Sportsbook Brands Willing To Pony Up Big Bucks As Part Of Third CA Betting Initiative

Posted By Matthew Kredell on August 31, 2021 - Last Updated on September 16, 2021

Sportsbook operators are putting up big money to back an online-only sports betting initiative in California.

This group announced they would be putting up an initial $100 million to fund the initiative campaign:

  • DraftKings
  • FanDuel
  • BetMGM
  • Bally’s Interactive
  • Fanatics Betting & Gaming
  • Penn National Gaming
  • WynnBET

Petitioners filed the initiative with California’s Attorney General’s office Tuesday morning. The actual individuals submitting the initiative are Kurt Onteo and John Moffatt, legal counsel to the campaign.

From a joint statement of the operators:

“A state that is home to many of the world’s most innovative technology companies should no longer be stuck with antiquated, unsafe and untaxed sports betting options. The Act ensures a comprehensive licensing process — one that requires extensive vetting of experienced operators — and creates a competitive marketplace, as competition for market share will ensure the best products and experience for consumers. The future of online sports betting is here and active across the country, and there is no reason for the Golden State to be left behind.”

Details of new CA sports wagering initiative

The initiative provides a high barrier to entering the mobile marketplace. Full language is available here. Key details include:

  • A $100 million initial license fee for mobile sports betting operators, renewable every five years for $10 million.
  • All online sportsbooks must partner with a federally recognized Indian tribe.
  • Tribes can develop their own online platform under the name of the tribe or tribal casino for a $10 million initial fee. It’s renewable every five years for $1 million.
  • A 10% tax rate on gross gaming revenue paid by the operator, or a tribe that develops its own platform.

The high fees likely would limit the number of mobile sports wagering apps to not many more than the seven sportsbooks backing the initiative. California has the highest population in the US at nearly 40 million.

There are 104 federally-recognized Indian tribes in California, meaning most wouldn’t take part. However, 15% of mobile sports betting revenue goes toward economic development and assistance to tribal nations that don’t participate in sports wagering.

Sports teams, cardrooms, and racetracks are left out of the initiative. Proponents still hope to get sports team support through the increased marketing and partnerships that mobile sportsbooks can provide.

Initiative puts sports betting revenue into social issues

California’s homelessness crisis has proven to be an intractable issue. Can sports betting be the answer?

The campaign committee behind the initiative calls itself Californians for Solutions to Homelessness and Mental Health Support. And the initiative is titled the California Solutions to Homelessness and Mental Health Support Act.

Nearly half of all unsheltered people in the US live in California. The initiative pledges 85% of sports betting tax revenue toward homelessness and mental health support.

Proponents project the measure could raise between $500 million and $1 billion annually.

Campaign manager Dana Williamson explained in a statement:

“Permanent solutions require a permanent funding source. 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. Funding from the initiative will help those experiencing homelessness get off the street and into housing, increase mental health services, and address issues of addiction.”

Backers trying to coexist with tribal initiative

Proponents are attempting to make their initiative complementary to the in-person tribal sports betting measure already qualified for the November 2022 ballot.

Any online sports betting operator seeking to participate in the California marketplace must do so through a California tribe.

If both initiatives pass, they can each go into law without conflict.

The joint statement contends:

“The Act recognizes the important role of California Tribal nations. Tribes are given the option of offering state-regulated online sports betting, and qualified gaming entities will be required to partner with tribes to operate online sports betting in the state. Tribes who do not participate in online sports betting will still benefit from the initiative.”

California sports betting efforts heating up

More than 30 states could have legal sports betting up and running by the end of 2021 or early 2022. California won’t be one of them.

With the world’s fifth-largest economy, there’s no lack of interest in bringing regulated sports wagering to the Golden State.

This is the third sports betting initiative filed in California, following the in-person tribal initiative and one backed by limited cardroom interests and possibly cities.

The tribal initiative includes the state’s four racetracks and retail sports betting locations. The cardroom initiative creates an open marketplace for sports wagering including sports teams, cardrooms, tribes and racetracks.

According to the joint statement:

“Californians are already betting billions of dollars illegally every year, and legalizing sports betting is effectively a direct transfer of jobs, economic impact and revenue from the unregulated, predatory, offshore illegal market to a closely monitored legal market. Legal sports betting will bring hundreds of millions in tax revenue annually to California — directly funneled towards two of the state’s most intractable challenges, homelessness and mental health.”

Path forward for CA’s newest sports betting initiative

To make the November 2022 ballot, the campaign must collect 997,139 valid signatures by April.

With $100 million pledged, there’s no doubt proponents are serious about taking this campaign to the finish line.

The California Secretary of State suggested all initiatives be submitted by Aug. 24 to ensure the full 180 days to gather signatures.

By missing that deadline by a week, the campaign will have slightly less than the full time to circulate.

Signature gathering won’t start until the Secretary of State provides a title and summary for the initiative in 65 days.

Proponents have 30 days to change any language in the initiative. The Attorney General accepts public comments on the initiative for the next 30 days.

Photo by Alexia Khruscheva | Dreamstime.com
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Matthew Kredell

Matthew has covered efforts to legalize and regulate online gambling since 2007. His reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. A USC journalism alum, Matt started his career as a sportswriter at the Los Angeles Daily News and has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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