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Bring Sports Betting Out of the Shadows

Back Commentary Sep 10, 2018 By Russell Lowery

In the world of California public policy, it’s hard to imagine missing an opportunity that could protect consumers, turn the tap off illegal operations and generate new tax revenues.

But that’s what just happened with sports betting in the state. With the decision by the U.S. Supreme Court in May to overturn the Professional and Amateur Sports Protection Act of 1992, states are now allowed to legalize — and regulate — the estimated $400 billion in illegal sports wagers that Americans make every year. The California Legislature, however, missed the June 28 deadline that would have put the legalization of sports betting on the November 2018 ballot, for voters to decide.

The Supreme Court decision gave states the opportunity to provide safe, legal and regulated environments for sports fans to enjoy sports betting. The decision also gave states the opportunity to generate meaningful tax revenue and address the black market. New Jersey, Rhode Island, Pennsylvania and West Virginia immediately took advantage, moving quickly to pass legislation on sports betting. At least a dozen other states have drafted and introduced similar bills.

Taking sports betting out of the shadows will ensure that Californians have a safe environment to enjoy sports wagering. It will provide data and techniques to track suspicious betting patterns. And it will generate revenue for our state’s infrastructure and schools.

In California, our legislature punted. Legislators were not able to reach a compromise on the issue — as tribes, card rooms, race tracks and online gaming interests have been unable to find an acceptable comprehensive gaming regulatory package.

As a result, California continues to have an underground sports betting market, which lines the pockets of black market operators and provides no protection for players (for example, no guarantees that bookies pay); no accountability for problem gambling; and no safeguards for sports integrity. We need to legalize sports betting and develop a smart, efficient regulatory system. Taking sports betting out of the shadows will ensure that Californians have a safe environment to enjoy sports wagering. It will provide data and techniques to track suspicious betting patterns. And it will generate revenue for our state’s infrastructure and schools.

A 2017 study by Oxford Economics examined the economic impact of legalized sports betting, and projected a $1.2 billion increase in gross domestic product in California. That growth would come with an estimated 9,080 jobs and $497 million in annual wages. The study also found significant tax benefits. With a possible $704 million in annual tax impact, safe and legal sports betting in California can be a win-win for all involved.

California shouldn’t cede the benefits of sports betting to other states. In New Jersey, the first two weeks of legalized sports betting — with only three licensees ready to take wagers — generated more than $16 million in sports bets.

Public opinion about sports betting has changed in recent years. In 1992, when federal law banned sports betting in most of the U.S., a majority of Americans were against legalization, according to polls conducted at that time. There was a concern that sports betting hurts the games we love. The intervening years have proven that sports betting is going to occur with or without legalization. The sports leagues support legal betting because they know that transparency is the best way to prevent bribery and match-fixing.

California has a long and successful history of regulating gaming entertainment to ensure it supports jobs, local economies and state revenues — all while promoting responsible gaming, preventing underage gambling and giving law enforcement agencies tools to monitor illegal activities. We can do the same for sports betting.

As states proceed with legalization, there are important policy questions to address, and California legislators and regulators need to be ready to answer them: How do we best protect against match-fixing? What data and resources do we need to protect game integrity? What resources do we need to help individual problem gamblers? How do we ensure that law enforcement is adequately equipped to address any local challenges? There should be a vigorous debate about these questions.

We can always expect special interests to get involved but the overriding question should be: What is best for Californians? Should we limit sports betting to existing licensed gaming facilities? Should we open the doors to online gaming interests? Which sports should be included? What rate of taxation will ensure Californians have thriving and competitive sports book offers? These conversations need to occur in an open, transparent public process that is only possible with legalization.

Frankly, a lot of Californians may never bet on sports. But if someone wants to place a bet on the outcome of a soccer match, most people in this state feel it is an acceptable form of gaming entertainment, according to a statewide poll conducted by my organization, Californians for Sports Betting. The Supreme Court has ruled and it’s time for California to step up. We need to bring sports betting into the light and ensure there is a legal, regulated and safe environment for sports betting. Our legislators missed out on the chance to let voters make a decision in November 2018. We don’t need to wait for the Legislature to act. We have the initiative process that allows us to bring the question directly to the voters. Sports betting is an exciting opportunity. We can’t afford to miss out on it again.

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