Now that Proposition 27, the bill that would legalize online sports betting in California, is heading for a decisive defeat in November, FanDuel and DraftKings are already signaling their readiness to rejoin the battle... in 2024.
That was the message delivered by DraftKings CEO Jason Robins and FanDuel CEO Amy Howe at Tuesday's G2E panel discussion in Las Vegas. The heads of the two major sportsbooks begrudgingly admitted defeat this time around but expressed optimism that voters may be more amenable to California sports betting in two years' time.
Sportsbooks will "live to fight another day"
The CEOs were united in their belief it is only a matter of time before voters are ultimately persuaded to jump on the legal sports betting bandwagon.
"The more time people in California get exposed to the messages, the more they’re able to sift through what’s true and what’s not," Robins said, after complaining about what he described as unfair attack ads put out by the coalition of 51 native tribes that oppose Prop 27.
"I think you’ll see more momentum toward ’24, hopefully, maybe even in ’22, but probably more likely in ’24 when that’s getting passed."
FanDuel's Howe echoed her fellow CEO's assessment of the state of things and hinted at a possible future collaboration with the tribes:
"It’s hard to imagine that sports betting won’t include the state of California. It’s always been our industry’s intention to try and find a solution that aligns the stakeholders — the tribes, racetracks, government, and ultimately consumers," said Howe. "We believe there is a path to get there. Whether we get there in 2022 or get there in 2024, we believe it is the right path...."
Added Howe, without suggesting any clear strategy to reverse voters' mindset:
"If Proposition 27 doesn’t pass this time around, we will live to fight another day."
No responsibility taken for failed messaging
Neither Robins nor Howe were willing to admit any responsibility for the collapse of the Prop 27 campaign, which saw the sportsbooks pour nearly $200 million into a massive TV ad campaign in support of their doomed bill.
Robins placed blame on the native tribes for running "false and misleading" attack ads that turned Californians against the sportbooks, adding: "When the opposition side is going to spend over $100 million [on such ads], it's just tough to beat."
Robins also suggested that Proposition 27 only qualified for the November 8 ballot at the beginning of July, leaving the sportsbooks too little time to sway public opinion, adding that it "wouldn’t have mattered" what kind of message the backers of legalized sports betting would have put out.
However, the operators may well have engineered their own defeat by virtue of misleading messaging that saw them label their online sports betting measure as the "California Solutions to Homelessness and Mental Health Support Act."
The title was in reference to the 10% tax on sportsbooks revenue that would see 85% of tax collections go to homeless and mental health care initiatives, while the remaining 15% would fund non-gaming industry-affiliated tribes.
The obfuscatory wording of the bill was attacked by the native tribes and other groups as being a cynical and misleading attempt to deflect attention from the underlying intent of the bill — to legalize online sports wagering.
According to last month's L.A. Times/UC-Berkeley poll of likely voters, Californians were expected to reject Prop 27 by a massive 53% to 27% margin.
Those surveyed indicated that they were concerned over the potential dangers of legalized sports betting as well as an apparent underlying distrust of out-of-state sportsbooks taking control over an industry that has been predominantly under tribal control since 2000.
Looming defeat will prolong illegal wagering by Californians
California is not only the richest state in the U.S. but also its most populous, with 39.4 million inhabitants. The sportsbooks covet the Golden State as the Holy Grail of sports wagering, with an estimated annual revenue potential of over $3 billion, according to estimates by Eilers & Krejcik Gaming.
The state represents the nation's most lucrative untapped mobile wagering market — ahead of Florida and Texas — of the remaining 14 states that have yet to legalize sports betting.
California is also believed to be the largest source of illegal sports betting wagering in the U.S.
Only a few hours prior to the Robins/Howe panel discussion, American Gaming Association CEO Bill Miller reminded attendees that this year will see Americans place over $300 billion in illegal bets — most of which are wagers on sporting events.
Robins later homed in on the theme of illegal sports wagering during his time on the podium.
"It is a massive thing that tens of millions of Americans are betting in illegal markets," said Robins. "Not only does that create a threat in terms of having something that’s not safe for consumers, from a competitive standpoint it also puts us at a disadvantage because we have to pay taxes and do checks."
Added Howe: "Nine out of 10 sports bettors said they want to be betting on a safe and legal regulated platform."
