I don’t view Derek Stevens as a typical online sports betting executive, at least not in our current era of limiting, same-game parlays, and what can sometimes feel like a general squeezing of players.
The Circa Sports boss gives off the “Old Vegas” vibe, and his sportsbook can cater to a sharper clientele who most likely appreciate that vibe, as well as the operator’s higher limits. That model can sharply contrast with that of other OSB operators.
So when Stevens voiced concerns about sweepstakes casinos and sportsbooks last week at the Global Gaming Expo, it was duly noted. The comments felt to me as more suited to someone like DraftKings CEO Jason Robins, who had spoken just before Stevens but not mentioned sweeps.
It's not realistic that current sweeps situation is sustainable, Stevens says. Notes that Circa put a lot of effort to launching legal sports betting in five states. But we're in early stages of sports betting and sweeps might not be on everyone's radar, he adds.
— Geoff Zochodne (@GeoffZochodne) October 9, 2024
But, according to Stevens, sweeps — which use a dual-currency model wherein no purchase is necessary to bet but allows users to buy more credits to play slots or make sports wagers — have found a legal “loophole.”
Stevens also said certain sweeps are “absolutely” sportsbooks. And yet, the Circa CEO added, these companies hold no state licenses and pay no gaming taxes.
These sweepstakes may not be on everyone’s “radar” either, Stevens told the crowd at G2E. And while they may not present a threat yet to Circa or other sportsbook operators, Stevens questioned whether the status quo is sustainable.
“I don’t think states' attorneys generals and state legislators have a full comprehension of how big this is,” he said. “Because with the sweepstakes … we’re talking billions of dollars here. It’s just exploded.”
Heads up
That ignorance is eroding. A few state regulators, such as the Michigan Gaming Control Board, have even sent cease-and-desist letters to sweeps operators in the past.
However, Stevens and other influential groups are trying to draw more attention to the sweeps boom, which may not have hit home for everyone. Moreover, given who is sounding the alarm, the radar antennas of more and more regulators and lawmakers may start to register that sweeps activity as well.
Sweepstakes operators maintain they follow all the applicable laws and rules where they operate, which is more than 40 states. But those assurances seem unlikely to stop pushback in the most populous jurisdiction in the U.S., and perhaps elsewhere.
Victor Rocha, host and conference chairman of the Indian Gaming Association, says he had missed "threat" of sweepstakes to tribal gaming until he attended a mixer at G2E and everyone was talking sweeps. Likened it to movie Blade when guy realizes he's in a party full of vampires.
— Geoff Zochodne (@GeoffZochodne) October 16, 2024
Arguably, one of the harshest broadsides to date came this Wednesday during another edition of the Indian Gaming Association’s “The New Normal” webcast, which looked at sweepstakes and DFS operators and the concerns they present for tribal gambling in California.
Victor Rocha, the Indian Gaming Association’s conference chairman, said he was really alerted to the “threat” to tribal gaming after attending a party at G2E and finding everyone talking about sweepstakes.
Rocha likened the scene to the movie “Blade,” which starts with someone walking into a rave before gradually realizing he’s surrounded by vampires after blood begins to pour from the fire sprinklers.
“I was in a vampire party,” Rocha said.
A lot at stake
While he left before any actual blood hit the floor, Rocha called sweeps “gambling on training wheels” and something that is cannibalizing the business of tribal gaming operators.
“They want to get between us and our customers again,” Rocha said. “This is about erasure.”
California’s gaming tribes are not about to let themselves get elbowed out of the way.
The IGA webinar’s focus on California was intentional, as what happens in the Golden State is often felt and heard elsewhere, especially when it comes to tribal gaming.
For instance, it was in California where gaming tribes fought off a hugely expensive effort by online sports betting operators to legalize their products at the ballot box.
The tribes now sound as if they are prepared for another fight over DFS and sweeps to protect their control over legal gaming in the state, and have even taken some action of their own on that front.
“Any new entry of gaming into California begins and ends with tribes,” said James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), during the webinar. “That’s it, that’s the reality of how gaming operates in California. You may not like it, but that’s the reality, and you will respect it. You may not do it right now but you will respect it at the end of the day.”
Siva said they have been watching so-called “DFS 2.0” (or pick’em fantasy versus the house) and sweeps since late 2023, when California's attorney general was asked for an opinion on the legal status of DFS.
Asked why California has not hit certain online gambling operators with cease-and-desist letters like other jurisdictions, Siva said the current enforcement is consistent with the “status quo” in the state. Lawmakers and regulators will ignore new forms of gaming if the public likes it, he suggested, which allows companies to establish themselves.
“With everything happening right now, [DFS/sweeps operators] have made sure that the radar of California tribes is on them, so this is going to be another big push for us,” Siva said.
More than talk
So sweeps are on the radar of gaming tribes in California. Those tribes are now trying to get the issue on the agenda of others.
CNIGA has pushed back on DFS by providing feedback to the AG’s office (the tribes view it as illegal in all forms), but Siva also said they are sending a letter this week to Google to object to certain online gaming apps offered in its mobile store. A similar letter will be sent to Apple.
“Because the longer they’re here the more entrenched they get,” Siva said. “But we will stand up and protect our sovereignty every day of the week.”
California's tribes have indeed had some success in Sacramento recently, which has them optimistic they could see similar gains regarding DFS and sweeps.
“Legislatively, it’s something that we could definitely tackle,” Siva said. “We have the momentum, we have that kind of unity that we’ve really been working on.”
