The CEOs of DraftKings and FanDuel told an overflow crowd at the Global Gaming Expo in Las Vegas Tuesday that it’s going to be difficult to pass a ballot measure in California that brings mobile sports wagering to the state but added they expect to be back in 2024 if the initiative fails in November.
The comments from Amy Howe, CEO of FanDuel, and Jason Robins, co-founder and CEO of DraftKings, follow a report Monday in The Wall Street Journal that a coalition of operators led by DraftKings and FanDuel is cutting back on advertising supporting California’s Proposition 27, which would allow mobile wagering tied to tribal casinos, just as polls show it’s headed for defeat. They have faced stiff opposition from tribes who have a measure that would only allow retail sports betting at tribal casinos and horse tracks such as Santa Anita Park and Del Mar.
The Journal reported that Prop 27, in total, has fundraised more than $400 million, with its proponents raising $169 million. It said the group has canceled about $11 million in broadcast and cable television ads through the election after a recent poll showed it was headed for defeat.
The measure has pitted tribes against commercial operators in what’s viewed as a potential $3 billion a year in annual sports betting revenue in California.
“We will live to fight another day,” said Howe, who lives in Los Angeles. “It’s hard to imagine that (sports betting) won’t include the state of California. It’s always been our industry’s intention to try and find a solution that aligns the stakeholders – the tribes, racetracks, government and ultimately consumers. We believe there is a path to get there. Whether we get there in 2022 or get there in 2024, we believe it is the right path.”
Howe said data from the American Gaming Association shows that nine of 10 sports bettors want to bet on a safe and legal platform, and if Prop 27 doesn’t pass, that only continues to fuel the illegal market.
Robins said it’s hard to imagine California not having sports betting. The state is usually on the leading edge and not the last one to embrace innovations, he said.
“That said, if the opposition is willing to spend more than $100 million, it’s just tough to beat,” Robins said. “It doesn’t matter what your issue is. Going and trying to spend only makes it worse because people get sick of seeing the ads. I’m not sure any different message would have mattered. When you have more than $100 million spent on false and misleading ads, people don’t know – just like they don’t know the difference between legal and illegal markets. They just know what they see.”
Robins said when there’s a lot of money pushing that narrative, it puts doubts into people’s minds and makes it hard on the first go-around to get your story out there.
“I think the more people in California that get exposed to the message and the more they are able to take time (to consider this) – this is all very fast,” Robins said. “It started in July, and the election is coming up next month. The more they are able to sift through what’s true and what’s not, I think you will see more momentum towards hopefully in 2024 and hopefully even in 2022. It’s more likely in 2024 it’s getting passed.”
Jay Snowden, CEO and President of Penn Entertainment, addressed sports betting advertising, a growing part of the landscape, and concerns about its influence on children and problem gambling.
Snowden said it falls upon the industry to deal with it. Issues have arisen in Europe over the last decade, and if the industry doesn’t self-regulate, it will get regulated in ways “you’re probably not too excited about.”
Snowden said it’s important to know your customer and be compliant at the state level because regulations vary by jurisdiction. If all of that is not treated responsibly, “we’re headed in a bad place,” he said. “I do get concerned when I’m watching football on Sundays with my 13-year-old son, and he’s asking what bets should be placed because he sees all of these ads. It’s something you have to be mindful of. It doesn’t mean it’s bad or overdone today, but we have to look at this and handle it very responsibly.”
Soo Kim, chairman of Bally’s Corp., said in the “land grab of getting to sports-betting revenue numbers” that at some point, there will be a backlash of being able to balance the load to the consumer and use technology for responsible gaming. That has to be core to the business because “gaming is a powerful product that you have to build in the responsibility,” Kim said.
Snowden said they don’t want irresponsible gamblers in their ecosystem. It doesn’t move the needle from a cash-flow perspective, and Penn constantly seeks out those with gambling problems.
Kim said that for companies only doing mobile gaming, advertising is the only way to break through. When you combine a land-based operation, he said there’s the ability for a “more subtle engagement” and not just hitting people on the airwaves at every commercial break.
“I think you get a better customer experience and a more responsible experience,” Kim said. “An omnichannel gaming company can offer a better balance.”