Published in cooperation between BetMGM Money Casino and the Salinas Valley Tribune
As one of California’s most significant economic contributors, the casino industry generates billions annually and supports hundreds of thousands of jobs. Yet, the question remains: Will the industry’s revenue continue its upward trend? Multiple factors, including technological advancements and potential legislative changes, will shape the industry’s future in California.
The Growing Casino Industry in California
California’s tribal-operated casino industry is the nation’s second most impactful in terms of economic contribution, just behind Nevada. According to the American Gaming Association, California’s tribal casinos bring in nearly $20 billion annually, supporting approximately 184,700 jobs and generating $5.8 billion in tax revenue. Unlike Nevada, where commercial casinos dominate, California’s casinos are limited to tribal lands, which creates a unique but highly profitable gaming environment.
In recent years, tribal casinos have invested heavily in expansion and luxury amenities, transforming sites like Pechanga Resort Casino and Graton Resort into resort-style destinations with spas, golf courses, and entertainment venues. These investments have boosted California casinos’ appeal for local gamblers and tourists seeking a full experience beyond gaming.
California’s Current Stance on Online Gambling
California’s strict regulations limit gambling to in-person activities, primarily through tribal casinos, cardrooms, and lottery outlets. Over the years, several legislative initiatives have sought to legalize iGaming and sports betting in California. In 2023, proponents introduced initiatives to legalize both online and in-person sports wagering, granting tribes exclusive rights to operate sportsbooks. However, these initiatives failed to gain sufficient support and were withdrawn in early 2024. So, while many states have embraced online gambling and sports betting, there are still no legal online casino platforms accepting bets from anyone within California. The ongoing efforts to legalize iGaming in California will likely continue to struggle without tribal support, and the state’s current in-person-only gambling model will miss out on significant iGaming revenue opportunities.
What California Can Learn From Other States
States like New Jersey, Pennsylvania, and Michigan have tapped into the lucrative online gambling market, generating substantial new revenue streams. In Michigan, online gambling alone hit a record $2.3 billion in revenue in 2023, an 18.3 percent increase from the previous year. This revenue significantly exceeded initial estimates and resulted in $369.8 million in state taxes—$354 million from internet casino gaming alone. Similarly, New Jersey has consistently benefited from its online gaming operations, collecting hundreds of millions annually in taxes and demonstrating that online gambling could also be a sustainable revenue model for California.
If California were to legalize online casinos and sports betting, it could capture the illegal wagers currently placed by Californians on offshore sites, benefiting the state through taxation. The Statista Research Department projects that in 2024, California’s regulated online gambling market could generate up to $1.04 billion in revenue. One reason for this high-profit potential is that the gambling market often faces higher tax rates than other entertainment sectors.
Beyond the financial benefits, online gambling could create jobs and support the growth of California’s existing land-based casino sector. Research by EKG Gaming shows that online gambling boosts rather than cannibalizes land-based casino revenue. Additionally, legalized online gambling would allow California to implement consumer protections and responsible gambling initiatives, often absent from offshore operations. California’s in-person-only model misses these revenue opportunities as potential online players turn to neighboring states or offshore sites for access.
The Economic Potential of Gambling in California
California stands at a crossroads. It can either embrace the model of states like Michigan and Pennsylvania, where online gambling complements physical casinos and enhances revenue, or it can continue with its in-person-only model. Keeping online gambling illegal would mean missing out on a lucrative market projected to generate millions in state tax revenue, which could fund education, infrastructure, and healthcare.
However, any push for online gambling legislation in California will likely face continued opposition from tribal entities unless a revenue-sharing model that protects their interests is developed. Achieving this would require extensive negotiation and could take years to implement.
The Future of California’s Casino Industry
It would be naive to expect online casinos to be legalized anytime soon in California. According to tribal leaders, any path to legalization in the Golden State will need to be tribe-driven. Given the size of the defeat faced by the sports betting proposition in 2024, state legislators are likely in for a lengthy battle. Despite the potential market size, the issues with the interested parties could take years to resolve.
Meanwhile, tribal casinos are taking steps to upgrade their facilities within California to increase revenue and stay competitive. Many establishments are transforming into resort-style destinations with spas, golf courses, and even concert venues. These investments will no doubt make California casinos more attractive, not only to local gamblers but also to tourists seeking a full entertainment experience beyond gambling. California casinos will continue to be significant contributors to the state’s economy, but they will eventually need to make deliberate efforts to adapt to the demands of a more modern, digital world.
Indian casinos should be regulated. Slot machines etc.