In a speech to a state lawmakers meeting earlier this month in Boston, DraftKings CEO Jason Robins touted a California ballot question backed by his company and six other sports betting operators that could bring mobile and online sports wagering to the nation’s largest state.
He told the National Council of Legislators from Gaming States (NCLGS) that the measure included language that would direct 85 percent of the tax revenue generated by mobile sports betting to support California-based organizations and government agencies that service the homeless and provide treatment for mental health and addiction.
Robins said Proposition 27, which will appear on the November ballot in California, was an example of a “creative solution to societal problems” that could be addressed by the gaming industry.
DraftKings, along with FanDuel, BetMGM, WynnBet, Bally’s Interactive, Barstool Sports and Fanatics, spent more than $100 million to qualify the ballot question. However, other than a few remarks by Robins on his company’s quarterly earnings conference calls, representatives from the sports betting operators have remained silent on the referendum.
That might be a mistake, according to Charles Gillespie, CEO of Gambling.com Group, which provides digital marketing services and customer acquisition technology to sports betting operators and casinos worldwide. He believes all the operators need to take a front-and-center role in the campaign.
“I don’t understand why they’re leaving the whole thing to Jason,” Gillespie said. “California is the perfect kind of example of how complex regulation is in the United States. Politics in California is always going to be complicated.”
Gambling.com views California as potentially the nation’s largest sports betting market if it joins 35 other states and Washington, D.C., with legal and regulated sports wagering.
Truist Securities, citing public data in a research report, listed New York as the nation’s largest sports betting state through May with $7.5 billion in total wagers and $535 million in revenue. New Jersey is second with $5.1 billion in handle and $270 million in revenue. Illinois is the third-largest sports betting state with $4.1 billion in bets and $293 million in revenue.
Nevada, once the only state with legal sports betting, is now fourth in the nation with $3.9 billion in wagers through May and $170 million in revenue.
Gillespie said the operators “have made a credible proposal and there’s a material chance that it goes through.”
However, Californians will also decide on Proposition 26, a ballot measure qualified by a coalition of the state’s Indian tribes that would allow retail sportsbooks to be operated inside tribal casinos and several horse racing tracks. The measure doesn’t include a mobile sports betting component.
The election is roughly three-and-a-half months away, but the landscape is already vitriolic.
A tribal alliance has locked arms with the California Nations Indian Gaming Association in opposition to Proposition 27, calling the measure a “deceptive” move that would only benefit the bank accounts of “out-of-state operators.”
San Manuel Band of Mission Indians Chairwoman Lynn Valbuena, whose Southern California tribe owns the Palms Casino Resort in Las Vegas, said in a statement that Proposition 27, “threatens decades of progress for California’s tribal governments, erodes tribal sovereignty, and threatens our future economic sustainability.”
Gillespie, whose company is not involved with either side in the campaign, suggested the operators need to be more out in front as the election nears.
The major sports betting operators, he said, need a victory and to avoid the failure DraftKings and FanDuel experienced earlier this year in Florida. The companies spent $37 million in an unsuccessful effort to place a sports betting ballot question in front of voters. After Hard Rock Entertainment’s online sports betting business was shut down after 34 days by a federal judge, sports betting in the state may not be resolved until next year.
“The operators lost in Florida. That was big for them,” Gillespie said. “If it happens again in California, it’s terrifying about how aggressive the operators are going to be coming back because (legalizing sports betting) is not going away.”
Gillespie credited language in Proposition 27, which requires operators to participate with California tribes in mobile sports betting. A portion of the revenues would be shared among smaller non-gaming tribes. In addition, the measure allows tribes to operate their own sports wagering platforms.
“They’ve carved out meaningful economics for a number of tribes in California in this bill,” Gillespie said. “They didn’t have to do that. If they have to come back and do this again, there’s no guarantee they’re going to be as accommodating.”
Backers of Proposition 27 said this month the measure gained the support of three small Indian tribes – Big Valley Band of Pomo Indians, Santa Rosa Rancheria Tachi Yokut Tribe and Middletown Rancheria of Pomo Indians.
“For too long, rural and economically disadvantaged tribes like ours have struggled to provide for our people,” Philip Gomez, chairman of the Big Valley Band tribe said in a statement. “This measure would provide us with economic opportunities to fortify our tribe’s future for generations to come.”
However, the tribal coalition announced earlier this month that the California Democratic Party voted to oppose Proposition 27 and take a neutral position on Proposition 26.
“By opposing Prop 27, California Democrats rejected out-of-state corporations and reaffirmed their commitment to California’s Indian tribes,” said Agua Caliente Band of Cahuilla Indians Chairman Reid Milanovich.
The tribes also announced support for Proposition 26 from California labor and civil rights leader Dolores Huerta, who said the measure “will empower tribes to create new economic opportunities for their members.”
Gillispie predicted that either both propositions would pass or both would be voted down, not a split decision. He also said it was “inevitable” that the tribal coalition would file a lawsuit against the operators if Proposition 27 passes.
Tribal casinos, which produce an estimated $8 billion in annual gaming revenue, will “defend their turf, which is proven to be extremely lucrative for them historically,” Gillispie said.
He added that California is too important in the future of sports betting nationally to remain sidelined.
“It’s in everyone’s best interest to find a happy, sustainable way forward, including the citizens of California,” Gillispie said.
This excerpt originally appeared in Indy Gaming on July 20, 2022.