With two ballot initiatives to legalize sports betting in California headed for near-certain defeat in November, players on all sides are beginning to strategize their next moves even as campaign representatives say they remain focused on the election at hand.
Because billions in profits are on the table, it’s likely a matter of when, not if, some form of legal sports betting comes to the state. Californians can expect to see it on the 2024 ballot or on the legislature’s agenda as stakeholders sketch out plans.
But to avoid a repeat of 2022, in which tribal governments, sports betting companies, and card rooms rung up record fundraising of over $400 million to little effect, some form of a grand bargain will need to be struck.
“The reality is that all the parties are going to try again, first through the state legislature and that’s going to be very frustrating,” said I. Nelson Rose, emeritus gambling law professor at Whittier College. “Then some group is going to start writing an initiative again. If cooler heads prevail, they will include other parties.”
Californians can legally gamble at 69 licensed tribal casinos, 84 licensed card rooms, 4 horse racing tracks and the state lottery. Tribal casinos make up the bulk of the gaming economy, with revenue estimated at over $8 billion by the state Legislative Analyst Office.
Legalizing in-person sports betting under Proposition 26 could generate $300 million, by some estimates. Introducing mobile sports betting with Prop 27 could reap $2.8 billion in profit. Neither appear to have strong public support.
Prop. 26, backed by a coalition of 50 tribes, earned only 31% support from likely voters with 42% opposed, according to a poll released last week by the UC Berkeley Institute of Governmental Studies. Prop. 27, backed by online sports betting companies, fared even worse, with 27% of likely voters in support and 53% opposed.
While the election isn’t over, experts speculate that these measures will likely tank for a variety of reasons. Similar but opposing propositions on the ballot, the torrent of confusing attack ads, concern about online gambling addiction and uncertainty about who would actually benefit all seemed to have turned off the public.
“For Californians trying to make a decision on this they’ve got to ask themselves, how would the expansion of gaming benefit their community? And I think they’re gonna have a hard time answering that because no has told us or produced those figures,” said. Kerri J. Malloy, an assistant professor of indigenous studies at San Jose State University and a member of the Yurok Tribe
Beyond communication strategy, divided factions of Native American tribal governments know they will have a stronger hand in any future deal if they resolve their differences over online sports betting.
The vast majority of tribes who have taken a stance oppose allowing companies like FanDuel and DraftKings to operate mobile sports betting in California. Instead, they support the slow introduction of in-person sports gambling at tribal casinos. Yet three tribes publicly sided with those companies and another wants to play a leadership role in establishing online betting.
If there is tribal consensus, it is that corporate mobile sports betting promises to disrupt their core business model — Vegas-style gambling with slots, lottery games, and card games like baccarat and blackjack at brick-and-mortar casinos.
It was only two decades ago that California voters amended the state constitution to allow federally recognized tribes to operate “Vegas-style” gambling. Many saw the move as an expression of support for tribal sovereignty, even a form of reparations, more than a century after the region’s indigenous people survived state-sponsored genocide.
Gaming revenues became a key source of economic and political power for many tribal governments. But not all tribes have enjoyed those benefits equitably. Those that operate rural casinos, non-gaming tribes, and tribes that lack federal recognition haven’t shared in the same prosperity.
By supporting Prop. 27, three such tribes — Big Valley Rancheria, Middleton Rancheria Pomo, and the Santa Rosa Rancheria Tachi Yokut — appear ready to let companies like DraftKings and FanDuel take the lead to their potential benefit. The much larger No on 27 camp is split on whether to take steps towards mobile gambling at all.
A faction of tribes led by the San Manuel Band of Mission Indians submitted its own 2024 ballot initiative to operate online sports wagering. But they have no set plan and are open to conversations with tribes and the companies “in anticipation of sports wagering happening at some point,” said the tribe’s vice president and chief of staff Frank Sizemore.
The coalition of 50 tribes supporting Prop. 26 is led by higher-resourced gaming tribes including the Federated Indians of Graton Rancheria, Pechanga Band of Indians, Yocha Dehe Wintun Nation.
Chairman Cody Martinez of the Sycuan Band of Kumeyaay, a leader in this coalition, hopes to bring the various factions of tribes together at upcoming “all tribes meetings” with California Nations Indian Gaming Association.
He said renegotiating the revenue-sharing agreement between high and low-earning tribes in California will help build common ground for next steps. In a hypothetical new agreement, he said tribes could receive some 20% more revenue.
A list of 62 tribes on the Indian Gaming Revenue Sharing Trust Fund list receive $1.1 million a year each, an amount that hasn’t changed since 1999. The tribes on the list either don’t operate casinos or have less than 350 slot machines.
“There is division in Indian Country regarding the mobile platforms. Ultimately we will continue to fight the corporate intrusion into the state. Where we see common ground is on the revenue share for the limited and non-gaming tribes,” Martinez said.
Nathan Click, a spokesperson for the Yes on 27, campaign, declined to make representatives of the sports wagering companies available but said they are focused on their campaign and will reassess after the election.
While companies may turn their focus elsewhere for a while, industry experts say, they are bound to return attention to California.
Card rooms, a main competitor of tribal casinos despite its small share of the total industry, are focused on defeating Prop. 26 because it would open the door for lawsuits against some of their practices. Four privately operated horse racetracks, which have faced criticism in recent years over frequent horse deaths, are also involved.
The messiness of the various factions makes it unlikely sports betting will be taken up in the legislature, said gambling law expert and sports betting attorney Daniel Wallach.
Despite his argument that lawmakers have the authority to legalize sports betting without a constitutional amendment, he and others expect to see at least one sports gambling initiative on the 2024 ballot.
“The legislative solution is the path of least resistance but it requires the most difficult task here, which is to which is to bring the disagreeing stakeholders together and find common ground,” Wallach said.
“If you have that then it’s a layup. If you don’t, then there’s no sports betting bill in California and you’ll be waiting for years.”
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