A Line In The California Sand
California is shaping up to be the battleground for three critical industry fights: Sweepstakes, Prediction Markets, and DFS.
The Bulletin Board
THE LEDE: California is ground zero for sweepstakes and DFS battles.
BEYOND the HEADLINE: Three California tribes sue Kalshi.
ROUNDUP: Carnival Cruises joins AGA; Terry Rozier investigation details; GLPI joins NAAiG; Hard Rock’s online CS center; CFTC-PredictIt case update.
NEWS: DraftKings settles two more lawsuits.
AROUND the WATERCOOLER: Envelope pushers, the whole lot of you.
STRAY THOUGHTS: Almost two years of Straight to the Point and RIP to Ozzy.
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The Lede: California Sweepstakes and DFS Updates
Two significant developments are occurring in California: The state has active legislation looking to prohibit sweepstakes gambling sites, and simultaneously, but on a separate track, the Attorney General’s office has issued an opinion declaring daily fantasy sports to be illegal gambling.
Here’s the latest on both efforts — they were also a topic of discussion during last week’s Indian Gaming Association New Normal webinar series, summarized by Rege Behe and Grant Lucas at Sweepsy.
Sweepstakes bill advancing through the Assembly
AB 831 has passed through two committees: the Governmental Organization Committee on July 8 (15-0) and the Public Safety Committee on July 15 (6-0). The bill is now in the Appropriations Committee. Previous STTP coverage of the bill can be found here.
The bill was slightly amended by the Public Safety Committee, with the removal of the words “promote” and “person” and the addition of the word “knowingly.”
“This bill would make it unlawful for any person or entity to operate, conduct,
offer, or promoteor offer an online sweepstakes game, as defined, in this state.It is unlawful for anyperson, entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to knowingly support directly or indirectly the operation, conduct, or promotion of an online sweepstakes game within this state.”
The first change likely makes celebrity endorsers safe from prosecution.
The second change, the removal of “person,” is aimed at alleviating concerns (particularly from the ACLU) that the language of the bill could potentially criminalize customers.
The third change ensures that punishments would still apply to affiliates and vendors that “knowingly” support sweepstakes sites.
Following the hearing, the Social Gaming Leadership Alliance (SGLA) urged lawmakers to reject AB831, calling it “a rushed and sweeping bill that would ban legitimate online social games and criminalize an entire form of digital entertainment enjoyed by millions of Californians.”
"The SGLA urges lawmakers to carefully consider whether they want to support legislation built on misleading claims from perceived competitors who themselves fail to meet the standards they claim to champion,” said SGLA Executive Director Jeff Duncan.
According to the SGLA, “Californians have generated more than 20,000 emails, calls, and social posts urging their legislators to vote no on the bill” since early July.
Underdog & PrizePicks Shift to P2P
At the same time, DFS is under fire from the AG’s office.
As STTP previously reported:
“California Attorney General Rob Bonta issued a 33-page opinion on the legality of daily fantasy sports in the state, and the tl;dr for DFS operators is that the opinion isn’t positive.
“… For now, it doesn’t appear that any operators will withdraw from the state (as I mentioned earlier, DFS operators cannot afford to lose California), as AG opinions are merely opinions and not binding as law.
“… STTP suspects that a compromise will be reached that allows for peer-to-peer DFS contests, with against-the-house versions prohibited.”
The opinion is being challenged in court, and as InGame noted, it’s causing a political divide and a state of uncertainty for DFS players:
“The AG’s opinion is non-binding and advisory, and Gov. Gavin Newsom quickly registered his disagreement. Nevertheless the DFS community nationwide is on edge due to the uncertainty around where the winds may ultimately blow in California, which by itself is the world’s fourth largest economy and supplies a lot of liquidity to DFS contests across the country.”
Following the opinion from California AG Rob Bonta, Underdog transitioned its DFS offerings to a peer-to-peer format (Prize Picks did the same just before the opinion was released, and as Dustin Gouker noted, Sleeper did the same at some point). This is similar to what has occurred in other states, such as Florida and New York. However, as SBC Americas noted, the opinion from Bonta’s office only draws a distinction between P2P and against-the-house in a footnote.
As noted above, Underdog has filed suit, but Judge Jennifer Rockwell denied Underdog’s motion for a temporary restraining order, stating the company had sufficient time to challenge the opinion during the 18-month investigation. The court noted that Bonta’s opinion does not change the law or cause immediate harm to Underdog.
Beyond the Headline: Three California Tribes Sue Kalshi
California could also be ground zero for the prediction market fight. Three federally recognized Indian Tribes, the Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians, have filed a lawsuit in the US District Court for the Northern District of California, seeking a preliminary and permanent injunction against Kalshi and Robinhood, as first reported by Attorney Daniel Wallach.
The lawsuit claims that Kalshi and Robinhood are “engaging in illegal sports gambling on the Tribes’ respective reservations in direct violation of the Indian Gaming Regulatory Act (IGRA).”
As Wallach noted on LinkedIn, “The tribes’ also advance a civil RICO claim (3x damages) against Kalshi and Robinhood, alleging that they are a racketeering enterprise along with the ‘individual officers, directors, agents, and/or employees who knowingly participated in the Gaming Racket’s affairs.’”
