Why Is Online Gambling Still Illegal In California?

Published in cooperation between CryptoNews.com and the East Bay Express

30 states now allow legal online sports betting, although only six permit online casino gambling. Despite calls from some groups to legalize online betting in the Golden State, California does not regulate any form of online gambling other than state lotteries. Physical card rooms, race tracks, and tribal casinos are permitted, so gamblers do have some venues to play at. But fans cannot bet on the 49ers, the Giants, or any other Californian teams at retail sports betting venues. Neither can they place online wagers at state-licensed websites.  

No KYC online casino sites are popular because they are based offshore and do not necessitate confirmation of Know Your Customer (KYC) details on registration. These casinos allow Californian players to still enjoy online casinos and sports betting, according to casino reviews writer Nick Pappas, without having to go through a verification process.

Casino gamblers who do want to bet on traditional table games can visit one of the more than 75 tribal casinos, operated by more than 70 different tribes. These do not fall under the same Californian state regulations because they are on tribal land and tribal land is considered sovereign.

Tribes can, effectively, make their own rules when it comes to gambling. California tribal casinos have estimated revenue of around $10 billion, some of which is used to fund education, employment, and infrastructure on tribal land, and some of which goes to designated charities.

The California state lottery is considered a legal form of gambling, with proceeds from the lottery being used to improve state infrastructure and schemes. Tickets, however, cannot be bought online and must be purchased through regulated licensed retail outlets.

Similarly, tickets cannot be purchased over the phone, by email, or via resellers, which means options are severely limited for would-be players. The lottery does provide various games including regular draws and scratchers. The state lottery started in 1984 and funds raised from it go towards paying for the education system in the state.

An odd quirk of the California gambling laws is that card rooms, which can include gambling, are legal, as long as they are licensed and properly operated. There is ongoing debate about what games should and should not be permitted in these card rooms.

On the one hand, many of the establishments are known to offer games like blackjack, which require a house. Tribal casino owners argue that these should not be permitted and that they are breaking state gambling laws, which only strictly allow for live games where there is no house.

Currently, there are more than 70 legally recognized card rooms in the state, and in 2023, Gov. Gavin Newsom signed a bill that would prevent any new card rooms from being opened until at least 2043. The bill does allow for small, existing card rooms to further expand during this time, however.

Betting on horse racing is permitted, and punters can bet either at the track or at satellite facilities. Such facilities can be found in some bars and other physical locations, however, online betting is still not regulated in the state. Similar betting opportunities also exist for mule racing as well as some forms of martial arts and boxing matches.

In 2022, there were attempts to legalize some additional forms of gambling. Propositions 26 and 27 aimed to make it legal for gamblers to partake in sports betting in-person at tribal casinos and online at licensed platforms.

Ultimately, however, the moves were rejected and neither proposition made it to ballots. A similar idea was mooted this year, but a dispute between tribal casino betting powers and those who were lobbying for the changes meant this move ultimately failed, too. The California Nations Indian Gaming Association said of the failed move that it was a cynical move to legalize online sports betting and iGaming.

It is likely that gaming companies will be back with another attempt at changing Californian gambling laws in the future. The move has some backing from Californians themselves, albeit only moderate support. One poll suggests that 45 percent of people would vote to legalize sports betting with 33 percent of voters saying they would oppose the move. The numbers for online casinos are likely to be even closer.

The greatest opposition to online gambling laws comes from tribal casinos. They are worried that the legalization of sports betting and online gambling would erode their gambling market share, and the proceeds from tribal casinos are important to tribal governments and the tribes themselves. Without considerable support from residents, or favorable allowances in any proposals, it is unlikely that the move will get up enough steam to overturn this sentiment.

Gaming companies, on the other hand, support the move. In the most recent attempts to change state gambling laws, they did attempt to appease tribal gaming groups by conceding that sports betting companies must partner with tribal casinos and that a portion of revenue is paid to them.

The state might back the moves, having seen the tax revenue raised by other states that have legalized different forms of gambling. One report estimates that gambling legalizing online gambling would generate revenue of around $250 million a year while other reports put the figure closer to or even above the $1 billion mark.

Analysts also point to the creation of jobs that the move would bring. New Jersey and Michigan’s online gambling markets generate nearly $2 billion a year in revenue, each.

In some respects, California has some of the strictest and most prohibitive gambling laws in the country. State lotteries, betting on horse racing, and tribal casinos are legal. However, general sports betting and online gambling are not regulated.

Keen players continue to use offshore and anonymous casinos to place bets, and while there have been some attempts to change the laws, there have not been any positive developments in the past couple of years.