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What is This Holy Grail of Gambling?

Written by:
Gilbert Horowitz
Published on:
Mar/30/2022

Voters in the nation's most populous state will get a chance in November to unleash a massive new industry in California — and provide a jolt to other holdout states.

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The industry is sports betting. 

“California is the holy grail of U.S. sports betting markets,” said Daniel Wallach, a Florida-based attorney who has advised various players in burgeoning sports wagering states. “This is going to be a half-a-billion-dollar battle for control of the most lucrative betting market in the world.”

State after state has legalized sports wagering since the Supreme Court cleared the way in 2018, but California has not.

The reason is the same as to why online poker was never legalized despite ten years of trying.  The state's tribes have been in conflict. Horse tracks, card rooms and platforms such as FanDuel and DraftKings are also standing in the way of any type of cohesion.

The competing proposal from international gambling companies would require the online platforms to partner with tribes and give them a cut.

Outside gambling companies have framed this measure as an anti-homelessness initiative.  The tribes have laughed off that notion.

Politico writes:

Tribal leaders aren’t buying it. Eight months before the general election, they have matched gambling companies with a $100 million counteroffensive to block the competing initiative, calling it a power grab that violates the spirit of a 1998 California law that authorized tribal gambling and transformed tribes into formidable political players. An ad campaign warns the proposal from “out-of-state corporations” would “break the promise” between voters and tribes.

“The main fight for us is to ensure we keep the corporations out of state from coming in. That’s the best thing for all tribes here in California,” Jesus Tarango, chair of the Wilton Rancheria tribe, said in an interview. If the betting platforms prevail, tribes “may get a piece of it, but it would not be the same piece as if it was controlled by us and ran by us.”

“The different factions, to date, just have never really been able to come together on anything. There’s such distrust between them,” said state Sen. Bill Dodd (D-Napa), who carried failed legislation to authorize betting. With online betting portals now entering the picture, Dodd added, “it probably is going to make it tougher on everyone in some respects, but they’ve at least got the money to put together a legitimate campaign and their competitors have to recognize that. Maybe that brings some others to the table.”

Don't get your hopes up, as Politico notes:

Much of the action in California will be defensive as players will spend prolifically to block their opponents. The tribes’ longtime gambling nemeses — card rooms and the tax-satiated cities where they are located — look unlikely to qualify a measure giving them a slice. Nevertheless, they have loaded more than $24 million into a campaign committee battling the tribes, warning the measure contains provisions that expose card rooms to greater legal peril and decimate municipal budgets.

It’s possible California’s fight could produce a costly stalemate this year. Industry players are prepared to spend heavily to defeat their opponents, and voters often react to multiple initiatives on the same topic by voting for none of them. That would shift the conflict to the next election cycle — when competition could be even more fierce.

“The finish line is clearly in view and there’s a chance that each stakeholder, each ballot proponent could be on the losing side,” Wallach said. “In 2024, California’s 19 national sports teams are going to look at the landscape around the country and wonder, ‘Well, why can’t we have that, too?’ There will be more seats around the table than in 2022.”

- Gilbert Horowitz, Gambling911.com

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