Looks Like Groundhog Day For California In Ugly Fight Over Sports Betting

February 25, 2022
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Eight years ago, PokerStars launched an ill-fated campaign to bring online poker to California, and this year’s effort by DraftKings, FanDuel and other operators to legalize online sports betting in the Golden State appears to be eerily similar.

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Eight years ago, PokerStars launched an ill-fated campaign to bring online poker to California, and this year’s effort by DraftKings, FanDuel and other operators to legalize online sports betting in the Golden State appears to be eerily similar.

Even the main California gaming tribes involved are the same, with Pechanga squaring off against San Manuel again in what already is a bitter battle over the future of sports betting in the Golden State, that seems likely to grow uglier as Election Day in November approaches.

“Any time there are opportunities to expand licensed gaming in California, it does become a bit like Groundhog Day because of the varied special interests in the state,” said Eric Hollreiser, a former spokesman for PokerStars who now works as a gaming consultant based on the Isle of Man.

This year’s sports-betting debate in California is focused on three measures and only one so far has qualified to be on the November 8 ballot.

Sponsored by Pechanga and a coalition of more than a dozen other tribal governments, the initiative already on the ballot would restrict sports betting to land-based tribal casinos and state-licensed racetracks in California.

Meanwhile, San Manuel are also backing a broader measure which would allow sports betting at tribal casinos, as well as online, throughout California.

Under the proposal, only tribes could offer sports wagering and they would have to use their own casino brands for online betting and register player accounts in person.

The San Manuel initiative has been compared to the internet sports-betting operations commenced briefly in November by the Seminole Tribe in Florida.

The Seminoles abruptly halted online betting after U.S. District Judge Dabney Friedrich of Washington, D.C. ruled provisions to allow mobile wagers beyond tribal lands violated the Indian Gaming Regulatory Act of 1988.

The Seminoles are appealing Friedrich’s decision, but San Manuel have already adjusted their initiative to codify provisions in state law and give California tribes the option of operating online sports wagering under state regulation, rather than strictly as sovereign governments through their tribal gaming compacts.

In addition to that extra layer of legal complexity, San Manuel got off to a late start in collecting the 997,139 signatures required to put their sports-betting initiative on the ballot. Any ballot measure in California needs 8 percent of the total votes cast for governor in the preceding general election.

San Manuel are already preparing for 2024 if this year’s effort proves unsuccessful, sources said.

The third sports-betting initiative in play in California this year comes from DraftKings, FanDuel, BetMGM and a group of four other operators.

Like the San Manuel measure, it would allow wagers online in California. But the initiative would also allow leading national operators to deploy online sportsbooks under their own brands through a market-access with a California Indian tribe.

Despite appearing to have similar goals in opening California to sports betting online, San Manuel are vehemently opposed to the DraftKings and FanDuel measure that would open the door to national operators.

Earlier this month, San Manuel and their allies in the Rincon Band of Mission Indians and Wilton Rancheria tribes announced a campaign pledging to spend $100m to defeat the operator-backed measure.

The $100m is the same amount mentioned by DraftKings, FanDuel, BetMGM, Wynn, Penn National, Bally’s and Fanatics when they launched their ballot campaign last August.

The relationship of Draftings and FanDuel with San Manuel is just as toxic as their interaction with the Seminoles in Florida, according to sources.

DraftKings and FanDuel are more optimistic about working with Pechanga, on grounds that the online sports-betting initiative would complement the tribe’s brick-and-mortar version already on the ballot.

But Pechanga flatly denies any prospect of cooperation with the companies over sports betting.

“The vast majority of tribes in California, including Pechanga, are opposed to the corporate online measure,” said Jacob Mejia, a Pechanga representative.

“That not a single tribe has expressed support reflects the broad opposition to this measure, which would harm tribal gaming rights and tribal self-determination,” Mejia said.

California voters do not support a “massive expansion of online sports betting,” according to Mejia.

“At the same time, our research shows California voters prefer an incremental approach to authorizing sports wagering,” he said. “That’s why our coalition of Native American tribes, social justice advocates and community groups is supporting an initiative that is already qualified for the November ballot that will authorize in-person
sports wagering at tribal casinos.”

DraftKings and FanDuel are coming off a crushing defeat in Florida after failing to obtain enough signatures to qualify their sports-betting measure for the election ballot in November in the Sunshine State, despite spending more than $36m on the effort.

If they do not succeed in California, DraftKings and FanDuel will continue to be locked out of the nation’s first and third most populous states.

Under that scenario, New York, New Jersey and potentially Illinois are likely to dominate the nation’s booming sports-betting market at least until 2024.

Unlike other states where legislatures legalized sports betting, California requires approval of a state constitutional amendment by the state’s voters and that could prove to be a hard sell.

“I would not be surprised if nothing happens,” Hollreiser said.

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