New Sports Betting Initiative in California: DraftKings, FanDuel, and BetMGM Team Up
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California is getting closer to the potential legalization of sports betting, and significant progress could come from a new initiative that will be driven by some of the biggest players in the industry. DraftKings, FanDuel, and BetMGM have established a campaign committee and introduced the California Solutions to Homelessness and Mental Health Support Act. These sportsbooks have pledged $100 million to this initiative which will fund homelessness and mental health efforts through sports wagering revenue. The proposal limits online betting to individuals aged 21 years or older and, according to proponents, gives the California Department of Justice “broad power to regulate online sports betting” to protect against “corruption or illegal activity.”
A Permanent Solution to a Long-Term Problem
Dana Williamson, the campaign manager, spoke about the need for a permanent solution with a permanent funding source to long-term issues in California. According to a federal report, the California homeless population increased by almost 7% from January 2019 to January 2020 and how now reached 161,548 people. That represents almost 30% of the estimated 553,742 homeless people in the United States; that’s disproportionate to California’s population of 39.5 million, about 12% of the United States.
Sports betting could become the savior for California as it looks to generate revenue to solve its housing crisis. Forbes reported that the United States sports betting market generated $1 billion in revenue in 2020 and that number is projected to grow six times over by 2023. If sports wagering is legalized in California, it will instantly become the largest market in the country and the potential for revenue would be staggering. New Jersey has reported over $400 million in sports betting revenue YTD and its population is about a fifth of California’s.
Tribal Hurdles to Legislation
One major consideration as the legislation moves forward in California is the need to recognize the rights of Native American tribes. Per the Los Angeles County website, there are currently 109 federally recognized Indian tribes in California and 78 entities petitioning for recognition. Four such tribes have presented an initiative for sports betting that has received the requisite signatures to go before voters on November 8, 2022. This initiative would allow for in-person sports betting at tribal casinos as well as four horse-racing tracks including the Santa Anita Park, Del Mar Racetrack, Los Alamitos Race Course, and Golden Gate Fields.
Williamson, the campaign manager for the California Solutions to Homelessness and Mental health Support Act, has said that his team’s initiative still protects the tribes as any online sports betting operator in California would need to partner with a tribe. However, there will still likely be some significant pushback from the Native American tribes who have already donated about $12 million to their sports betting measure. Many of California Governor Gavin Newsom’s consultants are tied to Williamson’s campaign, and he risks alienating the tribes who have channeled over $3 million of about $60 million in funding against Newsom’s potential recall.
Cities Gaming Initiative
A third initiative is also in the works from the California Cities Gaming Authority. This initiative requires a fiscal analysis by the state’s attorney before supporters can begin circulating petitions, but it calls for a much more open sports betting structure in California. Under this proposal, any entity would be eligible for licensing in the state including Indian tribes, horse-racing tracks, card rooms, professional venues, and mobile options. 25% of the gross receipts would go to the state’s general fund for homelessness under this proposal and another 1%, up to $10 million, and all licensing fees would go to responsible gaming programs.
Next Steps
With three separate proposals potentially headed for the ballot for a resolution next summer in the state Capitol, there is significant work to be done by all parties involved. Lawmakers could attempt to craft a combined effort that would make the Native American tribes, card rooms, and national sportsbooks all happy, but that may prove to be too difficult an undertaking. Bearstar Strategies, a political group including Newsom, US Vice President Kamala Harris, and US Senator Alex Padilla, among others, has been hired to help the California Solutions to Homelessness and Mental Health Act get over the finish line, and that level of governmental support is significant. In any case, the legislative process in California is heating up and residents should be excited for the future possibility of legalization of sports betting.
