The vitriol from California Native American tribes toward online sportsbook operators has turned vicious in advertising campaigns of late. And the battle for the 2022 election has yet to really heat up.
Negative campaigns from two tribal factions already present sportsbook operators such as DraftKings, FanDuel and BetMGM as “out-of-state gambling corporations” who would expose “millions of children to online gambling.” That’s before the operator-backed California sports betting initiative even qualifies for the ballot.
When the dust settles from the 2022 election, how are California tribes and sportsbook operators ever going to work together?
In a panel discussion at last week’s National Indian Gaming Association (NIGA) convention, California tribal figures spoke about why they’re fighting against commercial operators.
Participating in the panel were California National Indian Gaming Association Chairman James Siva, Sycuan Band of the Kumeyaay Nation Chairman Cody Martinez and NIGA Conference Chairman Victor Rocha.
All the while, the operator initiative campaign and DraftKings served as sponsors for the National Indian Gaming Association convention.
Tribes see operators as competition
Although the operators amended their measure and did everything they could think of for the tribes to consider them partners, it didn’t turn out that way.
The operators put in their initiative that they could only enter the California market by partnering with a tribe. They even amended their measure to specify that the in-person tribal initiative could pass along with it.
But the tribes see California gaming as their market. If sportsbook operators are to enter the state, they want to be the ones allowing them in.
“I think the goal is to continue to protect tribal exclusivity,” Siva said at the National Indian Gaming Association convention. “I think that’s the major goal. If they find a way into the market, it should be at the tribes’ decision of how they enter this market and what that kind of potential partnership looks like.”
To continue controlling California gambling, tribes would prefer not to let in online sportsbooks if possible.
“To me, it’s no blurry line of what we are doing and why we’re trying to protect and fight,” Martinez said. “For Indian government gaming in this state, if we could keep the big boys out, the corporate people out, keep them out. Why not? This is what we have. But, again, the long-term fight, it’s going to be challenging. And so the more we can keep it narrow and in the tribes’ favor, of course that should be what we want to fight for.”
Afraid to open door for online casino
Online sports betting isn’t that much of a threat to tribes. It’s an entirely different activity than the slot machines and table games offered at California tribal casinos.
But tribes fear that once they let online operators into the state, the next initiative will be online casino gambling.
“The commercial entities are coming for online sports betting now, but what they are really coming after is full iGaming in the future,” Siva said. “And that’s really the threat.”
In 2000, tribes won a ballot victory when voters approved a constitutional amendment granting them exclusivity to slot machines and house-banked card games. Since then, tribes have vehemently defended that exclusivity.
Tribes in California might eventually get involved in online casino, as tribes in Michigan and Connecticut are currently. But tribes are wary of online casino. They certainly don’t want to give operators who offer it in other states more of an opening to do so in California.
“It’s not about sports betting,” Rocha said at the same National Indian Gaming Association panel. “It’s about the next generation of gambling and online gaming. The tribes have exclusivity and they’re not going to give it up, and that’s that. We’ll take that one to the mat.”
Martinez doesn’t think forming a partnership with the online operators now will mean anything later.
“These companies, why wouldn’t they want the whole piece for themselves? Once you’re in bed with an operator, even if they have to partner with the tribes … we should be very cautious because once they’re in, they’re never going to leave. The golden goose is California. Why would they leave? Why would they want a narrow approach when they can just try to expand and expand and expand. More revenue for their shareholders. Meanwhile, we’re fighting to provide programs and services for our people.”
Tribes fine with nuclear option
Right now, it’s looking like two sport betting initiatives will make the November ballot. The in-person tribal initiative already is eligible for the ballot. Operators are expected to submit signatures for approval in the next week or so.
It’s also still possible that a tribal mobile sports betting initiative led by San Manuel goes for the 2022 ballot. The campaign is collecting signatures, but more likely for the 2024 election.
Multiple sports betting initiatives with staunch no campaigns on each is bound to turn voters off on the issue.
“I think much more likely is all three ultimately fail due to voter confusion,” Siva said.
But tribes don’t see the failure of all sports betting initiatives as a negative. That means things stay as they are, with tribes dominating the gaming landscape in California.
