6.7 C
Wednesday, November 30, 2022

California sports betting bills deemed ‘critical to the future of the entire industry’ likely to fail [Video]

the midterm elections 2022 had the potential to become one of the most important days of the sports bets industry, which has been experiencing years of seemingly exponential growth in the market.

But Tuesday will likely be when one of the fastest-growing industries in the US gets a reality check, given that two sports betting measures on the ballot in California are expected to fail.

California voters will be asked to decide on proposition 26that would allow in-person sports betting on tribal lands, and proposition 27a bill that would allow mobile sports gaming statewide.

“California is too big a market to leave behind,” Joel Simkins, managing director of investment banking at Houlihan Lokey who focuses on gaming, told Yahoo Finance. “Obviously it is very critical for the future of the entire industry, especially on the business side, to make the economic model work. If we get the California domino to fall, Texas and Georgia will follow, and now we have some scale to make it work.”

A recent survey from the Public Policy Institute of California indicates that a majority of voters do not oppose either proposal, potentially eliminating a crucial stepping stone in the game expansion. The study found that among likely voters, 67% would vote no on Proposition 27, 57% would vote no on Proposition 26, and 48% of those likely voters think sports betting in general would be a “bad thing.”

“It’s not looking good at all for either of them,” Kathy Fairbanks, a spokeswoman for the Yes on 26/No on 27 campaign, told Yahoo Finance.

tribal power

The Supreme Court struck down the federal ban on sports betting in 2018, leaving the legality of the activity to individual states.

Since then, 35 states and Washington DC have legalized sports betting. The market has grown rapidly, with sportsbook generating nearly $3.1 billion in gross gaming revenue during the first half of this year, a 66% year-over-year increase. according to the American Gaming Association.

At the same time, California’s strong denial of Proposition 27 is proving to be a clear statement: In some states, tribes have more power than public companies.

The tribes are the main gaming operators in California. The legislation greatly limits other forms of gambling outside of card table operators and horse racing tracks.

The stories of the failures of Proposition 26 and Proposition 27 focus on the tribes that defend that position. while outside the national gaming operators as FanDuel (PDYPY), DraftKings (DKNG), BetMGM (MGM), and Penn Entertainment (PENN) try to penetrate the market.

Prop. 26 passed first and would allow tribes to offer sports betting on their premises. The tribes argue that this is a more responsible solution for sports betting, in part because in-person betting helps solidify the verification process and ensures that minors don’t gamble online.

Prop 27 specifically allows mobile sports betting operations outside of tribal lands. This would open up the state to any operator and severely affect the tribe’s current monopoly on brick-and-mortar casino revenue.

May 7, 2022;  Louisville, KY;  Vishal Singh and Andrew Gansalves review betting slips before the 148th Kentucky Derby at Churchill Downs.  Photo: Jamie Rhodes-USA TODAY Sports

May 7, 2022; Louisville, KY; Vishal Singh and Andrew Gansalves review betting slips before the 148th Kentucky Derby at Churchill Downs. Photo: Jamie Rhodes-USA TODAY Sports

Unless the tribes, who believe they have the pulse of voter sentiment in California, join forces with the operators, a continued gridlock in the state could hamper the expansion of sports betting across the country. California, unlike other states, requires that this type of legalization be approved at the ballot box, not by state legislators.

“We have to beat 27,” Fairbanks said, admitting that the failure of Proposition 27 is more important than the passage of Proposition 26. “That is by far our number one priority.”

Proposition 27 is ‘a way to help states solve problems’

Gaming operators supporting Proposition 27 argue that the expected hundreds of millions of dollars in state tax revenue from their operations can be used to fund “mental health treatment and solutions for homelessness and addiction.”

“Especially going into a bear market where we are likely to soon have deficits as a state, creating a safe and regulated online sports betting market is one way to help states solve problems,” Nathan Click, spokesperson for the Yes on campaign. 27. , he told Yahoo Finance.

Prop 27 would bring a 10% tax rate on sports bets made, after deduction of other expenses. The New York deal is much more lucrative, with a 51% tax rate, while Pennsylvania charges operators 36%.

Opponents of Proposition 27 say it’s about more than money. Proposition 27 tapped into three tribes that support the legislation to run ad campaigns with statements like “the law supports all California tribes.”

More than 50 tribes and organizations statewide do not support the legislation. Mark Macarro, Chairman of the Pechanga Tribe, told PlayCA in October that the tribes are not interested in working with sportsbooks to legalize mobile sports betting.

Fans wait to enter the stadium by the BetMGM sportsbook before the game between the Washington Nationals and the New York Mets at Nationals Park in DC on April 7, 2022. (Photo: Brad Mills-USA TODAY Sports)

Fans wait to enter the stadium by the BetMGM sportsbook before the game between the Washington Nationals and the New York Mets at Nationals Park in DC on April 7, 2022. (Photo: Brad Mills-USA TODAY Sports)

“For investors, California might be an opportunity, but for tribes it’s home,” said Jacob Mejia, vice president of public affairs for the Pechanga Band of Indians. “It has always been a home. It will always be a home, and they must respect “The only industry that has lifted tens of thousands of Native Americans out of abject poverty. As long as that continues to be ignored, California will remain closed to sports betting. California is not a profit center.”

Thus, there is a potential conundrum for gaming operators after Election Day. DraftKings CEO Jason Robins has already order another race on the ballot in 2024. He and other companies have already invested heavily in eventual legalization in California and appear intent on making a comeback.

While things may change, the sentiment that the tribes would join forces and change the narrative in 2024 doesn’t seem optimistic.

“We have to respect the will of the voters,” Meija said. “We have to discern what they are saying. For many of us, they confirm what we’ve been saying for years, which is that voters don’t support online sports betting. So tribal leaders will have conversations about what’s next and we’ll see.”

Josh is a reporter and producer for Yahoo Finance.

Click here for political news related to business and money.

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app to Apple either Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, flip board, LinkedInY Youtube

– Article Written By @ from www.bing.com

Nicole Aniston
Nicole loves to write and works as a corporate communications expert by day. She's been working in the field for quite some time now. Her training in media studies has provided her a wide perspective from which to tackle various issues. Public relations, corporate communications, travel, entrepreneurship, insurance, and finance are just few of the many topics she's interested in covering in her work.
Latest news
Related news