California Compromise
California tribes are pushing ahead with their sports betting plan and commercial operators are trying to make sure they don't get left out.
The Bulletin Board
VIEWS: What will it take to get mobile sports betting in California in 2028?
NEWS: Less than two weeks after it was announced, DraftKings pulled the plug after FanDuel said no to a surcharge in high-tax states.
BEYOND the HEADLINE: A bad week gets worse for DraftKings.
NEWS: Kamala Harris gains tribal support and the endorsement of the Nevada Culinary Union.
AROUND the WATERCOOLER: DC Attorney General investigating Intralot.
STRAY THOUGHTS: Can I be of assistance?
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California Sports Betting Outlook (2026 and 2028)
California tribes have stated their intent to get a retail sports betting initiative on the 2026 ballot. The effort will suck up a lot of oxygen (this is California, after all), but the real prize, and the real battle, is expected to occur two years later when mobile sports betting is on the agenda.
One of the questions I’ve been asking in the newsletter is what role, if any, will commercial operators play.
We’ve already seen what happens when the two sides try to chart separate courses, as evidenced by the disastrous ballot initiatives of 2022. As such, the next mobile sports betting effort will need a radically different approach.
Having learned its lesson well in 2022, FanDuel has embarked on an apology tour.
It’s crystal clear that the initiative needs to be on tribal terms. Still, FanDuel hopes to mend fences and hopefully get a seat at the table when the tribal-led mobile sports betting initiative is introduced.
Tribes will have options:
Go it wholly alone and look to launch self-branded sportsbooks through a B2B provider.
Find common ground with some or all of the commercial operators and figure out a relationship that works for everyone.
Say F*** it, and push off sports betting altogether.
The first two options have advantages and disadvantages for tribes, but Option 1 may end the same as the 2022 initiatives.
The good news is that with a 2028 target (which could easily turn into 2030 or 2032), commercial operators have several years to convince them that a tribal-commercial partnership is a win-win situation.
For that to happen, tribes will need strict assurances from the commercial operators:
There will be zero involvement in online casinos, now or in the future (which is the issue). Any inkling that commercial operators could push for online casino authorization would likely blow up any deal.
Tribal casinos will be the sportsbooks’ forward-facing brands. As Pechanga.net publisher Victor Rocha told me on a podcast appearance, there will be no erasure.
Tribes will also have to compromise and offer commercial operators a financial reason to partner with them. Arkansas has learned the hard way what happens when the land-based partner is guaranteed at least 51% of the revenue — zero top or second-tier operators in the market.
DraftKings Folds on Surcharge After FanDuel Balks at the Idea
*This entry has been updated to correct Jeremy Peter Jackson as CEO of Flutter, not FanDuel.
As I suspected would happen, DraftKings’ proposed surcharge on winning wagers in high-tax states is officially dead.
The decision came after FanDuel did its best, Homer Simpson sliding into the bushes impression, saying it wouldn’t impose a surcharge. Instead, Flutter/FanDuel said it would “mitigate 50% of the costs [of the Illinois tax increase] in 2025 through locally optimized promotional and marketing spend” in its earnings presentation released on Tuesday.
During its earnings call, Flutter CEO and executive director Jeremy Peter Jackson was asked about a potential surcharge:
“And our experience is that moderating levels of generosity or indeed reducing local marketing is the best response… And so we think that the moderating levels of generosity are reducing local marketing is the best customer option and we have no plans to introduce a surcharge for winners.”
As I said on Monday, “All eyes will be on FanDuel this week, which has an earnings call tomorrow. I will be shocked if FanDuel follows in DraftKings footsteps.”
Left on an island, DraftKings wasted little time and walked back its plan in a statement saying:
“We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge. We are always committed to delivering the best value in the industry to our loyal customers.”
The big question, and the question I raised earlier this week, is this: Even though it reversed course, is the damage already done?
By announcing it with such vigor and then pulling back, will DraftKings be left with all the bad PR and none of the financial benefits? Or will bettors memory hole the policy (which had a lifespan of less than two weeks)?
