026, meaning the timeline for possible changes is a long way off, if it ever comes at all.
The Debate Rages On
Sports betting is still being debated in California. However, online casino conversations are nearly absent, showing a disconnect in the legislative approach. With so much information absent, it may be time for a robust, thorough look into the statistics involved.
California is in a very unique position when it comes to online gambling. With unique laws and several parties involved, it seems a consensus is hard to reach. It will take a huge political shift, and possibly economic pressures, to swing the pendulum in favor of online gambling. Yet it is the people of California who will have the final say and when asked before, they voted against this. It seems, for now, California will remain one state where online gambling remains prohibited.
