A group of prominent sports betting operators is aligning with the Indian Gaming Association’s (IGA) fight against sweepstakes gaming and daily fantasy sites in California and other U.S. states.
As a guest on the IGA’s Wednesday webinar, Sports Betting Alliance president Jeremy Kudon said now is the time for industry leaders to stop what this partnership believes are illegal gaming operations.
“I think that this is a moment for all of the regulating operators, it doesn't matter who they are, and the sovereign tribal nations to band together, unite here, and let's root out the unregulated gaming,” Kudon said. “It’s like a pandemic right now.”
The SBA represents DraftKings, FanDuel, BetMGM, and Fanatics Sportsbook. The organization helps legal, regulated gaming operators get sports betting and online casinos into new states.
The IGA, which aids tribal nations with gaming compacts and protects that sovereignty on Indian lands, said last week that sweepstakes gaming and DFS are illegal in the Golden State.
“This is a moment in time in which the industry has wakened up and understands that we’re at a crossroads here, and if we don’t do something about this we’re all going to be regretting it,” IGA conference chairman Victor Rocha said Wednesday. “We can’t allow something like this to happen on our watch. This will not stand in California.”
Reasons to fight
Sweepstakes sites like Fliff Social Sportsbook and Chumba Casino have become the talk of the gaming industry in recent weeks.
This form of gambling is largely unregulated across the U.S., meaning it's not licensed, taxed, or held to the same responsible gaming protocols as legal operators. California sports betting and iGaming aren’t currently legal and regulated in the state.
Sweepstakes operators offer free games and coins. Some sites allow coins to be traded into cash while others promote users purchasing virtual currency with Visa, Mastercard, or bank accounts. Winnings from familiar-looking sportsbooks and online slot games can later be turned into real cash and prizes and paid out like at FanDuel or DraftKings.
Kudon said sweepstakes gaming operators, which don’t always require users to be 21 years of age, are quickly growing in popularity on college campuses.
“This is not an industry that’s in this for entertainment,” Rocha said. “It’s an industry that’s grooming the next generation for gambling. That’s why you see all the Wall Street money and investor money.”
Big-time money
According to Kudon, the sweepstakes gaming industry has generated $2 billion and could be up to $4 billion by 2025.
“That’s money that could be going to states,” Kudon said. “That’s money that could be going to tribes. They’re taking money away right now. It’s amazing how long this went kind of under the radar.”
He called sweepstakes gaming a “bigger issue” than DFS operators like PrizePicks and Underdog, and while legal sports betting operators have long been focused on battling legislatures and tribal nations, the “unregulated problem” is plaguing the industry now.
“We’ve moved beyond just the offshore sportsbooks that have always been out there and been a problem,” Kudon said. “We’ve moved beyond just the neighborhood bookies. Now you have these sweepstakes sites … that are offering these wagers and contests that are typically seen on a regulated, taxed online gaming site.”
VGW, an Australian company that owns Chumba, is especially drawing the attention of the anti-sweepstakes crusaders. Kudon compared VGW to FanDuel or DraftKings in terms of market dominance.
“That is the one that everyone is looking at,” Rocha said. “They spend a lot of money. I’m hearing estimates in California anywhere between $500 million and a billion dollars that are currently being siphoned out of California. Not necessarily all by (VGW), but they’re making big noise around the globe talking about how much money they are.”
Another round
This is not the first time tribal nations have taken on the task of keeping DFS out of California. Many states fought a similar battle with DraftKings and FanDuel when they were skill-based fantasy game operators. Players competed against each other, not the house.
That was before those sites evolved into regulated sportsbooks following the overturning of PASPA in 2018. Now, the attention is on PrizePicks and Underdog, which Kudon said their sports betting operators are using “fantasy sports” but offering player-prop parlays.
“That’s the same wagers that FanDuel, DraftKings, BetMGM, and Fanatics offer on their sportsbooks,” Kudon said. “In some states, and I believe California is one of them, you’re playing against the house. It’s no different than a book. They should be regulated as sportsbooks. They shouldn’t be operating in California if they’re using an against-the-house model.”
Stopping it
The IGA and SBA hope to impress upon Attorney Generals throughout the U.S. and tribal leaders in states like California, Florida, and Oklahoma, among others, to push for halting unregulated gaming operators.
They aren’t alone, either. Rocha said the American Gaming Association, a trade industry group, is joining their cause as well. The AGA recently asked state legislators and regulators to crack down on sweepstakes gaming and DFS sites.
“I know there’s an argument about loopholes. I don’t necessarily think there are loopholes in any state,” Kudon said. “I think it’s just a matter of finding the resources and making this a priority. What you guys (at IGA) have done is bring this to the light.”
Kudon, who regularly works with state officials, said the federal government has the ability to get involved. Laws allow the Department of Justice to stop companies from engaging in illegal gambling.
Meanwhile, he added that state lawmakers have a lot on their plates, especially in this election year. He said regulatory bodies don’t have the resources, are already stretched thin and are often limited to licensed operator jurisdictions, not telling outside companies what they can and can’t do.
After last week’s webinar shed light on the issue among Indian nations, Rocha said he heard from many tribal leaders who are taking it seriously.
“They’re shocked at the magnitude of money and the arrogance of these guys coming into California thinking we won’t react,” Rocha said. “The big thing is, we’re not alone.”
