BetMGM, DraftKings and FanDuel have added their support to a ballot measure that would allow mobile sports betting in California. With the latest plan, there could be three competing sports betting measures on the November 2022 ballot.
The nation’s largest betting companies want to qualify the measure for the 2022 ballot, where it would compete with a tribal proposal that would allow sports betting only at tribal casinos and racetracks—but not online or at card clubs. The big-name sportsbooks don’t want to stop sports betting from being legal in tribal casinos, they want to expand on it to allow mobile sportsbooks, which the tribal proposal pointedly does not do.
The tribal measure has already qualified for the 2022 midyear ballot.
Cities’ Proposal
A second group, the California Cities Gaming Authority—a joint powers authority of cities that authorize or regulate card rooms—has filed a request with the state Attorney General’s Office for a measure that would legalize statewide mobile betting. The authority includes Gardena, Inglewood, San Jose and Colma—all of which host card clubs.
Their initiative would tax sports betting at 25 percent and direct the money to the state’s general fund, where it would be spent on helping the homeless, providing affordable housing, and bolstering educational and mental health programs.
The card clubs support the Cities’ measure because it would cut them in on sports betting. So far, club owners have donated $400,000 towards the plan—not surprising, since the tribes deliberately excluded card clubs from sports betting in their initiative.
The Cities’ proposal, said the authority’s general counsel, Jimmy Gutierrez, “opens sports wagering to every entity licensed to conduct gaming in California including Indian tribes and to all professional sports teams seeking to conduct sports wagering directly or via the internet.” In other words, that would include all tribal casinos, the state’s four racetracks, card rooms, venues of professional sports teams and online or mobile sports wagering operators.
Gutierrez has criticized the tribes for trying to squeeze out card clubs: “The tribal gaming initiative gives Indian tribes powers sufficient to drive card rooms out of business by establishing Indian casinos on non-tribal lands in the cities that license card rooms.”
Cause-Funding
According to Politico, the sports betting operators behind the third measure plan to spend $100 million promoting the “California Solutions to Homelessness and Mental Health Support Act,” which would require a provider to partner with a tribe and set aside some revenue for tribes. Campaign manager Dana Williamson has managed the campaigns of former Governor Jerry Brown and served on his cabinet.
If passed, it would be the first initiative of its kind in the U.S. to earmark money to fight homelessness: 85 percent for the homeless and 15 percent for tribes. Williamson said, “Permanent solutions require a permanent funding source. (The 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.”
The plan would create an open, competitive market for mobile and internet wagering only. It would not cap the number of licenses but would charge a $100 million fee for operators who partner with tribes and $10 million for tribes that go it alone. It would also set a high bar for qualifying non-tribal operators, requiring them to already operate in 10 U.S. jurisdictions or at least 12 U.S. casinos and have five live digital platforms. It would allow bets on professional, college and amateur sports and would not require official league data. It would be taxed at 10 percent.
Proponents say their measure doesn’t conflict with the tribal measure and both could pass, in which case tribal casinos and racetracks would offer retail sportsbooks, while digital betting would be offered statewide.
However, gaming tribes have already spent $12 million on the sports initiative that would give them—and racetracks—a monopoly on sports betting. They’re unlikely to support this new proposal or any compromise.
According to one industry source, the sportsbook operators tried to be a part of the original tribal measure, and see this new proposal is as a way to work with the tribes. To support the measure or not will be a dicey proposition for companies that operate retail sportsbooks but also manage tribal casinos, such as Caesars or MGM.
The Juiciest Prize
With a population of 40 million, California is the juiciest untapped sports betting plum in the nation. BetMGM CEO Adam Greenblatt commented,
“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.” He added, “As we’ve seen in states where BetMGM currently operates, regulated sports betting brings in tax revenue that supports important causes – in this case finding solutions for homelessness and mental health support.”
The three possible rival sports betting initiatives sets up 2022 as possibly one of the most expensive elections on records. The tribes and card clubs have long battled, with card clubs generally losing ground. But the entry of the sports betting operators complicates things.
One other possible scenario: The legislature could create a compromise measure that would give enough to everybody to get all three to withdraw their measures.
