CALIFORNIA DREAMING

California’s sports betting chances hang on a knife edge

For many interested spectators, it seems entirely implausible that California is yet to have a legalized sports betting marketplace. The highest populated U.S state, with the strongest financial leverage in the country, is currently uncharacteristically missing a colossal commercial opportunity.

Since the overriding of the archaic PASBA legislation by the Supreme Court in 2018, a consistent wave of state-level legislative activity has served to induct over 30 jurisdictions to sports betting. This in turn has pre-empted a bountiful return for U.S and foreign-based sportsbook operators. The federalized governments who have presided over this landmark change in the nation’s approach to gambling are an assorted bunch, with cultural heritage or political tradition seemingly not a huge influencer in whether a state decides to embrace this new vertical. This perhaps makes California’s exclusion from the market all the more remarkable. If typical, conservativeleaning communities in the likes of Wyoming, Kansas, and Arkansas can stomach this significant recalibration of an American traditionalist view, how have the famously left-leaning, progressive Democrats of California not conspired to create a thriving sports betting industry of their own?

The answer is relatively simple, but somehow also incredibly complex to unravel.

Ultimately, the sheer scale of a prospective Californian market has just been too difficult a cross to bear. Indeed, a fierce battle has ensued in the Golden State, as various suitors, armed with proposals and measures on how they would facilitate localized sports wagering efforts, lock horns. Their reward for winning this contest is access to a huge financial treasure chest, perhaps unprecedented even in the lucrative early days of America’s nascent sports betting landscape. In its opening eight months of trading, New York’s sportsbook operators have taken over $10.35bn in handle, supporting them to generate close to $800m in gross gaming revenue. It’s alleged that a fledging Californian theatre would invite even higher sums, and in turn would overtake the Empire State in becoming the nation’s most lucrative betting powerhouse. The stakes have simply been too high.

For months, various factions have squabbled over who should govern the state’s native market, with various tribal interests, commercial giants, and card room operators all fighting for supremacy. Now, after a protracted and particularly bruising skirmish between potential stakeholders, just two candidates are left standing. The competing measures of these parties will be put to the Californian electorate in the second week of November, as residents determine the conclusion of this saga at the ballot box. However, which, if any of the proposals, will the majority of voters opt to support?

Proposition 26, which confirmed its place in Autumn’s referendum over twelve months ago, is a venture chiefly sponsored by the state’s native tribal groups. The ‘Coalition for Safe, Responsible Gaming’, is collectively backed by no less than 58 tribal entities. Their subsidiary campaign, colloquially referred to as the ‘No for 27’ movement (the proposition number of the opposing measure), has earned the support of a number of key local organizations, such as the California State Association of Counties and the California League of Cities, alongside a host of teaching unions and political exponents. Although their motiveforjoining forces withthe coalitionis perhaps more rooted in their resistance to Proposition 27, as opposed to supporting any initiative

By Ryan Murray

that promotes the introduction of gambling, these groups have undoubtedly added further credibility to the Proposition 26 cause.

If successful, the proposal would permit the establishment of retail sports betting facilities at tribal casinos and state race tracks. Through historic gaming compacts, Indian operators have long-held the ability to offer classic table games and slots from sites located on government-granted reservations. Therefore, in this sense, the integration of sports betting through this legislative mechanism would feel more like simply adding an extra vertical, as opposed to having to re-invent the wheel from scratch.

The proposed legislation states that a standard 10% tax levy on revenue would be applied, with funds re-directed towards problem gambling support programmes.

