California Sports Betting Shows Progress, Says Analyst

Posted on: January 8, 2024, 04:29h. 

Last updated on: January 9, 2024, 12:41h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

There could be some hope for regulated sports betting in California, because some commercial gaming companies are now aligning with the state’s largest Tribes in opposition to a pair of recently submitted sports wagering proposals.

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Jefferies analyst David Katz in a 2020 CNBC interview. He said there’s “meaningful progress” on California sports betting. (Image: CNBC)

The pitches, including The Sports Wagering Regulation and Tribal Gaming Protection Act, were recently filed by Eagle1 Acquisitions Corp. Last week, Attorney General Rob Bonta (D-CA) gave the go-ahead for the group to gather signatures to potentially get the proposals on the 2024 ballot. The state’s largest Tribal casino operators oppose those efforts, and they may be getting help from commercial sportsbook operators.

Arguably, that’s an interesting turn of events, because in 2022, California Tribes and private-sector gaming companies faced off on Propositions 26 and 27, both of which were soundly rejected by voters. Now, some unidentified commercial gaming entities may be partnering with a small number of the state’s biggest revenue-generating Tribes to defeat The Sports Wagering Regulation and Tribal Gaming Protection Act, and related efforts.

Small Number of Tribes Opposing

California is home to more than 70  Tribal casinos, but those venues aren’t on equal footing in terms of top and bottom-line heft.

Among the largest by revenue are the Agua Caliente, Barona, Graton Rancheria, Rincon, and San Manuel Tribes. Not only are those Tribes the operators of some of California’s largest and highest-grossing Tribal casinos, they combined to spend $220 million in 2022 to defeat Proposition 27, a sports betting proposal backed by commercial gaming companies. Those are likely the Tribes that commercial operators may be cozying up to this time around.

Given the divergent views of the multitude of Tribes, we believe a smaller group of the largest Tribes is expected to drive the process,” wrote Jefferies analyst David Katz in a new report to clients.

Katz added that it’s important commercial and Tribal operators are finding some common ground in California.

“Operators have also connected with … larger Tribes to attempt alignment of efforts, which we consider critical to meaningful progress,” according to Katz.

California Still Faces Long Road in 2024

Commercial operators and Tribes aligning in California is undoubtedly noteworthy. But that doesn’t imply sports betting will make progress in the state this year. Eagle1 must garner 874,641 signatures by April to potentially get the issue of sports wagering on this year’s ballot in California.

That’s a tall order, and even if it’s successful, it likely won’t mean much without the support of the Tribes. Tribal operators in the largest state are reluctant to push the matter over the near term, viewing it as a 2026 matter, with mobile betting further out than that.

Even if Eagle1 is successful in its quest to get the issue on this year’s ballot, the combined resources of the aforementioned Tribes and private-sector operators could ensure The Sports Wagering Regulation and Tribal Gaming Protection Act is defeated.