iGaming Daily

Jessica Welman (00:02.473)
The tribes may be California dreaming, but for the unregulated gaming space, last week was a California nightmare. Between a new bill targeting sweepstakes and a rumored Attorney General opinion on the legality of fantasy sports, the Sunshine State is at DEFCON 1, and there could be an all-out legal war on the horizon. We've got all the juicy details on today's episode of iGaming Daily. iGaming Daily is brought to you by OptiMove, the number one CRM marketing solution for the iGaming market.

I'm Jessica Wellman, Managing Editor of SBC Media and Kids. I am...

riding solo today. Charlie Horner and Tom Nightingale are both on vacation, perhaps because they knew that we were going to have to talk about this and they guessed that I was going to rant and rave. And instead, I have a platform to do it all by myself on this episode. So we've got a ton of stuff that happened in California last week. And I think we'll start with a topic that Charlie and I discussed on the previous podcast because we

heard it was coming and we didn't really know the details, which is a California sweepstakes bill. It is assembly bill 831. It is backed by the California Nations Indian Gaming Association, CNAIGA, and it would, it takes a lot of the same language as the New York bill in terms of prohibiting sweepstakes casinos. Before I get into the nitty gritty of what is in the bill, just to kind of give you an idea of the state of play on it.

Remember the Georgia soapbox derby bill that we love talking about so much? It's similar to that. There was a very simple language tweak bill that changed two words of tribal gaming law that passed through the assembly and sits in the Senate now. As those of you may remember from the Georgia case, it is completely normal in these state legislatures to take bills that are kind of tangentially related to a topic

Jessica Welman (02:24.298)
And if it doesn't pass on its own, they'll just glom it on to a different bill. So what it's done is AB 831 is now sweepstakes language that has been amended by a Senate committee and inserted in. So it's through the assembly, the Senate needs to act on it. If the Senate were to pass it, it would have to go back to the assembly for concurrence because it's nowhere close to the bill that the assembly passed the first time.

Now that you understand the nitty gritty of it, let's get into what it actually entails.

It defy it. I'm always one to say, how does it define sweeps? Here's how it defines it. The dual currency system of payment. And here's the exact language allows a person to play or participate with direct consideration in parentheses, a playable token of game value that can be purchased or received through a bonus or promotion or indirect consideration in parentheses, a token of game value that may be exchanged for or used as a chance to win a prize cash or cash equivalence and which is provided

through a promotion, bonus, or with the purchase of a playable token of game value. I have thoughts, which is, as always, I think that this language is going to be problematic for people far beyond the realm of sweepstakes.

Screenshot that made the rounds from the pro sweeps people References san manuel is a tribe in california that is one of the big pushers of this effort They own yamava casino. They also own the palms in las vegas And they have an online casino play online by yamava, which offers currently

Jessica Welman (04:12.448)
free casino play for finishing certain places in a contest, we would assume that's gonna be a no-go. The other thing is that Yamava, as many other social casinos tied to real money casinos, has a system set up where you can earn...

your Club Serrano casino loyalty points the more you play on this social casino and so you're going to be able to then turn your social casino play into something of real world value in terms of points and comp dollars.

I think on the New Normal podcast, the tribal representative Michael Honig, who is one of the general counsels for San Manuel, argued that this is not the same thing and it would not be covered. Looking at the language, I just don't. I'm not a lawyer. We know this. I just don't see it. I don't see how this isn't affected. Also, when you think about a dual currency system of payment, we're always generally talking about like gold

coins and sweeps coins, just getting down to the fundamental definition of dual meaning two, paying cash to get social coins sure sounds like two currencies, which is a whole other thing to unpack that I'll wait until the guys come back on to actually go in and do that. All right, so the tribes have put this out there. They've also

kept the language involving suppliers, which means, as I discussed on last week's episode, if you are a North American affiliate, Katina, my former employer, probably not having a great week either because this is a substantial chunk of their revenue if it were to disappear.

Jessica Welman (06:02.644)
It also includes celebrity endorsers, which is a new one that did not make it into the language of the New York bill. So the likes of Ryan Seacrest, Paris Hilton, et cetera, would potentially be impacted here as well, and they would lose their deals for that state. I believe they both reside in California too, which makes this even trickier. All right, with that in mind, what's next for it?

It seems like the tribes are putting all of their effort behind this and on the New Normal podcast, the group speaking there, including James Siva, the chair of CNAIGA, suggested that this bill does have legs and the ability to move. For those who don't know,

Tribes have an enormous amount of political sway in California. There are so many of them and given that there are so many that are united on this issue, unlike say sports betting with Prop 26 and Prop 27 a couple of years ago.

They certainly have the ability to pull strings and get votes on this and get it out of committee if they want to. It's just a matter of seeing if California will. As you may have heard, California not the most calm state at the moment. given that they do, you know, their session goes on into later in the year and they do have a little more time than other legislatures to get stuff done, it's going to be a question of priorities and we'll see if sweepstakes is one of those priorities.

Alright, I'm gonna exhale, take a sip of coffee, and then we're gonna come back and talk what's going on with DFS.

Jessica Welman (07:53.07)
All

Jessica Welman (07:56.77)
Welcome back to iGaming Daily. I feel like I'm filibustering like Mr. Smith. Ms. Wellman goes to Washington or Ms. Wellman goes to Los Angeles more accurately as I stump and discuss all things California on today's episode. We covered sweeps now to cover the other big news of the week. A local news outlet reported that the Attorney General Rob Bonta is set to drop his opinion on the legality of fantasy sports in the state. When I say

This is literally 10 years in the making.

