Some online sports betting operators may be focusing on another run at legalization in California starting in 2025, not now as one group is attempting.
That was the impression given this past week at a sports betting and iGaming summit in New York hosted by investment bank and capital markets firm Jefferies Financial Group Inc.
A note to Jefferies clients published on Thursday summarized the affair and said operators “remain focused” on the possibility of legalizing online sports betting in new states, including California and Texas.
“[California] is generally classified as a work-in-progress as operators build relationships in the next few months with tribal entities, with hopes for a meaningful effort by 2025,” the Jefferies analysts wrote. “[Texas] also remains a potential positive for 2025, as its legislature does not convene in 2024.”
Throwback Thursday
The “work-in-progress” status and optimism about a “meaningful effort” by 2025 do not suggest a lot of faith in the ongoing effort to get a sports betting-related measure on the ballot in California in 2024. Recent polling released in connection with that effort reportedly suggests public opinion is lacking as well.
That effort continues, however, as the public comment period on the two proposed initiatives closed on Monday. The proponents now have until next week to amend the language of their proposals before another pause in the process. The chairman of the California Nations Indian Gaming Association (CNIGA), which opposes the 2024 legalization effort, has said he does not expect any signature-gathering for the initiatives can occur until around the end of January.
One reason why operators at the Jefferies summit may be looking past 2024 to 2025 is that they are not the ones behind the latest campaign to bring legal sports betting to California. Companies such as DraftKings and FanDuel backed a ballot measure in 2022 that aimed to authorize online sports betting in the state, but it was opposed by the influential gaming tribes and soundly defeated by voters. So, too, was another initiative supported by the gaming tribes that proposed in-person wagering at their casinos and horse-racing tracks.
A bull market for betting?
The Jefferies note said the interest in opening the Florida market to more online sportsbook operators — Hard Rock Bet has the state to itself right now, although there is an ongoing court challenge that could change things — “is more legally complex.”
On the iGaming front, there is hope for progress in New York and perhaps a few other states. In general, though, the notion of online casino gambling has not taken off in the U.S. the same way sports betting has.
“In our view, the [gross gaming revenue] levels generated thus far without super-states CA, TX and FL and limited iGaming legalizations leave a bullish set-up for the next few years,” the Jefferies analysts wrote.
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