A few days ago, several prominent tribal members spoke in Las Vegas about their sports betting efforts in California.
During a Global Gaming Expo (G2E) panel titled “California Sports Betting: Tribal Campaign Update,” Victor Rocha, Jacob Mejia, James Siva and Sara Dutschke discussed the California sports betting ballot initiatives.
Rocha is the conference chairman of the Indian Gaming Association. Mejia is the director of public affairs for the Pechanga Tribe. Siva is the vice chair of the Morongo Tribe. And Dutschke is the chairwoman of the Ione Band of Miwok Indians, a small non-gaming tribe located outside Sacramento.
There are two California sports betting initiatives up for a vote next month. Proposition 26 would allow in-person betting at California tribal casinos and four horse tracks. On the other hand, Proposition 27 allows major operators to enter the market and provide online sports betting.
Unsurprisingly, California tribes support Prop 26. Large companies like DraftKings and FanDuel are backing Prop 27.
The panel was described as an update on Prop 26. However, much of the discussion was around the flaws in the opposing initiative.
Normally, these “Well, Actually…” columns focus on debunking some common misconceptions perpetuated by California newspapers. But since tribal leaders opined on the online initiative, there’s plenty to dissect from Tuesday’s talk.
It’s about protecting tribal sovereignty
Much of the criticism surrounding the online initiative was directed at how the proposal is an attack on tribal nations. It’s not about sports betting, per se. It’s about outside entities infringing on a market the tribes feel was reserved for them.
In California, tribal casinos have exclusivity over most Las Vegas-style gaming. They are the only facilities where Californians can play slot machines.
California cardrooms spread house-backed card games like Ultimate Texas Hold’em, but that appears to be a point of contention among tribes.
As a result, the tribes believe this type of exclusivity should extend to sports betting as well. Furthermore, the tribes use gaming revenue to fund most of their infrastructure. After all, these are still technically sovereign nations operating within U.S. borders.
As Rocha said Tuesday:
“We want to take care of our children, we want to take care of our businesses, we want to take care of the future of our families… [Online operators] don’t get it. They do not get it. They don’t respect tribal sovereignty, they don’t respect the tribes and they don’t respect the precedents.”
Well, actually…
There doesn’t seem to be a shred of evidence to support the claim that tribal exclusivity should include sports betting.
Other gambling facilities already exist in the state. There are cardrooms, horse tracks and even a state lottery in the Golden State. That in and of itself shows that not all gaming is reserved for the tribes.
There are only a few forms of gambling that involve any skill at all.
This doesn’t negate the variance of the outcomes, which most people refer to as luck. But aside from poker and race/sports handicapping, gambling is usually just betting on a random outcome where the operator isn’t providing the bettor with the correct odds. The difference between the actual odds and the offered odds is where the operator makes its money.
For example, a roulette table has anywhere between 37 and 39 spaces, depending on how many 0’s there are. On a wheel with just a single zero slot, hitting a random number is a 37:1 shot. But if you bet on a number and win, the casino pays you at 36:1 odds.
In this example, the gambler is taking the worst of it since the casino isn’t paying out true odds on the bet.
Nobody is arguing cardrooms shouldn’t spread poker. And nobody is making the case for horse tracks to not accept wagers on races. Those are currently the only two places in California where any skill-based gambling exists.
OK, let me circle back to my actual point.
Tribal gaming appears to be reserved for non-skill based activities
In 1998, the California Supreme Court ruled that house-banked card games and slot machines violated its constitutional ban on “Nevada-style” gaming. Consequently, the public passed Proposition 5, which allowed tribes to spread those games at their casinos.
Ultimately, the proposition was overturned in the courts on a technicality. But a separate ballot initiative passed two years later re-established that right for tribes.
Since then, the initiatives and compacts regarding tribal gaming in California were strengthened, but never expanded to other games. Most of the disagreements between the state and tribe were over how many slot machines tribes could have. It was never about adding new games to the compact.
The compacts and legal precedents point to the tribes having exclusivity over completely luck-based gaming. Sports betting is not that.
Let me put in the disclaimer: Most bettors should treat it the same as any other form of gambling. And that same argument goes for poker and horse betting as well.
But if sports betting were on the same level as roulette, then Billy Walters must be the luckiest gambler on the planet.
