California’s powerful gaming tribes and major online sports betting companies, including DraftKings, FanDuel, BetMGM, and Fanatics, have united to confront a mutual adversary: unregulated gray market sweepstakes sites. These sites, such as High 5 Casino and Fliff, are reportedly diverting millions from legal gambling by sidestepping regulation and taxation, potentially reaching a revenue of $4 billion by 2025.
The alliance represents a significant shift for both California tribes and commercial operators, who previously clashed in a high-stakes campaign over Propositions 26 and 27 in 2022. The ballot measures, aimed at expanding sports betting options, failed after a campaign costing hundreds of millions of dollars. Now, the parties are standing together to urge stronger regulation of sweepstakes sites.
“These sweepstakes sites are taking billions of dollars in revenue,” said Jeremy Kudon, president of the Sports Betting Alliance, on a webcast hosted by Victor Rocha, a prominent figure in California’s tribal gaming sector. “I think it’s supposed to be right now $2 billion in revenue for these sweepstakes sites. And they’re predicting they’re going to get up to $4 billion by the end of 2025. That’s money that could be going to the states. That’s money that could be going to the tribes.”
The sites offer games under the guise of “social” platforms, where users initially play for free but can later buy virtual coins to wager and redeem for real money. The industry’s rapid growth has put pressure on both tribes and licensed operators, who pay millions in taxes and fees. Both sides are now calling on state attorneys general to regulate and restrict sweepstakes platforms.
Rocha’s webcast, where he hosted Kudon, marked a symbolic public display of unity. Rocha acknowledged the shift in attitude since the 2022 ballot initiatives. “I think a lot of people were shocked when I announced that you were going to be our guest this week. I think a lot of people thought that after California 26 and 27, there would be no way that the East and West shall meet,” Rocha remarked, noting the alliance’s new focus.
The collaboration follows steps taken by companies like FanDuel, which has recently hired several high-ranking tribal leaders to support strategic partnerships. In April, FanDuel’s CEO Amy Howe publicly recognized the company’s past missteps, calling the 2022 initiative “a spectacular failure” and emphasizing that any future efforts in California will be “with and through” the tribes.
Beyond sweepstakes sites, the alliance is monitoring pick’em-style fantasy sports games, which they call “DFS 2.0” and that Rocha and Kudon both see as thinly veiled sports betting. Rocha said California’s tribes await guidance on the legality of these games, which have gained popularity as of late.
“This is a moment in time where the industry has woken up and sees that we’re at a crossroads,” Rocha said, describing the broader efforts to address unregulated gaming. The new alliance, he said, is ready to “turn Fliff into a verb,” determined to prevent sweepstakes sites from further expansion across California.
The alliance’s next steps may hinge on state regulatory responses, with advocates hoping for action soon to restrict what Rocha described as a “shortcut” to gambling revenue. “When you guys are ready to do it, we’re going to be there to help you in any way, shape or form that you think is best. I think there’s a great future there,” Kudon said, affirming the online sports betting industry’s commitment to working closely with the tribes on future initiatives.
https://www.yogonet.com/international/news/2024/11/15/85438-california-gaming-tribes-and-sports-betting-giants-join-forces-against-unregulated-sweepstakes-sites