However, if the Coalition for Safe, Responsible Gaming is focused on using more traditional, in-person methods to accommodate the arrival of legalized sports wagering, then Proposition 27, otherwise known as ‘Californians for Solutions to Homelessness, Mental Health, and Addiction’, is all about embracing a new, perhaps more glossy,virtual approach. Indeed, one of the key differentials between these two conflicting campaigns lies in the operational space in which they would both exist. Proposition 27, which is largely bankrolled via the deep pockets of several of North America’s most powerful sports betting firms, advocates the introduction of online sportsbook applications. If successful, this would mean that Californian players would have uninterrupted access to markets via their smartphone, in turn removing the requirement of travelling to a casino and wagering in the flesh. tive operators pay an eye-watering $100m license fee to have the privilege of running a digital sportsbook, supplemented by a $10m annual renewal fee. Although the role of commercial organizations is largely overlooked by the Indian coalition, Proposition 27 permits tribal interests to collaborate with the likes of DraftKings, FanDuel or BetMGM to create a locally accessible mobile sports betting platform. However, the measure is very much reserved for the big boys of the business, such as the early industry pace-setters referenced above. Indeed, in order to hit the bid’s qualifying criteria, any market participant must already be active in at least ten other U.S states. As a consequence, should the ‘Californians for Solutions to Homelessness, Mental Health and Addiction’ manage to establish their hegemony, smaller sportsbooks would need to latch onto the coattails of those with a nationwide presence via partnership agreements. Given the financial and membership profile of the two contrasting tenders, many initially assumed that Proposition 27 would leverage its considerable strength to move well ahead of the Indian-backed alternative. However, this prediction is far from an accurate reflection of the current, ground-level reality, with the ‘No for 27’ campaign managing to locate and subsequently chip away at its opponents particularly fragile Achilles heel.

Indeed, ironically, the largest challenge facing the ‘27’ contingent is a product of the nature of their incredibly successful commercial approach. Many across the local community, including independent organizations, politicians, and vocal residents, believe the group’s aggressive and unrelenting pursuit of profitwould comfortably supersede any commitment towards social responsibility initiatives; a narrative that the Coalition for Safe, Responsible Gaming have cultivated

Gaming

well in recent weeks. Even anti-gambling protesters have aligned themselves, given their shared distain, with the proponents of the Coalition’s measure, perhaps now viewing Proposition 26 as the lesser of two evils.

Furthermore, opponents have attacked the seemingly contrived nature of the Proposition 27 campaign. They believe that the measure’s full legislative title is in itself an illustration of how far commercial operators are prepared to go in order to secure profits and establish supremacy. The coalition asserts that dropping in terms such as ‘homelessness’, ‘mental health’ and ‘addiction’ is a clever marketing ploy in an attempt to curry favour with the Golden State electorate, and acts as a smokescreen to their true money-driven motivations. This tactic, perhaps aimed at chiefly floating voters,seeks to convince that the proposal is in fact an altruistic enterprise, and therefore something that could be mutually advantageous to all parties; the bettor, the operator, and the suffering. Few have fallen for this rather cynicalmethodology, with many, not just those whose allegiances lie with the coalition, questioning the integrity of Proposition 27’s charitable dimension. In the words of Los Angeles Times journalist Michael Hiltzik ‘the gambling firms are all public-spirited in their way, but do you really think they care about the crises of homelessness in California as opposed to drinking deeply of the potential profits from online gambling in the vast California market? Me neither.’

True, a quick scan over the numbers certainly suggests a lack of credibility. The ‘Californians for Solutions to Homelessness, Mental Health and Addiction’ would clearly generate their donations to these causes via the deployment of their proposed taxation framework. Yet, charges on participating operators have, like Proposition 26, been positioned at just 10%of their total gross gaming revenue. Not only does this mean that a colossal chunk of bettors’ cash would remain in the bank accounts of most of the continents’ most successful sportsbooks, but it would also result in California presiding over one of the lowest tax rates within the United States’ legalized sports betting arena. The two most highly taxed markets, New York and Pennsylvania, set rates at 51% and 36% respectively, whilst only a tiny handful of states have introduced revenue taxes at 10% or lower.

Furthermore, there’s some plausibility in claims that these charitable causes have been selectedthrough a populist lens, unashamedly seeking to manipulate what’s currently ‘in-vogue’. This is because, with very little research or engagement of the topics identified as the most suitable for investment, the conspirators behind Proposition 27 would have noted that local Governor Gavin Newsom has already announced an enormous support package in these areas. The $12bn pledged over the next two years dwarfs the anticipated figure delivered by the proposed sports betting tax rate, and would indeed add just 4% to Newsom’s already costed commitment.

