California’s Billion Dollar Online Sports Gambling Gold Rush

A battle royale is shaping up between Native American tribes and the “Three Kings” of online gaming in the USA over the future of a new California sports gambling gold rush.

At stake are hundreds of millions—perhaps billions—of dollars that can be mined in America’s Golden State, the wealthiest in the nation, which, if it were an independent country, would be the fifth richest in the world.

All will be revealed this November when two new bills seeking to legalise online sports betting go before the California State Capitol in Sacramento.

One bill is supported and financed by the nation’s big three sports betting verticals — DraftKings, FanDuel and BetMGM.

The so-called “Three Kings” group has amassed and submitted more than the one million signatures of state voters needed by law to call a referendum on the measure.

If verified by state officials, the iGaming ballot will run alongside another proposal being driven by a coalition of tribal peoples, who hitherto have had a monopoly on gambling in the state.

This bill seeks to legalise sports betting only at casinos operated on Native American lands and at horse racing tracks.

There’s a very strong likelihood that both measures will pass muster with California voters – leading to a legal face-off between the competing claimants.

Legalised online and retail sports betting could generate about US$3 billion (£2.45bn/€2.88bn) annually in revenue for operators, experts estimate.

Currently, California’s gambling industry has a handle of some US$50 billion a year (£40.9bn/€48.06bn).

“You have at least two well-funded measures, a growing number of well-staffed campaigns and a jaw-dropping amount of money at stake,” noted Jason Kinney, a political consultant who isn’t connected to any of the sports betting proposals.

According to reliable reports, the “Three Kings” cabal has already spent US$100 million on its campaign (£81.9m/€96.1m) to legalise online sports betting in the state, population 39 million people.

Battle Lines

They’ve wrapped their power pitch as a do-good measure to combat the surprisingly high level of homelessness in the land that personifies the American Dream.

Their initiative is called “The California Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative (2022)”.

Under the proposed bill, sports betting will be taxed at 10 per cent, with 85 per cent of the levy going towards combatting homelessness. The remaining 15 per cent of tax revenues would be distributed to Native American tribes who are not participating in online sports wagering.

Online sports betting would be open to “qualified gaming entities”, presumably top gamers like themselves, who would have to pay a licence fee of US$100 million.

Tribal operators–and online platform providers they partner with–would pay a relatively modest licence fee of US$10 million each (£8.19m/€9.6m).

With suggested levies of such magnitude, it’s plain to see how much the ambitious “Three Kings” believe the California iGaming gold rush is worth.

But the 60-odd Native American tribes who already operate casinos in the state are clearly not enamoured with the perceived interlopers, believing, perhaps rightly, that they will only undermine their control over California’s legal gambling market.

“This is not about money,” asserted one tribal chief, Mark Macarro. “It’s about protecting our tribal gaming rights and long-term self-sufficiency.”

In all, California’s Native American tribes have spent around US$350 million (£286.6m/€336.4m) lobbying and advertising against the DraftKings, FanDuel and BetMGM proposal.

With legalised sports betting now firmly ensconced in most of America’s prime state markets, California remains the last great prize.

The battle lines have been drawn.