FanDuel and DraftKings consider uniting with California tribes to introduce OSB

Representatives from both FanDuel and DraftKings have discussed the possibility of working with tribal gaming stakeholders in California to introduce legal sports betting within the state.  

Talks took place during a meeting at the Indian Gaming Tradeshow & Convention in San Diego this week, which included DraftKings chief commercial officer Jeremy Elbaum and FanDuel VP of strategic partnerships Frank Sizemore. 

On behalf of the Sports Betting Alliance (SBA), a proposal was floated to create a single entity owned by California’s 109 tribes, which would then contract with national operators to offer online sports betting in the country’s most populous state.   

The operators, including SBA members, would compete with each other and pay an annual minimum guarantee per tribe. Operators would also share a slice of their revenue with the tribes and the state of California. State taxes would be applied, too.

SBA members include leading US sports betting operators FanDuel, DraftKings, BetMGM, and Fanatics.  

The proposal would potentially cap the number of operators in California at four, although an SBA representative said more could be permitted at the tribes’ discretion.

When asked by California National Indian Gaming Association chairman James Siva whether the proposal would fit within the Indian Gaming Regulatory Act (IGRA), Elbaum replied the legislation could potentially break the model.  

Elbaum also stressed that the SBA’s intention would be to include all tribes, with the operators paying for the initiative, taking the risk away from the tribes themselves. 

Sports betting legislation was included on the ballot for the California elections back in 2022, in the form of Proposition 26 and 27. 

Proposition 26 looked to legalize sports betting in tribal casinos and at racetracks, while Proposition 27 sought to legalize commercial mobile sports betting, with its proceeds going to support homelessness, mental health, and tribal support services.  

Alongside the four SBA members, PENN Entertainment also donated to the ‘Yes on 27’ campaign, which raised $169.2m in support funding and was the most expensive ballot measure battle in US history with those for and against it spending around $450m.

But ultimately, Proposition 27 was unanimously rejected by the electorate by 82.3% to 17.3%. Two-thirds of ballots said no to Proposition 26.

During this week’s convention, DraftKings co-founder CEO Jason Robins and FanDuel Group president Christian Genetski sat on a separate panel to discuss the significance and merits of operators collaborating with tribal gaming entities.  

Robins pointed to DraftKings’ relationship with the Bay Mills sportsbook in Michigan as an example. 

He said: “Each state is different but what we saw at Bay Mills was a tribe that really wanted the partnership and understood this was something that could truly be a win-win. 

“I feel like what we’ve been able to do together has been impactful for us and impactful for them, and that’s what is really important to us.” 

Genetski added: “In most states, we are partnered either with a tribe, a racetrack, sports team, or casino. 

“In all those partnerships, we take the same high-level philosophy which is, we are going to be in business together for a long time.” 

Robins went on to note that collaboration with tribes is the only way to move forward with introducing sports betting in California.  

He added: “There’s no other state out there that has the ability to impact our long-term growth than California. It is a critical state and having tribal relationships and partnerships is absolutely essential. There’s no other way to do it here.”