Big Tribes Pledge That Prop 26 Sports Betting Revenue Will Help Disadvantaged Tribes

Written By Matthew Kredell on September 16, 2022 - Last Updated on November 4, 2022

Although it’s not in the proposition language, large California Indian tribes supporting Proposition 26 plan on sharing sports betting revenue with disadvantaged tribes.

In a letter sent to tribal leaders throughout the state in February, chairmen of six tribes promised to contribute at least 15% of net California sports betting revenue to the Revenue Sharing Trust Fund (RSTF).

Chairmen of the following tribes signed the letter:

  • Pechanga Band of Indians
  • Agua Caliente Band of Cahuilla Indians
  • Barona Band of Indians
  • Santa Ynez Band of Chumash Indians
  • Sycuan Band of the Kumeyaay Nation
  • Yocha Dehe Wintun Nation

“Tribal leaders know how critical the Revenue Sharing Trust Fund is to non- and limited-gaming tribes,” Jacob Mejia, VP of Public Affairs for Pechanga, told PlayCA. “That’s why many of the tribes that operate large gaming facilities are making this commitment to share at least 15% of revenue from sports betting net win. It’s the strongest commitment they can make given the policy framework in California.”

Prop 26 could nearly double tribal revenue share

The letter starts off by telling fellow tribal leaders that they have heard their concerns regarding revenue sharing derived from California sports betting.

Non-gaming and limited-gaming tribes rely on revenue from larger gaming tribes to provide tribal services.

Eligible RSTF tribes currently receive $1.1 million annually. The letter estimates $436 million in statewide net sports gaming revenues by the third year. Adding 15% to the RSTF would provide each tribe an additional $934,320.

That’s an 85% increase in RSTF funds, and the letter mentions that figure should increase as the market matures. Reaching that figure would require more than just six tribes to contribute sports wagering revenue into the RSTF.

While each tribe must work out its own compact amendment to include sports wagering if Prop 26 passes, these six tribes can set an example for other tribes to follow. And if the state works out compacts involving a tax rate and revenue share with this group of tribes, it’s likely to seek identical terms with other tribes.

Why tribal revenue sharing isn’t included in Prop 26

For tribes, it’s important to retain their sovereignty to work out financial terms with the state through individual compacts.

That’s why Prop 26 includes a 10% tax rate for sports betting at California horse racing venues, but not at California tribal casinos. Even though tribes have pledged to pay the same 10% rate.

This aligns with Prop 1A (2000), which authorized tribal casinos. Prop 1A didn’t include financial terms. It simply authorized tribal gaming, and revenue sharing details were worked out through compacts.

The letter explains:

“We deliberately chose to not insert compact terms into the California Constitution, out of respect for our sovereignty and to avoid setting a dangerous precedent that would give opponents of Indian gaming a roadmap for coercing undue and unrelated fees on tribal government gaming.”

Pledge comes contrary to Prop 27 advertising

A recent Yes on 27 commercial compared Prop 26 and Proposition 27.

Here’s the ad transcript:

“The choice between Prop 26 and 27? Let’s get real. Prop 26 means no money to fix homelessness, no enforcement oversight, and no support for disadvantaged tribes. Yikes.”

While the ad is correct in that Prop 26 doesn’t include support for disadvantaged tribes, the letter shows otherwise.

Prop 27 also provides 15% in revenue share to tribes, and it’s written into the proposition. However, it does not go only to non-gaming and limited-gaming tribes. It goes to all tribes that don’t participate in online sports betting, which could include some with large casinos.

Some tribes also are concerned that Prop 27 could include a “poison pill” that would end tribal revenue share.

Although the pledge to share revenue isn’t written into Prop 26, the letter seems to have made an impact. At a legislative hearing last month, Santa Rosa Band of Cahuilla Indians Chair Lovina Saul Redner made known her belief in the pledge:

“Prop 26 would nearly double the funding provided to small tribes and non-gaming RSTF tribes annually. … Prop 26 helps small tribes like mine, that’s why Prop 26 is supported by both gaming and non-gaming tribes from all corners of the state.”

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