DraftKings, FanDuel Lobby California Tribes Over Mobile Sports-Betting Initiative

November 29, 2021
DraftKings and FanDuel are preparing to spend millions of dollars and confront strong tribal opposition in order to pass ballot measures to authorize online sports betting in both California and Florida next year.


DraftKings and FanDuel are preparing to spend millions of dollars and confront strong tribal opposition in order to pass ballot measures to authorize online sports betting in both California and Florida next year.

But representatives from both companies expressed their willingness to partner with tribes in California as they wait for the largest potential U.S. sports-betting market to eventually legalize wagering on games.

Jeremy Elbaum, senior vice president of business development with DraftKings, and Jonathan Edson, senior vice president of business development at FanDuel, were careful to avoid controversy with their comments during a panel discussion at the National Indian Gaming Association (NIGA) mid-year conference at Pechanga Resort Casino in Temecula, California.

Edson told attendees that a coalition of seven leading online betting operators including BetMGM, Bally's, Wynn, Penn National and Fanatics has begun collecting signatures to place their initiative legalizing mobile sports betting in California tethered to tribal casinos on the November 2022 ballot.

When asked by VIXIO GamblingCompliance whether they were concerned how potentially losing both initiatives in California and Florida would affect their business, neither Elbaum nor Edson answered the question.

“All I can say is at the moment we are focused on trying to make this work,” Elbaum said. “We think our [California] initiative is right and addresses the issue of tribal sovereignty.”

The move in Florida would expand mobile sports betting beyond the control of the Seminole Tribe, which was granted exclusive rights over sports betting pursuant to a landmark new gaming compact that took effect in August but was ruled to be invalid by a federal judge last week. The Seminoles are opposed to the initiative, which requires 891,589 valid voter signatures to be submitted by February 1 to be placed on the November 8, 2022 ballot.

There are currently three separate proposals to legalize mobile wagering in California, including the consortium’s proposal, as well as an initiative by cardrooms and a tribal-backed ballot proposal that would replicate the Seminole Compact model to authorize state-wide online sports betting exclusively via tribes.

A coalition of four California Indian tribes that oppose the commercial initiative filed its initiative earlier this month with the state attorney general’s office to authorize tribes to operate retail and online sports betting via servers on tribal reservations.

The initiative, submitted by the San Manuel Band of Mission Indians, the Rincon Band of Luiseño Indians, the Federated Indians of Graton Rancheria and Wilton Rancheria, is expected to be given the green light to collect signatures in January.

The tribal mobile initiative can be amended up to 35 days after its November 5, 2021 filing date.

Representatives from San Manuel and the three other tribes backing the initiative held meetings during the three-day conference last week but declined to comment on what was discussed.

Victor Rocha, the conference chairman with NIGA who moderated the panel discussion, said tribes see sports betting as an opportunity to create a better experience for their customers, but cautioned both DraftKings and FanDuel that tribes need to be respected and feel part of the process.

Rocha admitted that sports betting and internet gaming are the next iteration of tribal gaming.

“In California, we fought tooth and nail for our sovereignty and for us that is the line in the sand. For tribes, sovereignty is not an abstract concept,” Rocha said.

California, with its 40m residents, represents a lucrative sports-betting opportunity for tribal operators and commercial gaming companies. Legalizing wagering on games would require an amendment to the state constitution, which must be passed by a state-wide vote.

For each of the three additional proposals to qualify for the ballot, 997,139 valid signatures are required. The deadline for signature verification in California is 131 days before the general election, which is around June 30, 2022.

“Mobile sports betting is already happening in California,” said Edson of FanDuel. “Then the question becomes what is the right way to bring a legal version of that into the state.”

Elbaum reminded attendees that there are billions of dollars going to illegal online sports-betting sites that do not benefit states and certainly do not benefit tribes.

Edson acknowledged that California Indian tribes have built a tremendously successful gaming industry. In the year prior to the coronavirus outbreak, California's nearly 70 tribal casinos had gaming revenue of $8.4bn, according to federal data.

“Anything that you do you want to make sure the tribes are central to what is going to happen with sports betting,” Edson said. “That is what we’ve tried to do with our initiative.”

Elbaum agreed, saying the seven operators came together trying to figure out the best way to open mobile sports betting in California.

Elbaum noted that a fourth ballot measure limited to retail-only sports betting at tribal casinos and racetracks has already qualified for the November 8, 2022 ballot, but said the “question is how can we make both of them happen at the same time.”

Edson told attendees the FanDuel- and DraftKings-backed proposal was about “getting together good, attractive operators who want to get into California and then get in front of tribes and have active discussions about the revenues that are in California compared to other states.”

“The first thing we said was the tribes have to be the gatekeepers,” Edson said. “So if the tribes aren’t comfortable with the operators, then we can’t get into the state. The most important thing we did was protect the sovereignty of the tribes.”

Under the initiative, any qualified online operator wishing to utilize its own brand for sports betting would have to serve as the designee of a federally-recognized California tribal nation and pay an upfront fee of $100m to the state. Tribes can choose to operate mobile sports betting under their own brands for a reduced fee of $10m.

The seven operators have already committed $100m to get their initiative on next year’s ballot and approved by voters.

Rocha asked the FanDuel and DraftKings executives what would happen if all four initiatives are on the ballot next November.

“All I can say is that we’ve designed our ballot initiative to be complementary to the tribal initiative,” Edson said, referring to the retail-only measure that is supported by a broad alliance of California tribes.

“With respect to the others, the consortium is really committed to putting as much effort in to see that ours lays a path” to legalizing mobile wagering.

As for reconciliation with the other initiatives, Edson said FanDuel and other operators have been open to conversations with all the other stakeholders.

“Certainly, we remain open to see how all of us play together,” Edson said.

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