Tribes Wait And See On Operator-Backed California Sports Betting Initiative

Written By Matthew Kredell on September 1, 2021 - Last Updated on August 22, 2022
Tribes React Sportsbook Initiative

Early reactions from California Native American tribal members to an operator-backed sports betting initiative haven’t been as negative as one might expect.

Victor Rocha discussed the topic Wednesday on his weekly webinar presented by the National Indian Gaming Association (NIGA). It’s a day after seven operators filed an online-only sports betting initiative in California.

“What’s been interesting to me has been the reception,” Rocha said. “It didn’t land with a loud thud.”

Rocha is conference chairman of NIGA and a member of the Pechanga tribe. James Siva, chair of California Nations Indian Gaming Association (CNIGA) and vice-chair of the Morongo tribe, also participated. Both specified that their comments were their own and did not represent their organizations or tribes.

However, Siva did talk about how he is taking the temperature of the various members of his association before taking a stance on California sports betting.

“To put my CNIGA hat on for a little bit, that’s why the association has not come out with any response to this yet,” Siva said. “Because we’re just trying to be cautious and wait to get more information and see the overall response before we respond as an association overall.”

It’s a similar take to the tribal coalition backing the qualified in-person initiative. Participants discussed that Jacob Mejia, spokesman for the coalition, said tribal members would evaluate and discuss the measure before providing a formal comment.

“I think what you can take away from it is that it’s not outright hated like the card club measure, which was an immediate response and a hard no,” Rocha said. “This one is, ‘Eh, we’ll think about it. We’ll see.'”

Sportsbooks tried to cater to tribal wants

The early tribal response is much different from those to a recent sports betting initiative filed by California cardroom interests, and an initiative filed by some of the same sports betting companies in Florida.

That makes some sense, as the sportsbooks limit mobile sports wagering to tribes and earmark 15% of sports betting revenue to tribes that don’t participate.

“Here in California, they’ve seemed to approach it a little differently,” Rocha said. “They seem to be more amenable. They seem to understand that the tribes in California are entrenched. So I don’t think anybody really wants to go into this as a fight.”

Rocha was impressed that the initiative leaves out the cardrooms, increasing the likelihood of tribal support.

“Card clubs not included in this one too, and I think that was the sports betting companies saying that we heard the tribes, we heard what you guys have to say and we are listening,” Rocha said. “So that was a really big deal too.”

However, Siva noted that there’s a reason the tribes left mobile off their initiative. If the tribes wanted online sports betting, they could do an initiative for it on their own.

“I think the operators are trying to really position this as a complementary bill to the already-qualified tribal initiative,” Siva said. “I think that’s a bit of a reach considering that the tribal initiative intentionally left out online, the mobile aspect, left it on the table.”

Will tribal sports betting alliance splinter like it did with iPoker?

Siva admitted that he expects some California tribes to strongly consider giving support to the sportsbook initiative.

“I think everybody needs to be really careful looking at this,” Siva said. “Because I think this will appeal to certain tribes in the state. I think they’ll look at this and think they can make this work for them.”

Rocha compared it to the fruitless decade-long legislative battle over California online poker. Warring tribal factions formed, partnered with operators, and doomed the efforts.

“Nothing happened except we all learned a lesson,” Rocha said. “Without the tribes in agreement, you will revert back to the status quo. And if goes back to the status quo, the tribes win.”

Siva assessed that the quiet among tribal leaders to the sportsbook initiative is waiting to see if any tribe decides to embrace it and partner with one of the seven operators.

“I think tribes will sit back and watch and see honestly if somebody breaks ranks among the tribal community and announces something with these operators. That would really change things.”

At the end of the webinar, Siva tried to appeal to tribal members listening to stay united.

“We’ve shown the strength of what California tribes can do and what we can be when we come together,” he said. “I think we need to remember that moving forward into this next 18 months because it’s going to be a really critical time. If we can come together, we can control the destiny of online gaming here, we can control sports wagering. We can accept it, we can fight it. Whatever we decide, we can make happen. I just want to make sure everyone is aware of that. We’ve just got to work together.”

Fear of mobile sports wagering leading to iGaming

Richard Schuetz, a former California gaming regulator, contended that the gaming companies aren’t really interested in online sports betting. That it is a gateway for them to eventually offering California online casino products.

“I think what this is about is to get iGaming,” Schuetz said. “Because California is the fifth-largest entity as measured by gross domestic product in the world. If this could go iGaming, it would be quite huge. These guys aren’t having a fight over the control of sports betting. It’s just too tough a business.”

The initiative specifically limits mobile gaming to sports wagering. Any entrance into online casinos would require another ballot measure. And tribes own exclusivity to house-banked games in California.

However, tribal members at the webinar agreed with Schuetz.

“I do believe that this is just their entry point, because they want iGaming in California,” Siva said. “They want online slots, they want online blackjack, they want all of those games. So for them, I think they’re seeing this as we’re partnering with the tribes, only the tribes can offer online, see how good a partner we can be.”

Rocha said that if the discussion ever does go to online casinos, he thinks that would be the red line for California tribes.

Framing initiative around helping the homeless

The sportsbook initiative provides 85% of sports wagering revenue to homelessness and mental health issues.

The initiative even is called the California Solutions to Homelessness and Mental Health Support Act.

Siva admitted that could resonate with some people who will vote for money to address homelessness not even knowing it’s coming from sports betting.

However, Rocha said he didn’t think that many Californians really cared about homelessness.

Schuetz felt it is disingenuous to tie sports wagering revenue to homelessness.

“Quite frankly, I don’t think they care about the tribes any more than they care about the homeless or mental health,” Schuetz said. “To suggest that this is a deep concern of these firms to solve the mental health and homeless problem in California I think is naïve clearly.”

Sports betting ballot battle will be expensive

As Rocha mentioned, a ballot battle between tribes and sportsbook operators could get expensive. If it does turn into a battle.

Schuetz set the over/under on combined money spent to $200 million. Siva took the over.

“I think this is going to get insane,” Schuetz said. “Everybody with a pickup truck and a camper is going to be pulling into Sacramento and become a gaming lobbyist consultant. This is going to be a cash burn like you can’t believe, and some of these players are very good at burning cash.”

How many California sports betting initiatives could make the ballot?

There are now three sports betting initiatives live in California. But there could still be more.

The participants discussed the possibility of another cardroom initiative or perhaps a legislative referendum.

“As the number of initiatives around sports wagering increases, the more confusion it causes for the voter,” Siva said. “And when voters are confused, voters tend to vote no.”

Rocha joked that there will be more signature gathers than homeless on the streets of California in the coming months.

As for the sportsbook initiative, it sounds like there could be discussions between tribes and the operators over the next month. Petitioners have 30 days from filing to make changes to their proposal.

“I think part of the strategy was put it out there, see how the tribes react to it,” Rocha said. “It hasn’t been a hostile reaction.”

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