As states like Pennsylvania and New Jersey celebrate yet more record-setting iGaming in taxes and revenue, California continues to watch from the sidelines. That vacuum is being filled with offshore operators, providing a glimpse of what could become for Californians with such offerings of cryptocurrency options and fair games with a proven track record. Meanwhile, the state government is bleeding out potential dollars in taxes that could fund state-sanctioned programs and services.

California’s Missed Opportunity

While some East Coast states reap the reward of their progressive legislation, California continues to resist iGaming with tenacity. The state’s tribal gaming establishment has long controlled gambling legislation, and its most recent forays at legalizing iGaming have floundered and failed. The tribes’ most current statement that they will not even attempt to have legal gambling placed on a 2028 ballot effectively stalled any chance for reform.

In the absence of local options, Californians have started accessing gambling for real-money bets through offshore platforms. Modern iGaming sites like Megadice give us a glimpse of what a regulated marketplace could look like in terms of payment in cryptocurrencies, provably fair gaming, and a full suite of casino games and sportsbooks. Accessed from the comfort of the individual’s own space, these platforms provide the ultimate gambling convenience.

The Cost of Inaction 

This is costing California dearly. With estimates by industry experts, a fully realized iGaming market in California could bring in a revenue of $3 billion to $4 billion annually. Using Pennsylvania’s tax earnings as a benchmark, this could translate to over $1 billion in yearly tax revenue for California—money that’s currently slipping through the state’s fingers.

By the most conservative of estimates, were California to go ahead and adopt iGaming, along with a tax rate similar to that of Pennsylvania, the annual tax revenues generated could reach as high as $1 billion per year. Money that could help solve some very serious problems now facing California such as:

• Homelessness: With over 170,000 homeless individuals, California could use iGaming revenue to fund housing initiatives and support services.
• Education: The state’s public education system, which often faces budget shortfalls, could receive a significant boost.
• Infrastructure: California’s aging roads, bridges, and public transportation systems could benefit from this new revenue stream.

The iGaming industry doesn’t just generate tax revenue; it creates jobs. A regulated iGaming market in California might just equate to thousands of new jobs-from software developers to customer service representatives, to marketing and compliance professionals.

Furthermore, by shoehorning interested Californians to offshore platforms, the state abdicates its responsibility for consumer protection. A regulated market would mean fair play, responsible gambling measures, and legal recourse for players, which can sometimes be lacking in offshore operations.

The Tribal Conundrum

Amongst the biggest obstacles in the way of the legalization of iGaming in the Golden State has been California’s omnipotent tribal interests in gaming. Long holding exclusivity toward casino-style gaming, it is logical they wouldn’t favor any legislative effort that possibly erodes those franchise advantages they now have locked down.

But the success of iGaming in other states has proven that online can exist and even complement land-based casinos. In New Jersey, for example, online gaming has helped drive traffic to physical casinos, creating a symbiotic relationship between the two sectors.

The California tribes could seize the day and follow the lead of Florida’s Seminole Tribe in iGaming, securing a stranglehold online, in the aftermath of the Supreme Court’s decision in West Flagler Associates v. Haaland, which maintained the Seminole Tribe’s monopoly over online betting in Florida.

In welcoming iGaming, tribes might expand their sources of revenue and lock down a position in the gambling landscape for years to come.

Legislative Hurdles

The legislative path toward legalizing iGaming in California is tortuous. Any gaming expansion in California requires a constitutional amendment- which means voters have to approve. The ill-fated sports betting initiatives of 2022 showed just how difficult it is to navigate through California’s complex political world.

However, considering the continuous success of iGaming within other states, the state might be forced to reconsider this soon. Other states have legalized online gambling and taken their cut; this means the pressure on California to finally join the party will only get bigger.

The result of the 2024 presidential election could have implications for the future of iGaming in California, too. A change in federal policy on tribal gaming at the federal level by the Donald Trump administration could quicken the pace of state negotiations.

The Innovation Gap

Beyond the obvious lost revenue, California’s unwillingness to accept iGaming has the potential to create an innovation gap. States that have adopted online gaming are now developing as hubs for technology companies providing gaming software, payment processing, and responsible gambling tools. California, despite being a powerhouse for technology, is not a part of this emerging industry.

This gap in innovation extends to the player experience, too. From virtual reality casinos to AI-powered responsible gambling features, Californians are denied access to the latest advancements in online gaming technology. While other states forge ahead, California risks falling behind in an industry that’s rapidly changing.

The longer that California waits for the legalization of iGaming, the farther behind it will be when it finally decides to enter the market. This could put the state at a distinct disadvantage in terms of both industry expertise and market share.

What Alternatives Are There for California Residents?

While California continues to reject online gambling legalization, social casinos are one of the more popular and legally accepted casino-style gaming options available to residents. These websites represent a much different style of gaming when compared to traditional online casinos- and for some players might just be that first step towards offshore gambling.

Social casinos work based on a freemium model, enabling players to play similar games to casinos without wagering real money. How social casinos work is actually based on their core usage of virtual currency instead of real cash. Players are given free virtual currency through welcome bonuses, daily logins, and other forms of promotion. 

While free to play, users can opt to purchase additional virtual currency through in-app purchases. Most of these platforms have a social side with leaderboards, friend challenges, and even options to chat; thus, enhancing interactivity.