Hurdles Remain For Sports Betting In California, Massachusetts

July 11, 2022
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Despite a multimillion-dollar campaign by California tribes to defeat the company's online sports-betting ballot initiative this November and opposition from the state's Democratic Party, DraftKings CEO Jason Robins has said he is confident the proposal is an innovative solution to societal problems in the largest state in the nation.

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Despite a multimillion-dollar campaign by California tribes to defeat the company's online sports-betting ballot initiative this November and opposition from the state's Democratic Party, DraftKings CEO Jason Robins has said he is confident the proposal is an innovative solution to societal problems in the largest state in the nation.

Online sports-betting ballot measure Proposition 27 will be on the November 8 California ballot, as will Proposition 26, a competing retail-only sports-betting proposal by a coalition of California tribes.

DraftKings was joined by FanDuel, BetMGM, Barstool, WynnBET, Bally’s and Fanatics Betting and Gaming in crafting the ballot initiative that would permit mobile sports betting throughout the most populous state in the U.S. through partnerships between operators and California Indian tribes.

Robins said the company's proposal, if approved by voters, would have a significant impact on funding for homeless and mental health programs.

“We are incredibly excited about bringing online sports betting while protecting vulnerable populations by providing much needed funding for critical issues like homelessness,” said Robins during his keynote speech at the National Council of Legislators from Gaming States (NCLGS) summer meeting in Boston on Friday (July 8).

“Our proposition authorizes state-wide mobile sports betting with 85 percent of the tax revenues going to homeless and mental health, which are very pressing issues in California today,” Robins said.

“The remaining 15 percent of tax revenue will be split among California tribes who choose not to offer sports betting, a very deliberate intention of ours to make sure that if you could participate in the industry, great, but if not, you wouldn’t get left behind; you could still benefit.”

Robins said Proposition 27 was a “creative solution to societal problems that makes me excited about the possibilities in the gaming industry in the future.”

On Sunday, the California Democratic Party formally voted to oppose Proposition 27 on online sports betting, while agreeing to remain neutral on Proposition 26, the tribal-backed measure limited to retail sports wagering.

Democratic Assemblyman James Ramos declined to discuss whether he is opposed to or supports Proposition 27.

At the NCLGS conference, he told VIXIO GamblingCompliance that Californians “are going to see a lot of money on both sides being poured in and so we’ll see how this plays put.”

Ramos, a former chairman of the San Manuel Band of Mission Indians in Southern California, also declined to criticize three tribes that have broken ranks with the majority of California tribal nations by announcing their support for Proposition 27.

“We are not going to disagree with them,” Ramos said. “We are going to support them with what they are doing moving forward. The chairmen are good friends of mine … I’m not going to second guess them. I support their sovereignty.”

During his ten-minute speech, Robins also talked about the early days of DraftKings in Boston and the significant role legislators in several states played in its growth. But he stayed clear of discussing the ongoing legislative negotiations between the House and Senate to reach an agreement on a Massachusetts sports-betting bill.

Robins said that the future of the U.S. gaming industry was not in online sports betting and internet gaming, because those represent the present.

“Online sports betting has been approved in nearly half the states in this country in just a few years,” he said. “Internet gaming is already legal in six states, with larger states like New Jersey, Michigan and Pennsylvania authorizing both without cannibalizing existing operations.”

Robins acknowledged the industry still has work to do assuring state policymakers and some gaming executives that online casino gaming is a benefit that will add revenue and grow everyone’s business.

“This will be incredibly important as we experience rampant inflation as signs point to the potential of an economic recession,” said Robins, suggesting a possible economic downturn should incentivize policymakers to legalize online casino gambling.

Howard Glaser, global head of government affairs at Light & Wonder, was quick to dismiss any conversation that rampant inflation or a prolonged economic problem was good for the adoption of iGaming.

“The answer is no,” Glaser said Saturday during a NCLGS panel discussion on online gaming and cryptocurrency.

“A stable economy is good for the casino industry. A stable economy is good for iGaming,” Glaser said. “The rationale for iGaming … is not the economy is lousy, so we need revenue. That’s not the best argument for iGaming.”

He said the more effective argument was that online gaming already exists in the offshore market, taking place without protections for consumers and with the money laundering that goes along with it.

Massachusetts Sports-Betting Deadline Draws Near

Elsewhere at the NCLGS conference, a key lawmaker involved in negotiations on legalizing sports betting in Massachusetts said Friday that he was hopeful a conference committee of six representatives and senators could reach an agreement on a bill and send it to Republican Governor Charlie Baker’s desk before the legislative session concludes at the end of the month.

“Unfortunately, we are losing out to our neighbors in New Hampshire, Rhode Island,” Representative Jerry Parisella, a Democrat, said Friday during opening remarks at NCLGS. “For every year it is not available, Massachusetts loses valuable tax revenues to one of our neighbors.”

Parisella cited DraftKings data that found during the Super Bowl in February, nearly 30 percent of the bets placed in New Hampshire were from Massachusetts residents.

The Massachusetts Senate passed a sports wagering bill in April including provisions banning the use of credit cards and limiting television and online advertising.

Among the key differences from the House version, which was approved in July 2021, is the Senate’s proposal includes a ban on wagering on all collegiate sports and higher tax rates for both retail and mobile sports wagering.

Parisella, who sits on the six-member Sports Wagering Conference Committee, said members are doing what they can to reach an agreement by the end of the session on July 31.

“We are doing it already,” Parisella said. “So let’s get a legal, regulated [sports-betting] market. Hopefully, we can get it done by the time the session ends.”

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