Five More To Go
California sports betting talks progress, but challenges remain. Tribes and operators seek compromise, with key concerns around iCasino, revenue-sharing, market access, and tribal branding.
The Bulletin Board
THE LEDE: The five hurdles to legal sports betting in California.
BEYOND the HEADLINE: New regulations would kneecap CA cardrooms.
ROUNDUP: Ohio iCasino hearing; Indiana bill eases vendor licenses; MGM gets market access in Missouri; Quote of the Week.
NEWS: PENN-HG Vora fight intensifies.
AROUND the WATERCOOLER: The RG incentive structure is out of whack.
STRAY THOUGHTS: Why we like old things.
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The Lede: CA Sports Betting Needs to Clear 5 Hurdles
Brant James wrote a fascinating, detailed look at the current situation involving California sports betting for InGame.
James lays out the progress, noting that the sides are communicating with one another and are aligned on coming up with a compromise, but also the challenges.
“No one knows what new ideas or potential solutions will emerge [at an upcoming working group meeting on June 2]. But whatever does, this will remain a lengthy process. Tribal leaders say they won’t field an initiative to amend the state constitution and legalize sports betting before the 2028 election. But 2030 is also a possibility.”
As I previously wrote, tribes have three options:
Go it alone and launch self-branded sportsbooks through a B2B provider.
Find common ground and develop a framework with commercial operators.
Say F*** it, and push off sports betting altogether.
Commercial operators must convince tribes that Door #2 is the best option and then figure out how to create a framework that everyone can support, knowing that at any point in the process, tribes can shift to Door #1 (the messiest option) or Door #3.
I see five key concerns that will need to be addressed:
iCasino Guarantees: It’s hard to envision a compromise that doesn’t explicitly outline how online casinos would be handled in the future. Tribes have voiced concerns that sports betting will lead to online casino gambling, something they do not want unless they have complete control. Unlocking online gambling through sports betting, with no clarity around online casino, is not something the tribes are likely to do.
Revenue-Sharing Among Tribes: Tribes will need a clear, equitable model for distributing sports betting revenue among themselves. Larger gaming tribes may push for a structure favoring their established operations, while smaller tribes will likely demand protections to ensure they aren’t sidelined. A tiered or proportional revenue-sharing agreement, based on market participation or existing casino revenue, could be a sticking point to balance influence and fairness.
Revenue-Sharing with Commercial Operators: Commercial operators must propose a revenue split that ensures profitability. Tribes will likely resist any deal that feels exploitative or undervalues their market control. A framework might include fixed percentages or performance-based tiers, with guarantees that tribes retain the majority share of profits from their branded platforms.
Market Access: It’s not just a matter of who receives access to California as a platform provider. The state’s major gaming tribes are also keen on ensuring their place in the hierarchy, particularly since online gaming is the great equalizer, and every tribe is choosing between the same handful of suppliers. What are the key parameters for launching an online sportsbook? A land-based casino?
Tribal Branding: Tribes will prioritize maintaining their cultural identity and market presence through distinct branding of their sportsbooks. Any framework with commercial operators must allow tribes to control their brand identity, avoiding operator-dominated platforms. As Victor Rocha said on the Straight to the Point Podcast, there will be no “erasure.” This could involve exclusive tribal branding rights or co-branding agreements that elevate tribal names above those of commercial partners, ensuring recognition and fostering customer loyalty in a competitive online space.
To quote Sean Vasquez, president of Pechanga Resort Casino (h/t Legal Sports Report):
“Because you don’t have commercial gaming in this space, there needs to be tribal leadership on this initiative. Not tribal participation, tribal leadership. You have to have some sort of focus on helping all 109 tribes to uplift them, and I think most importantly, we have to have protection for our hard-fought sovereignty that we won.”
Beyond the Headline: CA AG Drops Hammer on Cardrooms
California Attorney General Rob Bonta’s office has released proposed regulations that, if enacted, could significantly alter the state's gambling landscape.
The significant changes are:
Player-Dealer Position Restrictions: The regulations require the player-dealer position in cardroom games to be held by a person physically seated at the table. Third-Party Providers of Proposition Player Services (TPPPS) not in this role cannot settle wagers, disrupting the current model where TPPPS employees often act as proposition players to facilitate games.
