California, IGaming’s Biggest Prize, Remains Just Out Of Reach

It could have been a classic and uplifting scene straight out of a revisionist left field western: a virtuous circle of “Cowboys and Indians” seeking the same noble outcome, clean and regulated sports betting for all in California, America’s Golden State.

But instead they shot each other in the foot through righteous indignation and grabby discord.

Ranged against the “cowboy” heavy-hitters–FanDuel, DraftKings and BetMGM, the biggest sports betting brands in the US–was an alliance of 50 Native American Indian bands or tribes.

Proposition 27 clashed with Proposition 26.

And both were snubbed by voters in California earlier this month – propositions, either one, that would have legalised sports betting in the nation’s most populous state, which if it were a country would be the world’s seventh richest.

Proposition 27, officially named the California Solutions to Homelessness and Mental Health Support Act, was soft-centred on a plan to generate an estimated US$500 million (£421.02m/€482.26m) in annual iGaming tax to spend on increased social welfare for the poorest of the state’s 39 million people.

But, instigated and promoted to the tune of US$169 million (£142.3m/€163m) in an advertising blitz by the heavy-hitters, it was overwhelmingly rejected by Golden State voters by a margin of 83.4 to 16.6 per cent.

Proposition 26, backed by the state’s Native tribes, who hitherto have had a monopoly on land-based casino gambling, was kicked back by an equally resounding 70 per cent of voters — despite an even more immense US$237 million campaign budget (£199.56m/€228.59m).

The results mean that fabulous California, home to some of the most storied sports teams in the nation, along with potentially big-time Texas and Florida, remains tantalizingly beyond the reach of iGaming America.

With an estimated potential annual revenue of some US$3 billion (£2.52bn/€2.89bn), according to some betting industry experts, it could be the richest prize in sports betting.

But now, as both sides retreat to bind their wounds, it will be at least 2024 before the iGaming proposition, or, heaven forbid, competing propositions, are ready to go again.

A Big Flop

“These out-of-state corporations have gotten arrogant,” says Dan Little, Chief Intergovernmental Affairs Officer of California’s San Manuel Band of Mission Indians, one of the biggest gaming tribes on the West Coast.

“They overplayed their hand. They could have worked with us and they didn’t. And they lost miserably.”

Another observer told this reporter: “I have never seen anything in my career that’s this big of a flop.”

It seems that California will now be one of the last of the 50 US states to allow sports betting, following its legalisation on a Federal level by the nation’s Supreme Court in 2019.

Still: “There is a path to get there,” believes Amy Howe, CEO of Flutter Entertainment-owned FanDuel, the first of America’s many dynamic sportsbooks to turn a profit.

Yet surely that pathway lies only in alliance with California’s Native American tribes.

Despite this obvious route to success, the adjudged “greed” of the heavy-hitters could stymie compromise.

“These guys have got to understand that they have to be a little more humble. If it’s the same approach in two years, [then] it will be the same result,” warns one tribal gaming leader.

Nationwide, the American Gaming Association, the gambling industry trade group, estimates that punters have bet US$125 billion (£105.25bn/€120.56bn) on sports, and generated US$1.3 billion in taxes (£1.09bn/€1.25bn), in the four years since regulation.

Currently, sports betting is legal in 35 US states, with some 80 per cent of bets being are placed over mobile phones.

With the top sportsbooks spending around a billion dollars a year in promotions alone, the near-term future is all about dominating market share, believes Amy Howe and competing sportsbooks’ CEOs.

But for now–like the infamous Gold Rush 1849ers–the potentially vast, unregulated wealth of Californian iGaming and sports betting remains a chimera for even the bravest treasure hunter.