An initiative to legalize sports betting — backed by industry giants — would require companies to pay $100 mil in fees + already be licensed in 10 states. Experts say small companies + startups can't compete on those terms
If one of the initiatives passes, California would become one ofto legalize betting on sports. The industry could generate $3.57 billion per year in net revenue for entities offering sports betting to people in California if online and in-person betting is legalized and many companies are able to operate, according to projections from Eilers & Krejcik Gaming LLC, a research firm. That’s larger than the firm’s projections for Texas, New York, or Florida.
The requirement that a company already be licensed in 10 states would cut off smaller companies and startups that are only licensed in a few states, Giden said. That, combined with the fee, would “meaningfully limit the ability of small companies and startups” to participate in the market, she said. said Olav Sorenson, a sociologist at UCLA’s Anderson School of Management who studies entrepreneurship. But only about 1 out of every 100 startups get any venture capital money, Sorenson said. When you include startups that rely on credit card loans and other sources of funds, the amount of money new companies have at their disposal shrinks.
A few companies already dominate online sports betting. FanDuel commands 31% of the U.S. market, followed by DraftKings with 26%, BetMGM with 16% and Caesars with 12%, according to research from Eilers & Krejcik.
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