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Beyond the Headline: DraftKings Email Error Causes Panic
And just when you thought things couldn’t get worse, DraftKings sent an email to seemingly every user in its database (account holders and non-account holders) on Tuesday that caused a mini-panic.
I received the email twice.
It was sent to the email account attached to my DraftKings account and to an account not associated with a DraftKings account. The latter did not have a username and merely had a number-letter string and the following message.
Considering one of my email accounts that received the email is not associated with a DraftKings account, I wonder if the email was sent to customers who have self-excluded, which would be yet another problem for DraftKings to deal with.
Interestingly, DraftKings addressed the email on social media but did not send a follow-up email to assuage customer fears.
As an aside, I’d also add that DraftKings’ email correspondence (this and some bonus offers they’ve sent me) looks like spam/phishing attacks, lacking the polished branding one would expect.
Kamala Harris Wins Support of Tribes and Culinary Union
Current Vice President and Democrat nominee for President Kamala Harris recently joined former President and Republican nominee Donald Trump in support of ending the federal tax on tips. The announcement officially won Harris the support of the Culinary Union Workers Union Local 226, which has some 60,000 members in Nevada.
At a June rally in Nevada, Trump said “he would call on Congress to end the taxation of tips as president.” That pledge did not win him the support of the Culinary Union, which had already backed President Joe Biden (before he dropped out of the race).
Harris also chimed in on another gambling-adjacent issue, telling a Pheonix rally, “I will always honor tribal sovereignty and respect tribal self-determination and fight for a future where every Native person can realize their aspirations, and every Native community is a place of opportunity.”
According to Native News Online, “It was the vice president’s biggest appeal to garner the Native vote in the upcoming election to date since she announced her candidacy for president.”
As Victor Rocha tweeted, “Unsurprisingly, you’re seeing very little tribal support for Donald Trump. You’ll see plenty of support for down-ballot Republicans, but it’s eerily quiet for DJT. He was terrible for tribal gaming. I personally don’t believe he would have supported the Seminoles.”
Harris has pulled even or even slightly ahead of Trump in betting prediction markets.
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Around the Watercooler
Social media conversations, rumors, and gossip.
Intralot is having a rough go of it in Washington, DC.
After being selected for an exclusive mobile sports betting contract by the DC Lottery, Intralot was forced to subcontract its flailing offering to FanDuel. Soon after, the DC City Council ended the lottery-run monopoly (Intralot is still the DC Lottery’s lottery supplier), and now we find out that Intralot is under investigation.
According to the Washington City Paper, DC Superior Court filings show Attorney General Brian Schwalb is investigating the Greek-based gaming firm.
As Compliance+More summarized, “The report suggested the AG is investigating under the auspices of “false claims” laws. The most common examples of such violations “include contractors and grantees who seek to have the District pay for work that was not fully or properly performed.”
Sports Handle’s Bennet Conlin connected some other dots, noting:
“The Washington Post reported in 2019 that Veterans Services Corporation (VSC) wasn’t living up to promised subcontractor duties with Intralot. The report indicated that VSC CEO Emmanuel Bailey didn’t have any employees at VSC, and there were legitimate questions about the ability of the subcontractor to do its job.
“It’s unclear if the D.C. investigation is focusing on VSC’s work with Intralot or if it’s looking into other aspects of Intralot’s shortcomings running Washington D.C. sports betting.”
Stray Thoughts
Shameless plug incoming…
In this newsletter, I often discuss bubbles and the need for people to get outside their bubbles and listen to other perspectives. The DraftKings surcharge is a great example of this. It’s an idea created in a world inhabited by people who share the same mindset. Every which way they sliced it made total sense on paper and would accomplish several goals. But it only made sense because no one was asking the right question.
If you think you or your organization might be in a bubble and need a new perspective, I offer consulting services (reach out to steve@igamingpundit.com), and bringing fresh perspectives to the table is my specialty.