California tribes missing out on millions in revenue without mobile sports betting By Howard Stutz, Executive Editor, CDC Gaming Reports December 19, 2020 at 5:00 am California’s tribal gaming industry is about to commit one of gambling’s ultimate sins. The group is leaving money on the table. The tribes submitted a ballot referendum a week ago that would legalize sports betting at Indian casinos and licensed racetracks. After collecting more than 1.4 million signatures, the tribes hope to place the question in front of voters in November 2022. Mobile sports betting, however, is not part of the initiative’s language, which allows only retail sportsbooks at the casinos and racetracks. With the rapid nationwide growth of sports betting – it’s legal in 19 states and Washington D.C., with another six states coming in 2021 – mobile wagering is a key element. One only needs to look 3,000 miles east. California has seen a remarkable number of Barstool Sports app downloads even without legal sports betting. New York legalized sportsbooks inside upstate casinos, but not mobile wagering. New Jersey made mobile a focus when it legalized sports betting at Atlantic City casinos and the state’s racetracks. New Jersey allows remote registration for customers and gaming operators can partner with multiple sports betting operators for online skins. The result? In November, New Jersey sportsbooks took in a single-month record of $931 million in sports wagers. Almost 94% of the bets – $872 million – were made through a mobile app or online. New Jersey is clearly profiting from New York’s lack of mobile sports betting. In January, media outlets reported how New York City residents drive or take a train to New Jersey, sign up for mobile sports betting accounts, and wager online. They may live in a state where mobile sports betting is banned, but geolocation software on smartphones and other devices shows the New Yorkers to be in New Jersey. FanDuel told Bloomberg News in January that an estimated 22% of its New Jersey online wagers came from New York residents. That’s one reason some hearts in New Jersey sank this week when New York Gov. Andrew Cuomo, who has long resisted mobile wagering, hinted he might back off on his opposition because the budget-strapped state needs the tax dollars. So why would California Indian tribes not include mobile sports wagering in their initiative? At the National Indian Gaming Conference in San Diego in April 2019, Pechanga Band of Luiseño Indians Vice President of Public Affairs Jacob Mejia said mobile sports betting was a divisive issue. Smaller tribes want to drive customers to their casinos, rather than allowing wagers to be placed via a mobile device anywhere in the state. When the initiative was first announced more than a year ago, with the backing of some 18 tribal casino operators, Meija, the coalition’s spokesman, said voters have “real concerns and opposition to mobile sports betting.” Deutsche Bank gaming analyst Carlo Santarelli said lack of mobile sports betting in the initiative could reduce gaming-revenue forecasts by 30% to 50%. Betting on UCLA would be prohibited in California under the tribal sports wagering initiative/Shutterstock In addition, the absence won’t help eliminate black-market sports betting operators. Offshore/unregulated sites have a foothold in California and won’t disappear if residents don’t have another choice. An anecdote disclosed by Penn National Gaming CEO Jay Snowden in October also contradicts the tribes’ argument about voter concerns. When the regional casino operator launched its Barstool Sports-branded wagering app, Snowden said the site recorded 310,000 downloads throughout the U.S. in states where customers are awaiting its launch. He added that California had “a remarkable number” of Barstool app downloads even without legal sports betting. The tribe’s initiative has other challenges and drawbacks. Wagering would be prohibited on games involving California’s colleges and universities and the 10% tax on sports betting revenues would come only from racetracks. Plus, the state’s 72 cardroom casinos are not included in the initiative. The animosity between the tribal casinos and the cardrooms is one of the nastiest in the gaming industry. California legislators have their own sports betting measure that was opposed by the tribes in 2018 and 2019 because it included cardroom casinos and racetracks. It also allowed online sports wagering. Sponsors shelved the measure in June after being faced with the enormous task of getting the bill through two Sacramento legislative houses in three days. With California facing a budget deficit of some $54 billion due to the COVID-19 pandemic, sports betting is sure to come up during the 2021 legislative session in Sacramento. Mobile sports betting will be part of the debate. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.