The November ballot will have several measures dealing with sports betting. We are already seeing ads in opposition to some of them—you know the ones with Native Americans claiming that if passed California will collapse and be given to people from “other States”. Expect over $200 million will be spent on these ads, pro and con. Both sides will misrepresent the truth as to what their measure would do, and the disaster of the other measures. Sadly, we have to vote on these.
““California is the holy grail of U.S. sports betting markets,” said Daniel Wallach, a Florida-based attorney who has advised various players in burgeoning sports wagering states. “This is going to be a half-a-billion-dollar battle for control of the most lucrative betting market in the world.”
Thirty-three states and Washington, D.C. have authorized sports betting, birthing a sector expected to generate tens of billions of dollars in revenue once those markets are fully operative. The explosive growth follows two-and-a-half decades in which Congress gave Nevada an effective monopoly on athletic wagering in America.
We will be watching these measures—tens of billions of dollars are at stake.”
The ‘Holy Grail’ of gambling could break American sports betting wide open
Voters in the nation’s most populous state will get a chance in November to unleash a massive new industry in California — and provide a jolt to other holdout states.
By JEREMY B. WHITE, Politico, 03/30/2022
OAKLAND, Calif. — California beckons as the biggest prize yet for America’s exploding sports betting market.
State after state has legalized sports wagering since the Supreme Court cleared the way in 2018, but California has not — despite a powerful in-state gambling market and ravenous interest from national industry players.
That could soon change. Voters in the nation’s most populous state will get a chance in November to unleash the massive new industry — and provide a jolt to other holdouts.
“California is the holy grail of U.S. sports betting markets,” said Daniel Wallach, a Florida-based attorney who has advised various players in burgeoning sports wagering states. “This is going to be a half-a-billion-dollar battle for control of the most lucrative betting market in the world.”
Thirty-three states and Washington, D.C. have authorized sports betting, birthing a sector expected to generate tens of billions of dollars in revenue once those markets are fully operative. The explosive growth follows two-and-a-half decades in which Congress gave Nevada an effective monopoly on athletic wagering in America.
If California legalizes, sports betting is likely to become legal everywhere in the U.S. “A lot of people basically think the rest of the country will legalize if California does,” said Oklahoma State University professor John Holden, who has testified as an expert witness as states consider gambling legislation.
California must resolve its own differences first — no easy task for a state mired in longstanding gambling divisions that already blunted legalization efforts nearly two years ago.
Native American casinos, horse tracks, card rooms and platforms such as FanDuel and DraftKings are vying for control of a market that could generate tens of billions of dollars annually, reprising a power struggle that has already played out in states like Florida.
The battle pits FanDuel and DraftKings, platforms that have dominated the new market, against incumbent tribes who warn their very sovereignty is at stake. Rival interests have moved hundreds of millions of dollars into a campaign that could challenge spending records.
Native American tribes had already qualified a ballot measure allowing sports bets on tribal land when international gambling companies made their play, committing $100 million to an initiative that would let them control online wagering. That measure is also expected to qualify for the November ballot given the pace of signature collection and the money at proponents’ disposal. The firms include BetMGM, DraftKings, FanDuel, Bally’s Interactive and other big names. The escalating standoff has also drawn in card rooms that offer limited gambling options outside of tribal land.
Control of online betting has become the crux of the dispute. After the betting platforms floated their online proposal, a trio of tribal chairs ominously warned colleagues they had to respond in kind or risk losing the larger struggle: the platforms prevailing “would accelerate the legalization of online gaming by non-tribal interests, threatening the existence of Indian gaming as we know it,” they wrote. Tribes have since begun gathering signatures to qualify another, online-focused measure, although they may have started too late to succeed.
It’s not difficult to see why internet wagering is a paramount concern: For every $10 wagered on sports, $8 to $9 are placed online, said Becca Giden, director of policy for the research firm Eilers & Krejcik Gaming LLC. People have already become accustomed to placing their bets on the web rather than going to a bookie and risking their kneecaps.
“It’s very clear that people in 2021 and 2022 want to do things online,” Giden said.
The competing proposal from international gambling companies would require the online platforms to partner with tribes and give them a cut.
Gambling companies have framed this measure as an anti-homelessness initiative because a share of revenues would flow into local housing efforts — a sweetener that has brought on board big-city mayors, who have struggled to provide shelter for people during the pandemic. That may also play well with California voters, who routinely consider housing and homelessness among their top concerns.
“Our initiative is the only one that would raise hundreds of millions of dollars reach year in solutions to homelessness,” campaign spokesperson Nathan Click said. “Our measure provides a number of benefits to California tribal nations.”
Tribal leaders aren’t buying it. Eight months before the general election, they have matched gambling companies with a $100 million counteroffensive to block the competing initiative, calling it a power grab that violates the spirit of a 1998 California law that authorized tribal gambling and transformed tribes into formidable political players. An ad campaign warns the proposal from “out-of-state corporations” would “break the promise” between voters and tribes.