Even from a purely crude perspective, the chosen causes are somewhat of a headscratcher in the context of contemporary Californian politics. Most residents, particularly given that Newsom’s scheduled spending plan already supports most of society’s most vulnerable, would have most likely preferreda charity programme focusing oneither more ‘progressive’ concepts, such as green energy solutions and water conversation, or current, contentious local issues, such as school funding or aid for domestic abuse victims.

PTO

There’s also merit in the theory that the mental health care element is largely a contradictive endeavour. Many believe that this ‘solution’ is a loosely-veiled reference to problem gambling support, meaning that those requiring medical intervention would have likely developed harmful behaviours through using the very platforms of those throwing dollars at their recovery.

Unsurprisingly, these developments have conspired to seriously damage the chances of a Proposition 27 victory. However, that’s not to say that its plucky counterpart is likely to earn the 51% majority required in order to have a mandate for industry control.

The unprecedented marketing campaign, which has seen both sides of the contest contribute to a recordbreaking $364m advertising spend, has given an opportunity for commercial operators to utilize their pre-existing connections to TV networks and sports teams. Through these channels, they’ve been able to bloody the nose of the Coalition through their consistent presence in advertisements, magazine shows, and across the jerseys of leading sports franchises, without quite landing a knockout punch.

Yet, regardless of the tactical point scoring, playground-style feuds and grotesque campaign expenditure, the current reality of the situation is this: the analysts now believe that neither side will emerge with over half of the electorate’s backing. Shockingly therefore, it looks increasingly likely that we’ll not see sports betting in the largest, and most affluent state in the country, for another year at the very least.

Indeed, experts believe that having twoproposals, both focused on the same industry and promoting, at least to the normal Californian on the street, relatively similar guiding principles, will cause confusion, apathy and dilution at the ballot box.

True, in a general sense, having two possibilities to choose from will always serve to reduce the overall likelihood of one earning an outright majority. Thus, by extension, this undermines the chances of any type of sports betting sector materialising as a product of November’s vote. Therefore, in the best interests of ensuring California finally embraces the newly-established presence of American sportsbooks, the most diplomatic action for those with no horse in the race would be to tick the box of each rivalling camp. However, for those who have tracked this momentous battle, the polarizing nature of the campaign trail will likely have compelled most to pick a side.

Furthermore, it’s the first time in U.S electoral history that competing sports betting measures feature in the same referendum, and therefore the traditional, ‘single up or down’ system is replaced by having voters select one, two, or neither option(s). Analysts, such as those based at the influential Eilers&Krejcik Gaming research centre in southern California, believe this dynamic will create a sense of ambivalence, and discourage the electorate from properly reviewing each proposal. When residents stand with pen in hand at the booth, this may easily propel some to spoil their vote, rather than opt for a route they may later regret. Indeed, Eilers&Krejcik Gaming say they are now ‘leaning negative on California’s sports betting legalization prospects this fall’.

So, could one of the most heated contests seen in the primitive history of legalized U.S sports betting result in defeat for two valiant competitors?

If so, it would be the first time that a state-wide referendum on gambling would have failed to deliver a positive outcome, with Arkansas, Colorado, South Dakota, Louisiana, and Maryland all successfully pushing through legislation at the polls. Unfortunately,as per the scale of funding invested in this intense fight, it looks as if defeat at the ballot box may be another record-breaking act that California’s sports betting suitors will have to endure.

Web3 and NFT mini roundup

By Lynn Pearce

NFTs (non-fungible tokens) are everywhere, in the daily news, no matter where you look online, the adoption of NFTs are spreading on a global scale, with no end in sight, whether it is articles on Web3, or ticketing for events, or in fashion articles, there is just an endless stream of news around the various use cases for NFTs – even FIFA have launched an NFT platform for soccer-themed digital collectibles on the Algor and Blockchain in the run-up to the World Cup later this year. I expect this will expand the accessibility of NFTs even more, as presumably they will feature memorable moments and imagery around all the soccer games, capturing the highlights for sports fans throughout the games.

