DraftKings, FanDuel add $20m to California initiative
DraftKings and FanDuel recently contributed nearly $10m apiece to the California online sports betting authorization ballot measure, another sizable investment in what is already the most expensive initiative in American history.
The two US sports betting leaders combined to add nearly $20m in the past two weeks to support Proposition 27, which would allow statewide mobile sports betting across the state. With the latest contribution, the daily fantasy sports-turned sportsbook and iCasino operators have now combined to spend more than $50m on the effort.
The latest financial commitment comes as money has poured in both for and against the initiative to allow commercial operators to launch online sportsbooks. Both opponents and proponents have likewise contributed tens of millions of dollars to Proposition 26, a separate, competing ballot measure that would only permit retail sportsbooks at certain tribal gaming facilities and horse tracks.
Combined, the two ballot initiatives have garnered more than $400m from both supporters and opponents, the most expensive such ballot measures in US history. With nearly 40m residents, California is far and away the nation’s most populated state and the biggest prize for US sportsbooks.
FanDuel is the nation’s leading online sportsbook by gross gaming revenue market share. Along with DraftKings, its longtime rival, the two companies would be among the biggest beneficiaries of legal, statewide mobile sports wagering.
BetMGM, which has jostled with DraftKings and FanDuel for the top three spots among combined online sports betting and iGaming market share nationwide, has contributed more than $16m to back Proposition 27. Caesars, the nation’s fourth-largest operator by sports betting handle market share, has notably stayed neutral on both Proposition 26 and Proposition 27.
Eilers & Krejcik report: “The length, competing nature, and consecutive appearance of the two sports betting ballot measures—in addition to those measures appearing alongside five other unrelated measures—will make sports betting a difficult sell at the California ballot box, in our view
The respective parent companies of WynnBet, BetFanatics, Bally Bet and Barstool Sportsbook have all contributed at least $10m each to support the online sports betting ballot measure. The aforementioned operators along with Rush Street Interactive’s BetRivers as well as the Hard Rock Sportsbooks are considered to be among the likeliest books to enter the state if Proposition 27 passes, according to a study by industry research firm Eilers & Krejcik Gaming.
If passed, the initiative would require each operator to pay a $100m licensing fee, the highest rate of any of the more than 20 states with legal online sports betting.
The commercial sportsbook-backed measure comes on the same ballot as the largely tribal-backed retail-only proposal. Like the commercial operators, California’s tribes have spent extensively, in this case, to promote Proposition 26 – and prevent Proposition 27.
Supporting tribes have touted the retail-only measure as a way to keep money within local communities and away from the pockets of out-of-state operators. California is the nation’s largest Native American gaming market and casino gaming is the most substantial economic driver for many tribal nations and their communities.
Passing the retail-only measure would generate $1.3bn in annual sports betting gross gaming revenue, according to Eilers & Krejcik. The same study projected passing the online initiative would generate $2.8bn in annual gross gaming revenue.
The two competing measures have complicated what many industry figures believe could be an uphill battle for passage. Though surveys nationwide show Americans largely back legal online and retail sports betting – and all six states with a simple yes-no ballot measure have approved them – the messaging around the two initiatives could cause both to fail, industry figures believe.
The recent Eilers & Krejcik report predicted that the millions spent on shaping the narrative between the two proposals along with their language and position on the ballot could lead voters to reject both.
“The length, competing nature, and consecutive appearance of the two sports betting ballot measures—in addition to those measures appearing alongside five other unrelated measures—will make sports betting a difficult sell at the California ballot box, in our view,” the report said.