Blackjack-Style Game Regulations: The new rules would only permit blackjack games without a “bust” feature or a 21-point target, differentiating them from traditional blackjack offered at tribal casinos or elsewhere. Basically, cardrooms would not be allowed to offer blackjack.
The changes would eliminate 50% of jobs and revenue, according to a Standard Regulatory Impact Assessment (SRIA) issued by Bonta’s office [bold mine]. The public hearings on the proposed regulations will be held on May 28 and 29 on Zoom.
Per a press release:
"Attorney General Rob Bonta’s proposed regulations would eliminate over 50% of the living-wage jobs supported by Los Angeles cardrooms and wipe out up to half of the revenue that our cities rely on to fund essential services like fire protection, police, parks, and senior programs,” said Juan Garza, Executive Director of the California Cities for Self-Reliance. “We urge the Attorney General to not move forward with unnecessary regulations of legally approved games.”
“The SRIA issued by the AG’s office has flawed and unsupported assumptions; it still highlights the cardrooms losing over 50% of revenue and jobs. In fact, the study admits that half of all players may stop coming to cardrooms - a change that would devastate many local communities, displace thousands of workers, and eliminate critical tax revenue for dozens of California cities.”
The proposed regulation stems from a longstanding dispute between tribal casinos and commercial cardrooms — a good explainer can be found here — and following the passage of SB 549, which allows tribes to sue cardrooms for offering “illegal” games.
As I wrote in the newsletter in April:
“The longstanding battle over player-banked games at California cardrooms remains a thorny issue, with SB 549 marking a rare legislative win for tribes in 2024 — a huge story that received minimal coverage. The bill, signed into law last year, gave tribes a narrow window to sue cardrooms for offering games that allegedly infringe on tribal exclusivity—a right previously denied by courts citing sovereign immunity limits. The lawsuits are now underway, but cardrooms have a deep history, a strong lobby, and a lot of political clout. The process could drag out for years. The real question: Will judicial outcomes finally shift the balance, or will cardrooms find new loopholes to exploit? Previous coverage of this complicated topic on STTP: The backstory, Cardroom opposition, Tribal support.”
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Roundup: OH iCasino Hearing; IN Bill Eases Vendor Licenses; MGM in Missouri; Quote of the Week.
Ohio online casino bill needs to clear hurdles [Sports Betting Dime]: The Ohio Senate Gaming Committee held a heated hearing on State Sen. Nathan Manning’s online casino legalization bill SB 197. More than 20 speakers, mostly opponents (ranging from moderate to staunch), cited high licensing fees and tax rates, potential harm to brick-and-mortar casinos, and concerns about increased rates of problem gambling. Another complicating factor was broached, as VLT supporters were out in force, pushing for legalization and regulation. Previous STTP coverage of online casino efforts in Ohio.
(Some) Gambling vendors no longer need to be licensed in Indiana [88.1 WVPE]: Following an executive order by Gov. Mike Braun aimed at eliminating unnecessary red tape, payment processors and marketing companies will no longer need to be licensed by the Indiana Gaming Commission. Per local press, “Gaming Commission officials said these companies pose little risk and that other state and federal regulations ensure they operate properly.” The revenue loss will be a drop in the proverbial bucket, around $60,000 annually.
MGM gains market access to Missouri with Century Casinos deal [Complete iGaming]: “Century Casinos announced on 27 May that it had signed a deal with BetMGM to be its online and retail sports betting provider in Missouri. Sports wagering in the Show-Me State goes live on December 1. Under the terms of the “long-term” accord (its length was not disclosed), Century will get a percentage of BetMGM’s Missouri-derived revenue. An undisclosed minimum amount of the net proceeds is guaranteed.”
Quote of the Week: “It means gambling on democracy today, but gambling on everything tomorrow, with the ineffective, underfunded, incapable CFTC ludicrously in charge.” ~ Dennis Kelleher, Co-founder, President, and CEO of Better Markets, on the CFTC dropping its election markets case against Kalshi.
Tribes to meet with CFTC today: Today marks the day when tribes will finally have the opportunity to discuss prediction markets with the CFTC. Incoming chair Brian Quintenz (assuming he is confirmed) will not be present, and most of the commissioners on the call will not be with the CFTC in a few days. Also of note, on the New Normal webinar series yesterday, Indian Gaming Association Executive Director Jason Giles announced that a tribal roundtable will take place on June 10 at Foxwoods to discuss the matter as part of the National Congress of American Indians (NCAI) mid-year convention.
