State. Wide. Mobile.
Those are the only three words that everyone testifying at Wednesday’s California Joint Committee on Governmental Organization informational hearing on legal sports wagering could agree on. While potential operators made their case for low taxes and fees, and representatives from the pro leagues lobbied for a “data mandate,” all parties believe that for legal sports betting to really succeed in the Golden State, it needs unfettered mobile. No in-person registration. No restrictions. Just a patron and his phone.
“As we’ve seen in other states, you want to make it as patron-friendly as possible,” said Jay Kornegay, Vice President of Race and Sportsbook Operations at the Westgate Las Vegas SuperBook, after the hearing. “That means remote signup and mobile wagering. You just lose so much revenue asking people to make the trip (to a sportsbook) to sign up.”
Wednesday’s hearing was likely the first of several as Senator Bill Dodd and Representative Adam Gray make yet another push to get their ACA 16 onto Governor Gavin Newsom’s desk. Noticeably absent from this hearing were tribal representatives — and all of California’s casinos are run by tribes — card room advocates, and anti-gambling spokespersons.
Tribal ballot initiative also in progress in California
A coalition of the more powerful tribes have already filed for a ballot referendum that would legalize sports betting at tribal casinos and horse tracks. The referendum cuts out the state’s licensed card rooms, a powerful lobby that also wants a piece of the sports betting pie, and would not allow state-wide mobile.
The hearing room at the state capital on Wednesday was an eclectic mix of sports betting professionals from Kornegay, a veteran sportsbook manager, to Matt Shelby from the Oregon Lottery to Todd Fuhrman a former oddsmaker turned podcaster and sports betting analyst for FOX Sports and CBS Sports, and Dan Spillane and Brian Seeley from the NBA and Major League Baseball, respectively.
“Lawmakers were able to get a good introduction to sports betting and some of the interesting caveats from stakeholders,” said consultant Brendan Bussmann of Global Market Advisors. “They now have to decide the best course forward for California and what will be approved by the voters.”
Said Fuhrman afterwards: “It felt like something that was a lot broader than what I expected. It was broad, overarching … with a goal of finding what’s the best action for the state of California.”
There was little new shared, but the testimony was top shelf and wide ranging. Attorney Daniel Wallach and Chris Grove, a managing director at Eilers & Krejcik Gaming gave an overview of sports betting in the U.S., with Wallach insisting that California doesn’t need a constitutional amendment to legalize and Grove suggesting that in-stadium betting should be part of any new law. Grove also shared a plethora of numbers showing just how big the market in California could be.
Two thoughts as I leave Sacramento post-hearing and return to Vegas:
1) I don’t see California passing a sports betting bill this year. You could *feel* the obstruction in the room.
2) “Very Soon And In Pleasant Company” by the Shipping News holds up pretty well.
— Chris Grove (@OPReport) January 9, 2020
“As far as what it means for the entire industry, California is the largest state in the country and it’s not even close,” Jason Robins’, co-founder of DraftKings, which has offices in California told Sports Handle. “Clearly, it’s a huge potential opportunity for everyone who offers sports betting. California is also just so important from our standpoint as a state in terms of identification with the tech industry and new, innovative offerings.
“It’s a market that we would like to see open up.”
Insight into sports betting
A second panel shared how to sports betting works in their corners of the world, with Shelby offering a unique view. The Oregon Lottery went live with sports betting in October and has mobile platforms only. It’s unlikely that California would follow Oregon’s lottery product concept, but Shelby was able to share information about how the Lottery can track players’ habits, identify trends, and potentially identify problem gamblers. He also quipped that while the Lottery “loses” when the Portland Trail Blazers win, it “wins” when the Golden State Warriors win, as the teams have a long-standing rivalry.
CA Legislature holds first hearing on sports wagering with Assemblyman Adam Gray saying “It is clear that we are quickly heading in the direction of a well thought out, legal sports betting framework in California.”
— Patrick McGreevy (@mcgreevy99) January 8, 2020
Dan Shapiro of William Hill talked about how sports betting increases visitation to casinos and food and beverage revenues, as well as arguing to keep fees and taxes low. Kornegay shared key demographic information — 88 percent of sports bettors in Nevada are men and 40 percent are aged 29 or less, most are college educated, and the average income is over $75,000. Kornegay went to talk about how, at his sportsbook, there have been “no incidents or issues” with taking bets on local college teams and he closed by inviting his California neighbors to Las Vegas for a tour.
“That sounds like a trip we need to make,” joked Gray.
Among the other witnesses, Fuhrman shared his thoughts on fan engagement and how “having skin in the game” keeps fans in their seats until a game has ended, as well as keeping tax rates low. “As you increase the tax rate, it’s the player who ultimately suffers” from inferior odds and higher fees.
Jake Williams of sportsbook data supplier Sportradar also agreed that “unreasonable conditions,” be they high taxes or fees, should be avoided and that the main goal in California should be “absorbing” the illegal market.
Pro leagues selling data mandate
The final panel was Spillane and Seeley, who have canvassed the country over the last two years seeking first an “integrity fee” or royalty, and now a mandate requiring that licensed sportsbooks purchase data packages offered directly from sports leagues or their third parties, the fairness and utility of which is dubious. So far, only three states — Tennessee, Illinois and Michigan — have included a data mandate in their sports betting laws. While the pair said their leagues favor an easy to use mobile component, they essentially also said their respective leagues would get behind legal California sports betting only if operators are forced to purchase data from the leagues.
“Without an appealing mobile option, people who want to bet on their phones will continue to do so” on the black market,” Spillane said. “And there should be a mandate that operators use official league data. This will help insure the accuracy and consistency of these bets.”
Seeley also said MLB wants to be involved in determined what kinds of bets are acceptable, and what kinds are not.
Lawmakers had questions throughout the hearing, from how do the pro leagues prevent corruption within their own date-collection teams (review and redundancy) to “Can we bet on the presidential election? (no) to “How do you maintain integrity in a game?” (very carefully). Overall the lawmakers seemed to be open to the information offered.
“I think because of the people they had there, the testimony was so good,” Kornegay said. “I felt like they were open … I thought they were very receptive.”