.svg)
Body
Several of the largest U.S. sports betting companies announced their support Tuesday for the latest ballot initiative to legalize online sports betting in California through a constitutional amendment that would limit licenses to established operators partnering with Indian tribes and require a $100m upfront fee.
The proposed “California Solutions to Homelessness and Mental Health Support Act” was filed Tuesday with the state attorney general’s office, with a coalition of seven prominent online sports-betting operators reportedly pledging to spend $100m in order to qualify the initiative for the November 2022 ballot and have it passed by voters.
Nathan Click, a campaign spokesman, told VIXIO GamblingCompliance the $100m raised to support the campaign was “a floor not a ceiling”.
Supported by DraftKings, BetMGM, FanDuel, Penn National Gaming/Barstool, WynnBet, Bally’s and the Jay Z-backed Fanatics Betting and Gaming, the ballot initiative would allow only Indian tribes or qualified sportsbook operators partnering with tribal casinos to offer online wagering on professional, college, electronic sports and other events in the largest state in the U.S.
“California is one of the most important sports betting markets in the world, and BetMGM is committed to bringing legal, regulated mobile sports betting to the state,” BetMGM CEO Adam Greenblatt said in a statement.
Eric Schippers, Penn National’s senior vice president of public affairs and government relations, said in an email to VIXIO GamblingCompliance that the company was “proud to be part of the coalition.”
DraftKings CEO Jason Robins said the initiative’s aim was “to replace the flourishing, illegal, unregulated sports wagering currently happening in California with a legal online option.”
“We are looking forward to working closely with California Tribal nations throughout this process, and we recognize the important role that they should play in operating online sports wagering in California,” Robins added in a statement.
Barriers To Entry
If approved by voters, the initiative would authorize California regulators to award online sports betting licenses to so-called “qualified gaming entities” that would have to be designated as the partner of a California Indian tribe.
The tribes’ designees would be required to pay a $100m fee in order to use own brands for online sports wagering, although they could recoup that upfront fee in lieu of paying taxes up to a $20m threshold over their first five or subsequent years of operations. Operators would be subject to an effective tax of 10 percent of adjusted revenue after certain deductions.
The initiative appears designed to limit the California market to a select group of gaming operators.
According to the ballot measure, only companies already either operating online sports betting in at least ten U.S. states or operating online betting in five states plus at least a dozen land-based casinos in any U.S. market could be a “qualified gaming entity” eligible to partner with a California tribe.
Tribes could also choose to operate online sports betting themselves and pay a lower upfront fee of $10m, but they could only use the same brand as their land-based casino-resorts and not partner with an outside skin.
Tribes would be required to pay a $1m renewal fee and online operators would need to pay $10m, every five years after the initial term, with those renewal fees also able to be offset against future taxes owed.
The measure unveiled on Tuesday is the third ballot initiative to be filed in California to legalize sports betting via a voter referendum.
An initiative by a coalition of gaming tribes to legalize retail-only wagering at tribal casinos and racetracks, and establish new restrictions on commercial cardroom operations, will be decided by voters in the November 2022 general election, having already qualified for the ballot.
A second initiative to legalize both online and retail wagering, and supported by the state’s cardroom industry, was filed earlier this month by a consortium of California city officials.
Dana Williamson, campaign manager for the new online initiative, said the measure does not conflict with, but is complementary to, the tribal initiative on the California ballot in November 2022 that would allow for retail sports betting at tribal casinos and racetracks.
There is a school of thought that at least some of California’s more powerful Indian tribes would be willing to support mobile sports wagering provided any ballot measure meets three essential conditions in dovetailing with the existing tribal initiative, excluding cardrooms from participating and recognizing the primacy of tribes in the California market.
A spokesman for the California tribal sports-betting coalition said the group was still studying Tuesday’s ballot initiative but did not offer a immediate hostile response, as the tribes did to the measure that was filed by cardroom interests and city officials last month.
“We believe our initiative that’s supported by a broad coalition of California tribes and has already qualified for the November 2022 ballot is the best way to introduce sports wagering in California,” said spokesman Jacob Mejia.
“We will evaluate this lengthy new measure from out-of-state gambling corporations and discuss with our coalition of California Indian tribes before providing formal comment.”
Fines, Blocking For Illegal Betting
If approved by voters, the California proposal would direct 85 percent of tax revenue to homeless and mental health programs, with 15 percent going to Indian tribes that do not participate in online sports wagering.
California would become the first state in the nation to dedicate taxes from sports betting to pay for state homeless and mental health programs. Other states have directed tax revenues to water projects, education, healthcare and other causes.
“Permanent solutions require a permanent funding source,” Williamson said in a statement. “The California Solutions to Homelessness and Mental Health Support Act will raise hundreds of millions of dollars annually to fight homelessness and expand mental health support in California by allowing regulated entities to offer safe, responsible sports betting online.”
Elsewhere, the 62-page ballot measures does not offer a formal role for sports teams or leagues or mandate use of official league data, which commercial operators have come to accept but tribes are likely to oppose.
Still, the coalition of seven operators suggested they will seek support from sports teams, stating that the benefits of legal online betting would “flow not only to the direct beneficiaries of the tax revenue generated, but also to the state’s sports teams and media and technology enterprises that partner with us.”
In terms of regulatory oversight, the initiative would establish a new Division of Online Sports Betting Control within the California Attorney General’s Office in order to award licenses, adopt regulations and enforce the measure.
The initiative would require bettors to pay a 15 percent tax on any amounts wagered with illegal sportsbooks, with illegal sites subject to blacklisting and web-blocking if they refuse to disclose the names of their California customers. Legal online operators, in turn, could be fined no more than $100,000 for compliance infractions.
We are looking forward to working closely with California Tribal nations throughout this process, and we recognize the important role that they should play in operating online sports wagering in California.
The global gaming industry has been hoping California, with its 40m residents, would move to legalize both retail and online sports betting ever since the U.S. Supreme Court overturned the federal ban in May 2018.
According to VIXIO GamblingCompliance forecasts, a sports-betting market in California that includes full online and mobile wagering would generate $1.7bn to $2bn in annual gross revenue at maturity, whereas a market limited to physical sportsbooks at racetracks and tribal casinos would be worth less than $350m annually.
California attorney general Rob Bonta’s office now must review the new initiative, along with the one filed last month by cardroom interests and provide official summaries, before supporters can begin collecting voter signatures to qualify for the November 2022 state-wide ballot.
As the proposal is a constitutional amendment, supporters will need to collect 997,139 valid signatures to get the initiative on the ballot.
Any initiative for the November 2022 ballot must qualify by June 30, 2022, according to the Secretary of State’s office.
