As the Legislature reconvenes this week, one of the first issues to be addressed will be potential licensing and regulatory oversight to officially legalize the daily fantasy sports betting industry in California.
But the Legislature’s authority to legalize any form of gambling is limited by the state constitution, which is clear that voters should decide this issue before legislators consider any bills.
In the last year, daily fantasy sports betting has become a multibillion-dollar form of gambling with more than 5 million bettors across the United States. At the start of the football season, companies such as FanDuel and DraftKings were spending more on advertising than any other company in the country. Those ads promised bettors that anyone can “win real cash prizes” and turn a few dollars into millions.
While this form of gambling is very popular, it is nonetheless illegal in California. The attorneys general of Nevada, New York and Illinois also have determined the betting games to be illegal gambling.
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This is because daily fantasy sports betting is very different from the traditional friendly wagers between co-workers, friends and relatives. What started out as a social competition of season-long fantasy leagues has evolved into a highly sophisticated and automated form of daily betting on individual performances of professional and amateur athletes.
To better understand why this is illegal, we have to consider how California has regulated gambling for 165 years. Our gambling history goes back to the Gold Rush, when San Francisco replaced New Orleans as the nation’s gambling mecca.
Card rooms existed even prior to statehood in 1850. Today, they are tightly regulated. Betting on horse races, gambling at tribal casinos and playing the lottery were all authorized much later when California voters approved constitutional amendments – 1933 for horse racing, 1984 for the lottery and in 2000 for tribal casinos.
State law provides for strict regulatory oversight, background checks for employees, support services for problem gamblers, a process for resolving disputes and much more. California’s gambling industry continues to thrive under this regulatory structure with nearly 160 casinos and card rooms, six horse racing tracks, almost 30 off-track betting facilities and more than 21,000 lottery retail locations.
When voters approved other forms of gambling, proponents argued that there was a clear benefit to communities and our economy. Daily fantasy sports betting companies, which are primarily located out of state, also would have to convince voters why their form of betting is good for California.
Even if voters approved daily fantasy sports betting and the Legislature passes regulations, it is arguable whether this form of gambling is allowed under federal law that specifically prohibits sports betting.
Nonetheless, FanDuel and DraftKings ignore the law and continue to operate in states including California. They seem to believe that if they keep loudly declaring “we are legal,” this proclamation will make it so.
Thankfully, our laws don’t work that way. They are written for everyone, not just the loudest voices.
Marc Levine, a Marin County Democrat, represents the 10th Assembly District. He can be contacted at Assemblymember.Levine@assembly.ca.gov.