Rocha explained:
“For me, from the 10,000-foot view looking at this, if all three initiatives make the ballot and conventional wisdom says they will probably fail because people don’t like confusion, the tribes win because it goes back to the status quo So the tribes still have exclusivity, they still run California, they still run the table, and all they do is [wait] till the next cycle to get it.”
Of course, it will still be hundreds of millions of dollars spent on campaigns for nothing.
Can tribes and sportsbook operators ever be partners?
If California voters happen to approve the operator initiative, tribes will be compelled to work online sportsbooks.
If it’s defeated, as projected by recent polls sponsored by the tribes, online sports betting will still come to California at some point. There will be another attempt on the 2024 ballot, whether from the tribes or other entities.
And once online sports betting is legal in California, even if it’s through parameters laid out by the tribes, tribes are going to want to partner with these experienced sportsbooks they spent most of 2022 badmouthing publicly. Right?
Eventually, tribes will need online sportsbook operators just as much as the operators need them for market access.
Martinez admits that once online sports betting is legal, tribes will compete with each other for the best partner.
“Out of the 60-plus gaming tribes, out of 110 federally recognized tribes in this state, can you keep them out? Out of those 60 tribes, how many can own and operate and develop their own mobile platform? It’s millions of dollars to do so. Most tribes will not find it fiscally responsible to own or operate their own platform. They’re going to partner with an existing operator. It makes sense to do so. It makes financial sense.”
Rocha added that he’s sure there have already been some deals made between tribes and online sportsbook operators behind the scenes. “We all know what’s going on,” he said.
Learning from Connecticut
Speaking to PlayCA at NIGA, Mashantucket Pequot Chairman Rodney Butler said he thinks California tribes eventually will follow Connecticut tribes in partnering with commercial sports betting operators.
Butler said his tribe initially had an adversarial relationship with DraftKings because the operator lobbied for online sports betting before coming to the tribe. But once they partnered and got on the same page, all was forgiven. Now the tribe, through DraftKings, is the online leader in Connecticut for sports betting and casino.
Butler also noted that Connecticut’s two tribes, including the Mohegan through their partnership with FanDuel, dominate the Connecticut market under their partners’ brands. Meanwhile, the Connecticut Lottery operating under its own brand through Rush Street Interactive, has just 5% of the market.
However, coming from a state with just one other tribe as competition, he understands the added hesitancy in California. Some times want online sports betting now, while others prefer to wait.
Butler explained:
“Look at any market and look at the market share of who’s leading, and there are three or four operators who are leading every single jurisdiction by far. And so if I’m one of the 100 California tribes, like we’re going to draw straws? Who gets the workhorse and who gets left with scraps? And so I get the apprehension on that sense, and I think they need to figure out a deal that balances all those concerns so that the winners don’t just keep winning and so it’s fair for everyone. And I guess that for some of them they feel like not allowing the commercial operators in at all keeps it fair for everyone.”
Butler added that, while the Mashantucket Pequot have done slightly better than Mohegan online, it hasn’t affected their retail market share, where the Mohegan Sun continues to lead Foxwoods.
Sportsbook operators try to play nice
At the last NIGA conference in December, representatives of DraftKings Sportsbook and FanDuel tried to pitch their initiative to tribal leaders. This time, the Californians for Solutions to Homelessness and Mental Health Support campaign sponsored the event.
Even as they face increasingly hostile advertisements, the operators continue their unrequited advances toward tribes.
Nathan Click, a spokesperson for the operator campaign, explained to PlayCA:
“The online sports betting platforms supporting our initiative have strong and successful partnerships with Tribes across the country. We see California Tribes as important partners, and that is reflected in our initiative. Every California Tribe – both gaming and non-gaming alike – will directly benefit from the economic and business opportunities in our measure. In our initiative, no bet can be placed in California unless it is done directly with a Tribe or with a Tribe’s operator partners. It would expand gaming opportunities for Tribes by allowing for the first time Tribes to facilitate and benefit from bets made outside of Tribal land.”
That’s the sort of positive messaging from operators who know, someday and someway, they will partner with California tribes.