News: PENN Fires Back at HG Vora (Again)
PENN Entertainment issued a fact sheet rebutting a 116-page investor presentation from activist investor HG Vora — here’s the breadcrumb trail to other newsletter entries on the PENN-HG Vora fight.
The Fact Sheet (available here) begins by stating that HG Vora’s presentation “was full of false claims and mischaracterizations,” and that despite public criticism, PENN seeks a constructive resolution, recommending HG Vora’s nominees for board seats.
I’ve included a screenshot of the three “False Claims” alleged by PENN.
In the fact sheet, PENN also argues its board is experienced in digital and strategic areas, with its interactive segment, led by former Disney/ESPN CTO Aaron LaBerge, including over 70 senior leaders with extensive iCasino and online sports betting expertise.
PENN notes its digital investments are nearing profitability and argues its omni-channel digital strategy (ESPN BET, theScore) drives customer acquisition, loyalty program growth (4 million new members), and retail market share gains in 14 of 17 markets, while its online sports betting and iCasino are projected to grow at a 17% CAGR through 2030.
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How bet365 could change after a transaction
Around the Watercooler
Social media conversations, rumors, and gossip.
This is something I’ve been cautioning for several years (as has Jamie Salsburg). There is an incentive structure in place that prioritizes job creation and more funding over solutions.
The problem is unsolvable (there will always be problem gamblers). Still, the current perspective from the vast majority in the space is that anything less than zero is unacceptable, and to achieve zero, we need more money to hire more people and run more campaigns.
If we think of it in terms of home security, at some point, additional safety measures become overkill— and possibly counterproductive. Going from three deadbolts to four, five, or ten might shore up the front door ever so slightly, but your house still has windows and other points of entry, and it also might endanger you in a fire. You also have to leave your home from time to time, so you’re never truly safe. That many locks are a waste of money.
The goal is to be safer.
The same is true for RG/PG: The goal isn’t to eliminate it (an impossible task), it’s to promote responsible behavior and accessible help within realistic bounds through strategies that focus on practical, balanced measures.
Chasing an unattainable ideal ignores diminishing returns and misallocates resources, resulting in redundant programs, ineffective marketing campaigns, and unnecessary hiring sprees. It should never be about doing the impossible or being perfect; constant improvement, even if small, is where the magic happens.
Accepting that some level of risk is inevitable enables the development of more innovative, sustainable solutions that prioritize real-world impact over bureaucratic growth.
Stray Thoughts
In a New York Times column, Will Leitch, founding editor of the Gawker Media sports blog Deadspin, reflects on the persistent recycling of old debates. He observes that disputes once thought settled, like Pete Rose’s eligibility for the Baseball Hall of Fame, continue to resurface, clogging public discourse. Leitch notes that modern media, from social platforms to streaming services, amplifies this by keeping old content and arguments alive, as seen when his son rediscovered a 40-year-old Hall & Oates song, a phenomenon he terms the "slow cancellation of the future." Quoting Chuck Klosterman and Mark Fisher, Leitch suggests that unlimited access to past culture flattens time, making everything feel retro and stalling innovation.
I disagree with the premise of the column, as most of his examples are not facts or even opinions with a broad consensus. However, the rediscovery of music and TV shows is something I’ve mentioned in this newsletter several times: curation.
In his column, Leitsch writes:
“In an age where kids are rediscovering “Friends,” “Lost,” “Suits” and whatever other “new” show happens to bubble up to the top of the Netflix algorithm, it’s not surprising the same old debates are being revived as well.”
I talk about this a lot. The reason kids gravitate toward older material is that they have access to curated content, whether it's books, music, or TV and movies.
There are thousands of TV shows and hundreds of thousands of individual songs from the 1960s to the 1990s. Kids today only watch the best of the best (they’re not taking flyers on random sitcoms that aired for a season or two), which are curated by the generations before them. I watched reruns of 1970s shows in the 1980s and 1990s, not because modern shows were phasing out, but because excellent shows were created before I was born.
Every new generation gets to hear and see the greatest hits from previous decades because the wheat has already been separated from the chaff. I remember my father decrying ‘80s music when I was a kid — he was hearing the good, the bad, and the ugly in real-time. But many years later, if I put on an ‘80s music channel, he’d think it was a great decade for music.