California Tribes See Battle Against Mobile Sports Betting As 'Fight For Survival'

May 17, 2022
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By far the most high-stakes and most expensive campaign ever in the U.S. to legalize sports betting continues to escalate in California as tribes and commercial operators battle for voter support of their competing initiatives.

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By far the most high-stakes and most expensive campaign ever in the U.S. to legalize sports betting continues to escalate in California as tribes and commercial operators battle for voter support of their competing initiatives.

Currently, only a ballot measure to legalize retail sports betting at tribal casinos and racetracks has qualified for the November 8 ballot, but the sponsors of a second initiative, backed by FanDuel, DraftKings and other commercial operators, say they have collected the required number of signatures to qualify.

The California Secretary of State has yet to validate the signatures, but assuming the initiative qualifies, the November ballot battle is set to be the most expensive to date in the U.S., with both campaigns promising to spend at least $100m each.

Jonathan Doubilet, vice president of business operations at Playtech, expects California voters to approve the tribal-backed retail initiative but defeat the mobile proposal.

“The lift that has to happen in order for sports betting to be legalized in California is tremendous,” Doubilet said on Friday (May 13) during a panel discussion on online gambling proliferation and platform considerations at the iGaming Next conference in New York City.

“It will be a retail-first rollout, at least that’s what I believe,” he said. “Thereafter, with mobile at some point perhaps next year or the year after we could see some movement.”

Doubilet was joined by Matt Cullen, senior vice president of digital and sports at betPARX; and Rob Heller, CEO of Spectrum Gaming Capital, for the panel discussion.

Cullen, formerly head of digital gaming operations for the San Manuel Band of Mission Indians in California, told attendees that his decade spent trying to legalize internet poker in the Golden State and specifically getting lawmakers to pass legislation in Sacramento “was ugly to say the least.”

“I think the operators who are there now doing what they are doing is very risky, trying to get out front of the incumbent tribes,” Cullen said. “It is not something I would advise our company to do, ever.”

Known as the Californians for Solutions to Homelessness and Mental Health Support Act, the online sports-betting ballot proposal would permit mobile wagering throughout the most populous state in the U.S. through partnerships between commercial sportsbook operators and tribes.

The initiative is supported by FanDuel, DraftKings, BetMGM, Penn National Gaming, Wynn, Bally’s Corporation and Fanatics Betting and Gaming.

If approved by voters, 85 percent of tax revenue from sports betting would be directed to homeless and mental health programs, with 15 percent going to tribes that do not participate in sports betting.

“I don’t believe the commercial interests want to solve the homeless problems in California,” said Richard Schuetz, a gaming industry consultant and former member of the California Gambling Control Commission.

“I think it’s a fun story but it’s not true. They want to get into a market that has 40m people and the fifth largest gross domestic product in the world, larger than the UK and larger than India.”

Schuetz also said he does not believe the final goal for the commercial companies was sports betting, but it was to legalize internet gaming in California.

“That’s the camel’s nose under the tent,” he said. “If iGaming goes over apps in California that’s going to have a dramatic impact on the tribes.”

Schuetz said he expected tribes to put up the fiercest of fights to defeat the commercial proposal. Tribal gaming is an $8.5bn business in California, according to the National Indian Gaming Commission.

“They again are fighting for their survival, and I wouldn’t think they are going to roll over too easy,” Schuetz said. “They’ll spend all they need to stop this because they’ve been brutalized for five centuries in this country, and they don’t want it any more.”

Schuetz described a potential third ballot initiative supported by cities and cardrooms as “a dog with fleas,” that will not go anywhere. Municipal representatives from cities with cardrooms filed a proposal last summer to authorize a wide range of sports betting, including online and at cardroom facilities. However, supporters never seriously began a campaign to collect signatures and cardrooms instead are mobilizing to block the tribal initiative that also includes provisions targeting illegal games.

Meanwhile, a third group led by the San Manuel Band of Mission Indians announced last week that they will not try to qualify yet another ballot measure to permit tribal mobile sports betting for this November’s ballot, but instead will target the November 2024 election.

“I believe there will be two measures on the ballot,” Schuetz said of this November's election.

Schuetz joined Brendan Bussmann, managing partner with B Global; Catie Di Stefano, co-founder of Weberfy; and Per Hellberg, CEO of PlayStar Casino, for an earlier iGaming Next panel discussion on the four largest states of California, New York, Texas and Florida.

“That nasty battle [in California] doesn’t bring things forward very quickly,” Hellberg said. “So I’m not very optimistic about this year but … things can change.”

Schuetz told conference attendees that during three weeks of meetings in California, a lobbyist for the tribes assured him that “they are going to go scorched earth on these commercial operators.”

“It is going to be ugly, and the tribes are very good at campaigns,” he said. “So don’t underestimate the tribes’ ability to generate a very effective media campaign. They are very good at what they do; very good.”

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