After California Debacle, Is There A Mandate Against Sports Betting?

November 11, 2022
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Following perhaps the biggest financial disaster in the history of gambling on Tuesday in California, the sports betting industry is beginning to wonder if its halcyon days might be over.

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Following perhaps the biggest financial disaster in the history of gambling on Tuesday (November 8) in California, the sports betting industry is beginning to wonder if its halcyon days might be over.

With spending estimates as high as $700m for two failed sports betting propositions, gaming lobbyists seem to agree a new strategy is essential for future campaigns.

“We cannot spend this kind of money again and go through this process all over again to have the same outcome,” said Brandt Iden, vice president of government affairs for Fanatics Betting & Gaming and former Republican state representative in Michigan.

More than 83 percent of California voters rejected Proposition 27, which would have allowed commercial sports betting companies like DraftKings and FanDuel to launch online wagering in the Golden State.

The other measure — Proposition 26, arguably a fig leaf to undermine Proposition 27 — would have restricted sports betting to in-person wagers at casinos run by California tribes.

Voters in California rejected Proposition 26 by more than 70 percent.

These staggering defeats are making gambling analysts ponder whether it might be too early to raise the sports betting issue in California in 2024 or even ever again.

“Do we think that the well is now poisoned with the voters or is this going to have to be a decision now made by the legislature?” asked John Pappas, an internet gambling lobbyist and founder of Corridor Consulting in Washington, D.C.

Iden and Pappas joined three other gambling lobbyists and analysts to discuss the fallout from the California votes in a webinar on Thursday sponsored by iGaming Business (iGB).

Pappas called for “unique solutions” for California, the most populous state in the U.S.

“California is just too important a state for people to walk away entirely,” he said.

“The tribes have clearly shown that they have [a] tremendous amount of influence and [a] tremendous amount of capital to ensure that they get outcomes that are favorable to them and that is certainly the expectation going forward that that is not going to change.”

Pappas scoffed at the pitch by commercial sports betting operators that online betting would provide enough revenue to cope with California’s homelessness problem.

“Two hundred million dollars is a wart on the butt of a rhino in California,” he said.

Stacie Stern, vice president of government affairs and partnerships for Underdog Fantasy a former lobbyist for Flutter-owned FanDuel, also questioned the use of social issues like homelessness to sell sports betting.

“I think that the idea of focusing on mental health and homelessness was really smart strategically in the beginning, but it just didn’t hit…it didn’t land with people,” she said. “And I don’t know if people thought it was an honest way to ask for sports betting quite frankly.”

Brianne Doura-Schawohl, founder of Doura-Schawohl Consultants in Washington, D.C. and Baltimore, said the industry must become more knowledgeable about issues important to voters before launching campaigns for sports betting and other gambling issues.

“This is a time that the industry really needs to get smarter, especially when it comes to policy about embracing funding mechanisms (for) consumer protection (and) responsible gaming as a pillar of their business and really living and breathing the spirit of that,” Doura-Schawohl said.

Brendan Bussmann, managing partner of the Las Vegas-based consultancy B Global, moderated the webinar and said up to six states could legalize gambling expansion in 2023.

Texas, Georgia, Minnesota, and North Carolina are among the leading candidates, according to the lobbyists who appeared in Thursday’s (November 10) webinar.

“There is no more low-hanging fruit. It’s been picked,” Iden said. “Everything from here is a lot of hard work all the way in.”

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