Recall that ten years ago if you were in gaming this was the heyday of DraftKings and Fandual and their lineup kind of fantasy that took the world by storm and There were lots of questions about whether or not it was legal At the time they asked for an opinion on it and the Attorney General kind of punted the Attorney General's continued to punt including former Vice President Kamala Harris and then

ago there was actually a request from a lawmaker to have the office issue its stance on fantasy sports, particularly whether DFS 2.0, this peer-to-peer or against the house kind of Pickham style fantasy fell within the scope of gambling or not.

So we've heard this opinion's coming, this opinion's coming, it's been kind of Peter and the Wolf that we've been waiting for it for a decade, but allegedly it's coming before July 3rd. And allegedly what is in it is not good for the fantasy industry. People with familiarity with the bill are saying that, or with the opinion are saying that it is going to...

Jessica Welman (09:50.082)
take the stance that basically every form of paid fantasy is not okay. So that includes

against the house pick and fantasy peer to peer pick and fantasy lineup traditional lineup contest like on fan duel and DraftKings paid season long may even fall into this so you know I watch out those of you in fantasy season log leagues I would hope that they have no time to come after that but you never know so

What does this mean? It's time we take a second to just kind of lay down what an attorney general opinion is. What it isn't is the law. What it is is a legal interpretation of the law by the highest standing.

lawmaker for the state on a particular subject. So Rob Bonta is going to take this stance and drop this opinion, but that actually doesn't mean that people have to like hightail it out of California on the 4th of July.

What it means is that this office does see it as illegal, and so they may be open to sending cease and desists, taking legal action against people. There are currently a couple of new lawsuits. There's a firm, there are lots of firms like this. I mean, that's a subject for another day too, that they just kind of find people to file class action lawsuits against various entities. And in this case, they have filed against both prize picks.

Jessica Welman (11:30.036)
and DraftKings suggesting that against the House, Peek-Em, Peer-to-Peer Peek-Em, and even line-up-style Peek-Em fall against the law and are breaking the law. So then in those lawsuits, they can bring up the AG opinion and have a little more weight on their side. It doesn't make it a crime, though. It just means the office thinks that it's a crime, which...

begs the question, what happens next? Well, what the fantasy sites can do, I mean, certainly they could up and leave, seems unlikely.

they may take legal action and file like a preemptive strike against the opinion or file that, you know, they want to challenge the opinion in court so that they can get a judicial determination on whether or not the law is the way they read it or the law is the way Bonta is interpreting it, which I think in a state like California that is ballgame, it's such a big part of the market for the DFS business.

I'm pretty sure that's going to happen. It might even happen by the time this podcast is live. They may just jump and get a head start on things. You never know. With that in mind, then it goes to court and it's up to a judge. And that opinion will determine how to interpret the law on a much more solid footing than just an AG opinion does.

Interesting thing to think about here, though, is Draftkings and FanDuel. Recall that they have been, I've been saying recall a lot today, right? Recall that they have been courting the tribes for a few years now. FanDuel has worked very hard to try to improve tribal relations. hired...

Jessica Welman (13:26.028)
the former NIGC chair, Sequoia Zimmermeyer, to work on their government relations. They've had another couple of key tribal hires. And then it all exploded at the Indian Gaming Association Convention because they had like a closed door meeting and somehow a member of the media got in and wrote that like, deal's basically on the table. And the tribes were like, I don't think so. So they're not in the best place anymore.

If you're Draftkings and Fandul and you're told that you're season long or you're your lineup style fantasy and in the case of Draftkings actually Draftkings pick six is a Pick'em style product. If you're told you have to you know the tribes are backing this the AG's backing this and you need to get out.

That's a trickier decision than if your prize picks are underdog and this is the whole crux of your business. So it'll be really interesting to see what the big two sports books do and I think it'll be interesting in a different way to see which of the more Pickham style operators decide to pursue legal action against this. All right.

I think I've covered everything there is to say about California this week. Actually, one last thing, because I love a good quote. Now, Ro Khanna is a congressman. He is not a state lawmaker in California, but he does represent the state of California. And Stephen A. Smith, who notably has a very lucrative partnership with PrizePix, had him on his show and asked him about the idea of banning fantasy.

This quote's just a gem.

Jessica Welman (15:11.476)
I'm opposed to that. did fantasy teams growing up and it's always amazed me that you'd be watching these games and folks will be less concerned about whether the Eagles are going to win or the 49ers are going to win. They're just cheering for the random offensive linemen because they had them on their fantasy team. That's the fun of sports. When you're talking about dumb things the Democratic Party does, it's like, let's go ban fantasy sports and then let's pay 20 million to understand why you're losing young men. I mean, come on.

you wonder why we're in the state we are as a party, it's laughable. That's quite the take and I am curious how much it resonates. He does have a lot of pull in California and I am going to guess that the Fantasy Sports Coalition is going to blast this quote out to all of their customers and encourage all of their customers to reach out to the state that they really don't want the AG to be meddling in such an issue.

We've got a lot to cover. We've covered a lot and we will continue to cover more on SBC Americas this week. Even with the holiday week, we will be with you through Thursday. And even if the fantasy opinion drops on the 4th of July, I will put down that hamburger and get to reading and writing. We will have it up for you ready to read. So be sure to keep checking into SBC Americas this week. Keep checking into the entire network of SBC sites and check back into iGaming Daily tomorrow.

the next time I'm on when I'm sure they won't let me have the mic solo again.