They are not the only ones moving ahead on the Algor and blockchain – one of the original music streaming companies, Napster, (which many of us have forgotten about) announced their planned move into the Web3 space with their $Napster token. According to an article written by Sujith Somraaj in June 2022, Algor and made news when they partnered with Limewire and launched a music-centric marketplace featuring the works of artists signed on Universal Music Groups label. The artists, including Travis Barker, Brandy and Nicky Jam, will launch exclusive artwork, music and fan experiences, as they transition their platform from a peer-topeer filesharing website to an NFT marketplace.

Even Mercedes and McLaren have got into the NFT act. Mercedes-AMG Petronas F1 Team together with FTX released free-to-claim NFT “Ticket Stubs” as well as unique and rare NFTs created by some of the world’s leading artists.

The British luxury supercar - McLaren’s Automotive announced the launch of their MSO Lab, which will house limited-edition McLaren NFTs and their first release, The Genesis Collection, showcased one of their most well-known automobiles.

In March 2022, Crypto.com announced it would be the FIFA World Cup’s exclusive exchange sponsor, apparently ditching their $495 millionsponsorship deal with UEFA, most likely in order to take up this deal.

When I read a short while ago that the south Korean electronics giant, LG had launched its own NFT marketplace, called LG Art Labs into the USA market, for television owners running webOS 5.0, I knew that the NFT trend towards mass adoption was about to explode, in my humble opinion. The marketplace enables them to buy, sell and trade NFTs from their own homes – this is going to be big.

According to the recent article on Decrypt, the Solana NFT project y00ts got off to a really great start, topping secondary markets as the creator NFTs sold for a significant premium over the mint price. who played a major role in spearheading NFTs and digital collectibles, including NFT-based fantasy soccer and MLB games and who have now taken on NBA Top Shot with the upcoming launch of an official NBA fantasy basketball game, which will co-exist with the Dapper Labs Top Shot and the NBAs own The Association Project. This exciting initiative, (created in partnership with the NBA and NBPA), allows the NBA to continue its push into web3 with a platform that will let users collect cards based on pro players from the league and to enter leagues that provide card rewards to top performers on the platform.

Having been fascinated about NFTs, from a creator perspective since I first read about non-fungible tokens, I have joined many communities, both online and locally offline. These are generally friendly and helpful places to find out anything and everything about NFTs and the trends that are developing and those projects that have come to fruition, plus, I get to learn something new every day, including the arguments for and against the use and widespread adoption of NFTs.

One of my favorite communities is Veefriends, led by Gary Vaynerchuk’s idea of building a community using NFTs ad smart contract technology, which is quickly developing into one of the strongset and largest communities in Web3. VeeFriends is a collection of 10,255 NFTs, all hand-drawn by him. Another community I follow, for obvious reasons, is the popular World of Women, a collection of 10,000 NFTs representing strong and powerful women and minted on the Ethereum blockchain. This project is led by the artist Yam Karkai with the mission for inclusivity in the Web3 space, creating opportunities for women and diverse creators.

NFTs are everywhere – with the fashion industry being one of the early adopters, as NFTs create unique digital assets that cannot be replicated – and coupled with their real-world assets, increase the value exponentially. According to Abimbola Abe, a writer who documents his journey with web3 and NFTs, this was very well demonstrated by D&G with their recent sales of a crownwith diamonds and a digital NFT version of the same crown as part of its groundbreaking “CollezioneGenesi” which sold for an eye-popping $6 million.

Forbes launched their fun and fabulous 100 Billionaires NFTs in April 2022, so even if you did not make the list, as a subscriber to Forbes, you could still join the virtual fun on the “next best list” as an owner of the Forbes Virtual NFT Billionaires collection – such a cool idea!

I believe the NFT trends will continue towards mass adoption, as the NFT utility can be used as evidence of ownership, to bring people together in diverse communities, for rental purposes, ticketing for events, all manner of purchasing opportunities in gaming and other industries – the technology is available to us and we are only limited by our own imagination, as the scope of potential applications is amazing!

Read more from Lynn Pearce every month exclusively in the Infinity Gaming Magazine.