California is home to four NBA franchises, more than any other state. So does The Stars Group forging a partnership with the NBA for sports betting signal a new era for the firm in hopes of finally gaining entry to the Golden State gambling market?
It likely bolsters the online gaming giant’s public support in the Golden State vis-à-vis lobbying, but it’s unclear if it will ultimately have an impact on California’s sports betting efforts. The politics surrounding gaming in the state are complicated and much larger than PokerStars, even though in the past it has appeared as if PokerStars’ presence might have been holding California back from online poker.
For years, California’s tribal gaming stakeholders had labeled PokerStars a so-called “bad actor” for doing business with Californians when online poker wasn’t legal. As of 2017, the last year California considered online poker, the iPoker juggernaut had, at to least some extent, reduced its lobbying presence in Sacramento. That could pick back up now that the NBA has basically endorsed the company.
Under the partnership, TSG will be promoted across the NBA’s digital assets and social media platforms.
Like a boulder up a hill
“Any time you have these large entities, who do enjoy some public support, there will be an attempt to lobby,” Stallings told US Bets. “I think people underestimate our robust gaming industry here in California. In addition to the tribes, you have the racetracks, you have the cardrooms. Sometimes our initiatives align, sometimes they don’t. For the most part, those three entities are going to have to be a part of the process.”
In other words, TSG appears to still face an almost Sisyphean battle in the state.
“When you see these outside groups come in, they aren’t always successful because there is a real tendency in California for things to be homegrown,” Stallings added. “I think that’s the one limitation, even though we do have sports franchises in California. Time will tell.”
BetStars, the online sports betting product from TSG, only accounts for a tiny fraction of the sports betting revenue of its New Jersey partner (Resorts Digital), so it obviously is looking for a greater foothold elsewhere. The company was also recently approved for Pennsylvania.
Online poker failure
Home to a population on par with Canada, California has long been the crown jewel for the regulated U.S. online poker industry. The same could now be said for sports wagering. A 2017 study from Oxford Economics predicts that California’s market could see a whopping $36 billion in annual handle (about seven times Nevada’s current level), which would generate about $2.3 billion in gaming revenue.
The state’s tribal gaming market is worth roughly $4 billion in casino win annually.
The handle and revenue figures are nearly double the estimates for the next largest potential sports betting states (Texas and New York, which are projected to be about equal), according to the study.
But before PASPA went by the wayside thanks to the U.S. Supreme Court, online poker was considered the lucrative gaming expansion opportunity for California. However, the politically powerful tribes, the commercial card rooms, and the racetracks couldn’t ultimately come to a consensus. A handful of gaming groups, including some tribes, partnered with PokerStars during the height of its lobbying.
Online poker is basically in the dustbin these days in the Golden State, and it doesn’t help that the regulated online poker vertical has struggled mightily in New Jersey, Nevada, and Delaware, even though those three states can share players. There’s some hope on the horizon with the upcoming launch of Pennsylvania online gaming, but these days legal sports wagering is a much more lucrative opportunity for California.
Path to California sports wagering?
California could see a ballot question to approve or reject a constitutional amendment for sports betting, something that never happened for online poker, which was considered with typical legislation. At least six California gaming firms reportedly were interested in a ballot initiative as of June.
The earliest Californians could vote on sportsbooks would be in 2020. Assemblyman Adam Gray, who pushed for online poker, introduced a proposed constitutional amendment in 2017, known as ACA-18, but it wasn’t successful in the legislature.
Stallings doesn’t see “any tribal support” for the ballot initiative in the works by the cardrooms, businesses that, according to the state’s tribal gaming industry, are currently offering illegal house-banked games.
“Our real conflict here in California is the expansion of gaming in the cardrooms,” he explained. “Most of the tribes are concerned [about an] almost full-casino feel in the cardrooms, when they are conducting, what we consider to be, illegal [house-banked games].”
The ballot initiative is “the kind of thing that almost has to have the tribes behind it for it to happen, because if the tribes put enough money against it, I don’t think it has the public support it would need,” Stallings added. He explained that tribal polling has not indicated that Californians are clamoring for sportsbooks.
However, the environment could change if sports betting becomes something that California sports fans demand to have as other states legalize and regulate, as eight currently do.
If a constitutional amendment ends up passing, and voters approve it, the California legislature, along with gaming regulators, would be then tasked with crafting the rules for the industry and issuing licenses. Stallings said legalizing sports betting before ironing out the details also makes a ballot initiative unlikely.
Under the state constitution and compacts, the 67 California tribal casinos have the exclusive right to offer casino-style gaming. A ballot initiative would open up the interests of the tribes to the legislative and public processes, which is risky for their respective casinos’ businesses.
MGM deal with tribe also not a game-changer
In October, MGM, which also has partnered with the NBA, announced that it had linked up its joint venture MGM GVC Interactive with the United Auburn Indian Community, which operates the Thunder Valley Casino Resort outside Sacramento (home to state lawmakers).
Despite the historic nature of that sports betting partnership, the tribe tempered expectations by saying in a presser that “it is not yet clear if California will authorize sports betting or interactive games.”
California has for decades been losing sports betting dollars to Nevada, which doesn’t bother MGM given its casinos in Las Vegas. But obviously California could dwarf the business in the Silver State.
MGM doesn’t have the complicated company history that has followed the TSG, formerly Amaya, in California. Still, the casino giant isn’t moving the needle in California when it comes to progress.
Sports betting has the “same kind of implications as internet poker,” Stallings explained. “If we can’t overcome major hurdles, then the advancement of any legislation, no matter who is behind it, if you don’t have all the tribes on board, is probably not going to happen in California. These landscape issues [with the cardrooms] have to be settled before we can see sports betting advance.”
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