Questions About New Effort To Change Florida Sports Betting

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Florida sports betting

A new ballot initiative purportedly backed by DraftKings and FanDuel was filed this week

If passed, it would allow for statewide commercial mobile sports betting in Florida.

The announcement comes as numerous questions swirl about the viability of the mobile provisions within the state’s new compact with the Seminole Tribe. Both the mayor of Miami Beach and the No Casinos group have sent letters to the Department of the Interior urging that the new agreement be rejected.

The Florida sports betting ballot initiative

The Florida ballot initiative is sponsored by a Tallahassee-based group called Florida Education Champions that appears to have registered with the state at the beginning of the month. It has been widely reported however that this PAC is being backed by FanDuel and DraftKings.

The proposed (and not so catchy) constitutional amendment title is:

“Authorizes sports and event betting. If betting revenues are taxed, taxes must supplement education.”

The summary of the initiative provides some more details:

Authorizes sports and event betting under Florida law at professional sports venues and pari-mutuel facilities and statewide via online sports betting platforms by entities authorized to conduct online sports betting, and by Native American tribes with a Florida gaming compact, only for persons 21 years and older.

“Requires legislative action to regulate sports betting. Legislature may tax betting revenues, and all such taxes are required to supplment the Educational Enhancement Trust Fund.”

Why a ballot initiative?

Unlike many states where DraftKings and FanDuel (or any other operator for that matter) can simply deploy an army of lobbyists on statehouses, there is some debate as to whether Florida could add mobile sports betting without a ballot initiative.

The new compact basically forecloses on that as a possibility even if that were the case. This route of a ballot initiative would put a decision in the hands of voters, as opposed to the one already made by legislators and the governor.

Back in 2018

Back in 2018, Florida voters passed what was then dubbed Amendment 3. The language of Amendment 3 stated:

This amendment ensures that Florida voters shall have the exclusive right to decide whether to authorize casino gambling by requiring that in order for casino gambling to be authorized under Florida law, it must be approved by Florida voters pursuant to Article XI, Section 3 of the Florida Constitution. Affects articles X and XI. Defines casino gambling and clarifies that this amendment does not conflict with federal law regarding state/tribal compacts.

This has the effect of requiring casino gambling expansions to go to the voters of the state.

A majority is not enough

Amendment 3 sets the bar high for casino gaming expansion in the state requiring a 60% threshold to be reached in order for expansion to be approved. The Florida Constitution, with the 60% threshold has been amended 144 times since the current Constitution’s adoption in 1968.

But numerous initiatives have failed to reach the threshold, with hundreds more failing to ever even gather enough signatures to ever make it on the ballot.

Who is backing an amendment?

The news that DraftKings and FanDuel intend to finance a ballot initiative via the Florida Education Champions group in the Sunshine State should perhaps not come as a surprise.

The companies have made no secret of their desire to gain access to the state. However, the current deal between the state and the Seminole Tribe does not provide a clear path for them.

DraftKings, FanDuel lost some firepower

The news that the two sports gambling leaders,are going to go to the voters comes on the same day as news that Brian Ballard of gaming lobbying powerhouse Ballard Partners deregistered as representing the two companies in the state and is now registered to represent the Hard Rock International brand.

Whither Disney?

Disney, along with the Seminole Tribe, was one of the biggest supporters of Amendment 3 back in 2018, putting millions of dollars into the campaign to see that the measure received voter approval.

Disney has long opposed gambling expansion in the state.

Are times a changin’?

In Disney’s April 2021 10-Q, the quarterly report companies file with the SEC, the company revealed that they had realized a gain of $305 million of their stake in DraftKings.

The company’s 6% stake in DraftKings was acquired in March 2019 following a deal to acquire 21st Century Fox.

The deal bucked Disney’s long opposition to gambling.

Expanded interest?

Following the SEC filing, Disney CEO Bob Chapek explained the following on an earnings call with investors in response to a question from John Hodulik of UBS Securities about whether sports gambling would represent a bigger opportunity for the company, Chapek responded:

In terms of the gambling opportunity, as you know, we stuck our toe in this water in the last couple of years in terms of sports books, links with a few of the players out there. And I think going forward, we see this as an opportunity.

We see this as an opportunity. We know that it represents very little risk to the company and very little risk to ESPN. As a matter of fact, it’s actually – it builds the brand equity from the research that we’ve had in terms of some of the younger audience that follows sports because it’s such an integral part of the experience.

And so we think it’s actually a growth vehicle for us, but we’ll walk into it carefully and monitor it carefully. But we have a greater appetite to do more and more in that area.

Ballot measures, a long and arduous process

Assessing the ability of DraftKings and FanDuel to get a ballot measure passed is difficult at this point. The first step is to register as a political committee in order to be in accordance with campaign finance laws. They must send their wording and various forms to the Secretary of State to ensure they comport with state law.

When the organizers have collected 25% of the signatures they need in half of the state’s congressional district, the measure is sent by the Secretary of State to the Attorney General who is required to file a petition with the Florida Supreme Court to review that it comports with Florida’s single-subject rule and various other rules, as well as the Constitution.

If a ballot measure passes those requirements, the organizers must get signatures from 8% of the population who voted in the last presidential election. This means that DraftKings and FanDuel would need to get 891,589 signatures just to get the measure on the ballot.

The measure would then need to be approved by 60% of voters in the 2022 election.

Difficult task ahead on Florida sports betting

The ballot initiative faces a substantial task if they truly seek to get this measure in front of voters in November 2022. Beyond the substantial administrative and physical tasks of collecting hundreds of thousands of signatures, the measure is sure to face stark opposition from various groups. Some, like the Seminole Tribe, have substantial reserves of cash to fight the measure.

The threshold required by the state is a difficult burden to overcome even for popular measures. Given the 2018 measure passed to limit gambling expansion in the state, it seems like there is a great deal of uncertainty as to whether that many voters will want an expanded Florida sports betting market.

The other wild card that remains at play is what happens to the revenue-sharing agreement that exists between the Seminole Tribe and the State if such a measure does pass. This will largely depend on what comes out of the Department of the Interior in the coming days but could play a significant role in a public relations campaign against such a ballot measure from the Seminole Tribe.