In summary

California is in a unique position to make the sports betting industry fairer, safer and more reliable for bettors.

By Quemars Ahmed, Special to CalMatters

Quemars Ahmed is a former editor-in-chief of the UCLA Law Review and a practicing attorney. He loves throwing his money away on side bets at the blackjack table.

California, famous for being an innovator, is late to adopt sports betting. Even if sports betting is legalized in November due to a pair of ballot initiatives, the state would be 37th to join the party. Thanks to its size and to the strange nature of the dueling initiatives, however, California is in a unique position to make the sports betting industry fairer, safer and more reliable for bettors.

The ad war already has begun, with record amounts of money being spent on the Propositions 26 and 27 campaigns. The arguments for and against legalization have touched on issues ranging from tribal sovereignty to homelessness to gambling addiction. Missing, however, is the concern for the bettors.

While legalizing activities such as the sale of marijuana can be adapted to a pre-existing regulatory regime, the marketplace of sports betting has no such analog. To accept importation of the sports betting industry as it exists in other states is to accept a marketplace that is unfair to the consumer.

In the past two years, there has been an explosion in the number of states legalizing sports betting and corporations offering bets. This has sparked competition and innovation in an industry that had been mostly stagnant in the United States for decades.

This boom has not been without its downsides. Ambiguous situations that occur because of digital technology or circumstances that arise from new kinds of bets have been resolved by the sportsbooks because regulators were too uncertain or too slow to act. 

Take, for example, same-game parlays. Once relegated to the realm of fiction (they provide much of the anxiety in the movie “Uncut Gems”), they are now offered by almost every online sportsbook and are popular because of their potentially high payouts. The fine print in most sportsbooks is different from what has been practiced for decades with traditional parlays. Instead of recalculating the parlay if one of the legs is void, sportsbooks will void the entire parlay. DraftKings goes so far as to only void the parlay if none of the remaining legs loses, collecting the bettor’s money otherwise.

On Jan. 9, the  Warriors tweeted nine minutes before their game that night that Draymond Green would not play — but would start on the courtto honor the return of teammate Klay Thompson from serious injury. Between the tweet and when betting was closed, players bet using same-game parlays with as inflated odds as they could make, leaving the sportsbooks liable for millions of dollars. DraftKings took two days to decide to pay out winning bets.

In other situations, consumers are limited to how much they are allowed to bet, the price they can lay a bet for, and when they can place a bet — but they aren’t told that until they attempt to place their bets.

In no other industry is this allowed to take place. 

There are no hidden limitations on the amount one might spend at Target. It would be illegal for a company to list a price of an item on the shelf and then charge a different amount at checkout. Even walking through a casino, minimum and maximum bets are publicly displayed at every table, and there are established rules for misdeals or malfunctions. 

Sports bettors need more transparency, defined rules and an accessible oversight regime. Without a bettors lobby in Sacramento to counter the gaming interests, change is unlikely. A gaming entity or state official, however, could take advantage of the vacuum in the current political messaging to affect consumer-friendly reform in California and elsewhere.

What better way for tribal casinos to distinguish themselves as the best option for bettors? Or for Draftkings and Fanduel to assuage fears of being out-of–state corporations coming in to take advantage of Californians? 

Regulators have more leverage now to apply pressure on gaming entities to exact pledges for fair practices than they would after any proposition has been approved by voters.

The winning bet for these propositions might lie in the hands of their future clients.

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