The Battle Over California Sports Betting

Panning the rivers

In 1848, businessman and journalist Samuel Brannan made history by publicizing the first finding of gold on the American River in California. The subsequent seven years have since been labeled the California Gold Rush – a time when approximately 300,000 people traveled to the state from the US and abroad to hunt for their fortune.

this time, visiting prospectors won’t be panning for gold

Now, California could be on the verge of another incredibly prosperous period, although this time, new visitors won’t be panning for gold. Thanks to multiple proposals set for the November ballot, the state is on the precipice of joining the 34 other jurisdictions in the US that have legalized sports betting.

Earlier this year, Peter Schoenke, a board member of the Fantasy Sports and Gaming Association, described California as “the holy grail” for sportsbooks, and it’s easy to see why. It’s the US’s most populous state with around 39.7 million citizens. If it were to legalize sports betting, it would have the largest pool of potential players by far.

In light of this, industry consultants have predicted “the most expensive political battle this year” with commercial sports books and California tribes competing for control of the market. As this conflict heats up, desire for fortunes and tribal friction have created a stark resemblance to that Gold Rush almost two centuries ago.

Making a fortune

“Gold! Gold! Gold! From the American River,” Brannan cried as he ran through the streets of San Francisco in 1848. The founder of the California star newspaper is widely considered the Gold Rush’s first millionaire, but the period would make plenty more people rich. Estimates suggest California prospectors extracted more than $2bn worth of precious metals during the period, revitalizing the US economy in the process.

could raise as much as $3bn in annual revenue

Sportsbooks such as DraftKings, FanDuel, BetMGM, and PointsBet are now hoping they can channel the spirit of Brannan by making their California fortune. Preliminary estimates certainly suggest they could do just that. Chris Grove, a sports betting industry investor cited by ESPNhas predicted a mature California online betting market could raise as much as $3bn in annual revenue.

To put that into perspective, New Jersey sportsbooks generated a US record $815.8m in revenue last year. In fact, the entire US generated just $4.29bn in its record setting 12 months.

In predicting the potential of California, it’s also important to note the performance of one of the newest additions to the US’s mobile betting market. New York has seen unparalleled success since launching in January, already boasting the largest online market in the country. Up to the beginning of April, New Yorkers had already placed $5bn in wagers.

Much of New York’s success has been attributed to its population of 19.3 million, making it the most populous state with legal sports wagering currently. However, California dwarfs New York with more than twice that number. Based on New York’s current trajectory – $412m in revenue by the end of April – California has the potential to reach at least $2.5bn in just its first year.

A boom deal for tribes

Although prospectors such as Brannan made their fortune during the Gold Rush, it also had much more sinister consequences for another community. Before European settlers arrived during the period, around 300,000 Native American people lived in the state, but settlers brought violence and disease. By 1870, just an estimated 30,000 tribes people remained.

Since that time, the state’s Native American population has now grown to around 700,000. California’s tribes rightly have a much stronger voice in the state’s political landscape in the 21st century, and they are using their sway to ensure they get maximum profits from the Gold Rush this time around through their own betting proposal.

would completely exclude commercial betting operators from the party

Their main wagering measure, which has already qualified for the November ballot, would legalize retail sports betting only at tribal casinos, state horse racetracks, and certain card rooms. If passed, it would completely exclude commercial betting operators from the party, allowing the tribes to claim almost the entire spoils.

A retail-only market does not promise as many profits as its mobile counterpart, but the tribes are ready to fight for it. Reportedly, the San Manuel Band of Mission Indians, the Rincon Band of Luiseno Indians, and Wilton Ranchiere are prepared to pour at least $100m into a political fight over the issue.

It certainly looks like it will get that expensive, with the tribal proposal up against an online betting measure from a sportsbook coalition. Backed by BetMGM, DraftKings, and FanDuel, the measure has earned 1.6 million signatures, more than qualifying it for the November ballot. Ultimately, the people of California will decide which betting framework suits them best, if any.

Riled by this proposal, the tribes have also introduced another measure that grants their casinos the right to add online wagering options.

All that glitters

When the Gold Rush ended in 1855 it left some lucky prospectors – such as Brannan – with worldly fortunes. However, the majority of settlers who traveled to California were left with little more than the cash they had arrived with, and others ended the period even poorer. Ultimately, many fortune seekers learned a difficult lesson: all that glitters is not gold.

Californian tribes and sportsbook operators are in danger of falling down the same path as these unlucky settlers. California is the state with the highest number of professional sports teams, but residents still have to leave its borders to wager on games. Although it’s often seen as ahead of the times on a number of matters, the state has been left behind on betting as a result of in-fighting.

the tribes and operators aren’t helping matters by battling over the issue

This isn’t the first time betting backers have attempted to legalize the gambling vertically in the state either. The conversation has fallen flat on several occasions in the past due to the complicated nature of the state’s constitution and the decades-old compacts only allowing casinos on tribal lands. There is certainly no guarantee of any sports betting proposal will pass in November, and the tribes and operators aren’t helping matters by battling over the issue.

Not only could this have an impact on California wagering, but it could also have wider-reaching implications stretching far across state borders. John Holden, a professor at Oklahoma State University, believes legalization in California could lead to similar policies across the rest of the US. “A lot of people basically think the rest of the country will legalize if California does,” he told political last month.

Ultimately, it looks like the new Gold Rush will arrive at some point in the future, but California’s modern-day prospectors must take lessons from the past to ensure they can all share in the spoils.

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