California Gov. Gavin Newsom is facing a recall this year, with a slew of candidates trying to take the reins of the most populous state in the country. One of those candidates is YouTube star Kevin “Meet Kevin” Paffrath, who lays claim to a massive 1.66 million following on the site.
Paffrath, a 29-year-old Democrat, is the most likely candidate to beat Newsom, according to the prediction website PredictIt. However, Newsom is a roughly 90% favorite to stay in office, according to the site. The confident Paffrath pegs his odds significantly higher. Call him a live underdog, to use a sports betting term.
Part of Paffrath’s campaign involves big plans for gambling in California, including the legalization of online gambling — sports, casino, and poker. It’s a lofty goal for a state that tried and failed to bring stakeholders together to legalize online poker, efforts that spanned about a decade before being abandoned in recent years.
Fast forward to the present, and sports betting is the new big trend. Paffrath also wants to build new casinos throughout the state, saying that it “drives me nuts” that California bettors travel to Las Vegas.
California is currently looking at a referendum in 2022 that would allow retail sports betting at the state’s tribal casinos and horse race tracks, but there wouldn’t be online betting. It would be a big miss, and Paffrath is pitching online betting as a way to make the state competitive. California reportedly has been losing companies as well as people due to various reasons, including taxes and regulation.
US Bets caught up with Paffrath, who has 10 rallies planned for next month, to talk about his ideas for online gambling, as well as his thoughts on a recent snag for DraftKings, one of the leading players in the U.S. online gambling market and, if Paffrath implemented his plan, a potential operator in the Golden State.
US Bets: So California could have retail sports betting if a referendum for it passes next year. Do you think California would be at a disadvantage without an online/mobile component?
Kevin Paffrath: California has this idea that it needs to be in people’s lives and people’s businesses, and that it needs to tell people what they can and can’t do. People are adults and should be able to make their own decisions, and California should be able to benefit from taxing it reasonably, not taxing it out of existence with ridiculous regulation like they tend to do, like they’ve done with cannabis. We need reasonableness, and we have to give folks the freedoms they want and that includes fully legalizing gambling, online, in-person, everything. Quite frankly, we should be focusing on building industries around gambling, encouraging it as a source of entertainment. We can build events around online gambling; there are so many things we can do to monetize and raise revenues in California around legalizing. It’s critical, especially for a state that thinks it needs more money. If we need more money let’s do business things that create more money, not taxing more. I’m totally open to working with industry leaders. We’ve already started setting up interviews with casino executives, as well as advocacy groups who think there are ways to prevent possible downsides [to online gambling], because we know one of the concerns that comes up is what if someone becomes addicted? We’ve got to solve the mental health crisis in the state too. It’s not just gambling or gun violence. It’s everything. There is a lot to be done, but my belief is we can be much more competitive with other states. People can flee and have so many more freedoms in other states, and pay lower taxes. COVID has just accelerated the flight of people out of the state, and that is going to continue with all these additional restrictions that are unnecessary. For me, we need online, we need in-person, we need to focus on the things that make the state money and solve the problems we have.
US Bets: California spent about a decade trying to legalize online poker, but the stakeholders couldn’t come together despite it being the largest potential market for online gambling. What do you think you could do to bring the diverse group of stakeholders onboard?
KP: The problem right now is that because California is so entrenched in “you can do this, you can’t do this, only these kinds of card games are acceptable, unless you’re tribal”… in my opinion, we have to start over with how we think about gambling. By that I mean let’s work collaboratively with the online gambling industry, the tribal industry, the card rooms, everything, work together with everyone, plan how we can make California the No. 1 leader in gambling, not the biggest laggard. Like you said, we have the biggest potential, we are the biggest state. Why are people going to Las Vegas to gamble? It drives me nuts. Here in California there is so much opportunity to build new casinos, expand online gambling, and expand what people can spend their money on for entertainment. I think the easiest way to do that is instead of favoring this industry or this group, let’s work together with everyone, and say, “hey, how about we have a new regime,” where the tribal folks are happy, the online folks are happy, the card rooms are happy, the casino developers are happy, and we can work together with everybody to make California known as a gambling destination, and now all of a sudden all of the sectors win. Not only is the pie big enough for everyone, if you made California the gambling destination, you’d be massively expanding the pie.
US Bets: I know from your investing content on your YouTube channel that you are bullish on DraftKings, as a company and as a stock. What did you make of that Hindenburg Research report that came out the other day that sent the stock plummeting early in the day?
KP: I thought the report was garbage. I’m bullish on DraftKings, and I bought call options the morning of that report. I read the report, which came out about 10 minutes before the opening bell. Even just the 10 minutes I spent reading the report you could tell it was just garbage to give these folks an opportunity to make a quick buck on their short positions. The claims, in my opinion, were ludicrous. The links they were making were complete stretches. “Here’s the logo for something related to DraftKings on a website for a company in Taiwan that got busted.” OK, so another company in Taiwan did something illegal, it doesn’t mean DraftKings is a bad company. It was ridiculous. It was complete nonsense; DraftKings is here to stay.
US Bets: Were you surprised that DraftKings stock fell that much on the report?
KP: I’m not surprised because a lot of investors today, in my opinion, don’t have extremely high conviction when they invest. They tend to invest when things are green and it feels good to invest. Anytime a little flower pot falls over the markets freak out, and people overact. Then hedge funds are worried; institutional investors also often overreact because their customers, their clients are like, “Hey, I’m going to leave your fund, why are you in this, I can’t believe you’re in this scam of a company.” It’s complete nonsense. It’s an uneducated reaction. In today’s momentum age, it’s not uncommon at all, and personally I make a lot of money investing in their counter-trend. When DraftKings is plummeting, I’m a buyer (laughs).
Photo credit: Kevin Paffrath for Governor