Californians don’t support sports betting
This struck me as strange. But nearly everyone on Tuesday’s panel said the popularity of sports betting just wasn’t there in California.
It seemed perplexing to make that claim while supporting a ballot initiative that would legalize it.
Instead of trying to explain their argument, I’ll just let their words speak for themselves.
“I can’t say how people in the state of California feel about sports wagering,” said Dutschke. “Me personally, it’s not exciting to me. But I will say that I haven’t met a single person in the past six or seven months that says they want online sports betting in California.”
“In California, sports betting is soft,” said Rocha. “And mobile is even softer.”
“That’s also reflected in the research,” said Mejia. “When you ask ‘If this were legalized, how likely would you be able to participate, less than 20% say that they would participate in this whole thing.”
Well, actually…
Let’s start with Mejia’s statement. According to the polls, “less than 20%” of Californians would wager.
First off, we don’t know which research he is referencing. He never gets that detailed. But based on his verbiage, I’d venture a guess that the actual number is somewhere around 19.5%. If it were less than 19%, he probably would’ve said “less than 19%.”
At first glance, that number does seem to jump out at you. It means that more than four out of five California residents wouldn’t even take part in the new market.
But I hope we can agree that U.S. sports betting as a whole is a massive market. Bettors are wagering billions of dollars each month. It’s extremely popular.
So how many people take part in it?
According to a Forbes report, the number of Americans betting on sports more than doubled in 2021. It went from 5% to 12%.
In other words, Californians are actually more likely to bet on a game than someone in a different state.
This also points to why Dutschke doesn’t know anyone that wants to bet. Because most people don’t. But they also don’t want to stop those that do from placing a wager.
Furthermore, most people support using added tax revenue to help solve societal issues.
That was a big selling point in 2000 when Proposition 1A resolved the overturning of Prop 5 in 1999. Proponents of the ballot initiative said the added revenue would allow tribes to provide education, housing and health care for its people. Who would want to stand in the way of that?
Which is a good segue to flawed argument number three.
Prop 27 wouldn’t do much to help solve homelessness
Newspaper editorial staffs consistently use this argument. And it’s a flawed one. Here’s what Siva said about Prop 27’s revenue.
“In reality, it will bring very little money in for homelessness.”
He eventually went on to talk about how the online operators backing the proposal intentionally focused on California’s homeless problem to drum up support for the initiative.
“[Online operators] shifted their PR approach. They focus on homelessness. They were able to get minimal tribal support and then they tried this balancing act where they said this is from the big tribes. This is a money grab for them. They are pushing their monopoly.”
Towards the end of the talk, Rocha joked that in 2024, the initiative will focus on “free-range chickens” because Californians care about animals.
Well, actually…
First, let’s just acknowledge the hilariousness of a tribal member saying the online operators are pushing a monopoly. Only the tribes can offer certain types of gaming and are pushing for a near-monopoly on sports betting as well.
But I should address the actual argument that this won’t bring in much revenue for homelessness.
The rhetoric is misleading. The newspapers use the same sort of sleight-of-hand argument. Saying the proposal “will bring very little money in for homelessness” is simply false.
Hundreds of millions of dollars is a lot of money
I’ll keep this part brief since I’ve explained this in past columns. The California Legislative Analyst Office projects up to $500 million in new annual tax revenue from Prop 27. PlayCA’s internal projections have that number closer to $200 million.
Let’s meet in the middle and call it $350 million.
If you were to ask someone, “would you want to legalize online sports betting if it meant $350 million more would be spent on solving the homelessness problem in California?” The answer would almost certainly be yes. $350 million is a lot of money any way you slice it.
California already spends a lot of money on homelessness
I haven’t had the chance to debate this with Vice Chairman Siva, but I’d guess he means that this proposal won’t make a meaningful difference in the already large budget for homelessness.
According to California’s 2022-23 budget, Gov. Gavin Newsom allotted $7.2 billion to the homelessness problem. To be fair to Siva, a few hundred million won’t do much to change the outcome of the homelessness problem.
But there’s something incredibly dishonest about framing it as “very little.”
If you’re arguing against this helping the homelessness problem, you’re getting very close to the “government can’t solve problems” answer. I could easily defend this position, but I don’t think Siva is trying to make that argument.