“The main fight for us is to ensure we keep the corporations out of state from coming in. That’s the best thing for all tribes here in California,” Jesus Tarango, chair of the Wilton Rancheria tribe, said in an interview. If the betting platforms prevail, tribes “may get a piece of it, but it would not be the same piece as if it was controlled by us and ran by us.”
Sports wagering advanced with inexorable momentum after the Supreme Court in 2018 struck down a federal law that had limited such gambling to Nevada. Former New Jersey Gov. Chris Christie, a Republican who had moved to legalize sports betting at horse tracks and Atlantic City casinos, fought in court for years before convincing the justices the 1992 law violated state sovereignty.
The ruling seemed to legitimize sports betting overnight — turning a vice long the purview of barroom bookies and offshore gaming sites into a new government revenue stream and a pillar of sports in the U.S. The NFL, NBA, MLB and other professional leagues that sued Christie over New Jersey’s efforts to legalize are now embracing the industry, even partnering with gambling companies.
Giden said the resulting market has seen “absolutely crazy levels of expansion” thanks in part to a “user-friendly reputation” and the opportunity for states to pad their budgets. Giden predicted virtually every state will legalize the practice in the coming years.
“This feels more like ‘when’ than ‘if’ for the vast majority of states,” Giden said. “A lot of people don’t view sports betting the same way they view slots and poker and roulette as gambling-gambling — that, plus the opportunities for incremental revenue, have allowed sports betting to expand much, much faster than other betting options.”
Competition from neighboring states has helped spur policymakers into action, Giden said, as elected officials fear missing out on the windfall. The returns can be enormous: after New York allowed sports betting to move online this year, it shattered New Jersey’s single-month record by registering nearly $2 billion in bets.
California could match or surpass that. A legislative analysis said residents illegally wagered roughly $18.7 billion in 2016, based on an American Gaming Association estimate. The prospect of that type of profit has galvanized California players to try and control the nascent market. Tribal interests blocked a legislative proposal backed by professional sports leagues and non-tribal gambling interests as state lawmakers in 2020 tried to forge a deal.
“The different factions, to date, just have never really been able to come together on anything. There’s such distrust between them,” said state Sen. Bill Dodd (D-Napa), who carried failed legislation to authorize betting. With online betting portals now entering the picture, Dodd added, “it probably is going to make it tougher on everyone in some respects, but they’ve at least got the money to put together a legitimate campaign and their competitors have to recognize that. Maybe that brings some others to the table.”
Platforms like DraftKings and FanDuel have been key players in shaping the national landscape. After popularizing daily fantasy sports, which effectively served as a precursor to sports betting, the companies partnered with professional sports leagues and casinos and pushed into states where legalization is on the table. Each company has contributed $16.7 million toward the initiative campaign, a combined $100 million — significant but not unprecedented spending for a California ballot campaign.
“They’re very prominent,” Holden said. “They spend a ton of money lobbying in virtually every state, and they are significant market players too: Even in states where we do have exclusively tribal operations, a lot of those tribes are contracting with DraftKings or FanDuel to run their sports books.”
Florida showed how the clash between entrenched tribes and newcomer platforms can play out. A judge recently dissolved a pact allowing the Seminole Tribe to control sports wagering. Then a ballot initiative from DraftKings and FanDuel — framed as a boon to schools in a parallel to the homelessness-focused California effort — failed to gather enough signatures. The Seminole Tribe responded by running an ad that was somewhere between a victory lap and a dunk on the platforms.
“The Seminole Tribe of Florida wanted to secure exclusive control over both brick-and-mortar and online sports betting,” Wallach said. “There are definite parallels between the objectives of California Indian tribes and Florida Indian tribes.”
Much of the action in California will be defensive as players will spend prolifically to block their opponents. The tribes’ longtime gambling nemeses — card rooms and the tax-satiated cities where they are located — look unlikely to qualify a measure giving them a slice. Nevertheless, they have loaded more than $24 million into a campaign committee battling the tribes, warning the measure contains provisions that expose card rooms to greater legal peril and decimate municipal budgets.
“All these vital services cities provide for their residents depend on the revenue from these card rooms that these cities host,” said Juan Garza, executive director of the California Cities for Self-Reliance Joint Powers Authority, noting the card rooms furnish roughly 10,000 jobs.
It’s possible California’s fight could produce a costly stalemate this year. Industry players are prepared to spend heavily to defeat their opponents, and voters often react to multiple initiatives on the same topic by voting for none of them. That would shift the conflict to the next election cycle — when competition could be even more fierce.
“The finish line is clearly in view and there’s a chance that each stakeholder, each ballot proponent could be on the losing side,” Wallach said. “In 2024, California’s 19 national sports teams are going to look at the landscape around the country and wonder, ‘Well, why can’t we have that, too?’ There will be more seats around the table than in 2022.”