Roundup: Carnival Joins AGA; Rozier Details; New NAAiG Member; Hard Rock’s CS Center; CFTC-PredictIt Update
Carnival Corporation joins the AGA [Press Release]: Carnival, the world's largest cruise company, announced its membership in the American Gaming Association (AGA), becoming the first cruise operator to join the casino industry trade group. For those who may not know, Carnival cruises offer gambling. “We’re thrilled to welcome Carnival Corporation to the American Gaming Association. As a global leader in leisure travel and entertainment, they not only bring a unique perspective to our membership but also deepen our network through longstanding partnerships with several existing AGA members,” said Maureen Beddis, senior vice president of membership and events at the American Gaming Association.
Details into the Terry Rozier betting investigation revealed [ESPN]: As noted last week, the inquiry into NBA All-Star Terry Rozier is still ongoing. Rozier’s name was first linked to betting inconsistencies back in February, in the wake of the Jontay Porter scandal. According to ESPN, “A professional bettor placed 30 wagers in 46 minutes, all involving Terry Rozier in a 2023 NBA game, according to documents obtained by ESPN that reveal new details about the suspicious betting under scrutiny by federal investigators.” The bets were all on the unders, and per ESPN, “All 30 bets won, after Rozier, an eight-year veteran with the Hornets at the time, exited 10 minutes into the game, citing a foot issue.”
NAAiG picks up a new member, as online gambling opponents diversify [NAAiG on X]: “Wyomissing-based Gaming and Leisure Properties Inc., a real estate investment trust (REIT) focused on gaming properties, has joined the National Association Against iGaming (NAAiG) in its efforts to slow the expansion of iGaming. GLPI, which owns 68 gaming properties across 20 states, joined NAAiG, citing concerns over iGaming’s long-term impact on its business, tenant performance, and broader public policy.” STTP Thoughts: The NAAiG member roster is worrisome if you support online gambling legalization. In addition to the land-based casino operators (which have a presence in virtually every online casino candidate state), there are VGT suppliers, unions, towns, and now an REIT.
Hard Rock opens on-site online gambling customer service center [Play NJ]: Hard Rock Atlantic City has launched a 24/7 on-site customer service center to support its online gaming platform, Hard Rock Bet. Located within the Hard Rock Casino in Atlantic City, the center allows customers to demo online games and address app-related inquiries in person. Casino SVP Grant Williams emphasized the importance of face-to-face interactions in building trust and gathering feedback. You may recall (if you’ve been around as long as I have) that Resorts Casino had a similar concept, dubbed the iGaming Lounge (props to Ed Andrewes for having the vision), which I wrote about a decade ago.
Court grants CFTC motion for judgment in PredictIt case: Per the court filing obtained by STTP: “The two CFTC Division of Market Oversight letters challenged by plaintiffs [PredictIt and Aristotle International]… taking various actions to close the PredictIt Market are held to be arbitrary, capricious, and contrary to the law and are therefore vacated and set aside.”
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News: DraftKings Settles Two More Lawsuits
Last week, I reported that DraftKings reached a $3 million settlement over a lawsuit brought by the state of Connecticut, and now there are three more DraftKings settlements to report.
As reported by SBC Americas:
“According to court documents filed in Essex County Superior Court, Lisa D’Alessandro and her two minor children have amicably resolved their legal dispute with DraftKings, dismissing all claims against the operator. The suit was dismissed with prejudice putting an end to the legal issue between D’Alessandro and DraftKings that began in 2024.”
“The sportsbook also settled another high-profile lawsuit involving Dr. Kavita Fischer. As mentioned, the litigator behind a number of these consumer lawsuits, Litt, represented both clients.”
Terms of the settlement agreements were not disclosed.
DraftKings was also recently fined $90,000 in Colorado, while FanDuel was fined by two states: Massachusetts ($15,000) and Iowa ($125,000). All of the fines were for taking bets on prohibited markets.
Around the Watercooler
Social media conversations, rumors, and gossip.
I think Adam is spot on here, but there were a lot of voices screaming about being able to bet on every pitch, 24/7 advertising, and so on. They were called alarmists, Luddites, or worse, but they turned out to be mostly correct.
As soon as the industry was given the green light to drive on the road, it continued to accelerate at an increasingly faster pace.
Stray Thoughts
I have two Stray Thoughts today.
As I approach the second anniversary of the Straight to the Point newsletter, I would like to take a moment to thank everyone who has contributed to the newsletter's growth.
So to all my sponsors, podcast guests, paid subscribers, free subscribers, sources, and supporters, thank you.
With your help, the STTP newsletter has:
Tallied more than 1.5 million views
Reached 4,200 subscribers
Created a successful podcast
Spun off a premium subscription product, The Forecast (big things coming for that in the near future, by the way)
RIP Ozzy. I was never a fan when I was young (and obviously dumb), but when I really dug into their catalogue in my 20s, I realized Black Sabbath’s music was so groundbreaking that today, 55 years after its release, it’s still ahead of its time.
If you told me I could only listen to a single band's greatest hits album for the rest of my life, I’d put Black Sabbath’s greatest hits up against anyone.