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In a decision that could have an impact on their relationships with other tribal communities in California, two Native American tribes have announced their support for a newly qualified ballot measure to allow mobile sports betting state-wide, instead of a separate retail-only wagering initiative backed by other tribes.
On Wednesday (June 29), two tribes — the Big Valley Band of Pomo Indians and the Middletown Rancheria of Pomo Indians — announced their support for the measure known as the Californians for Solutions to Homelessness and Mental Health Support Act.
Chairmen of both tribes praised the measure as a historic way for small, disadvantaged tribes to strengthen their economic self-reliance.
“Don’t believe those false attacks,” said Jose “Moke” Simon, chairman of the Middletown Rancheria of Pomo Indiana, whose Twin Pine Casino & Hotel is in Middletown, near the rural town of Calistoga in northern California.
“The solutions act protects tribal sovereignty and will allow every tribe, not just those with big casinos close to big cities, a chance to directly benefit from online sports betting in California,” Simon said. “This measure puts tribes firmly in control of online sports betting.”
Supported by DraftKings, BetMGM, FanDuel, Penn National/Barstool, WynnBET, Bally’s Corporation, and Fanatics Betting and Gaming, the measure would direct 85 percent of tax revenue toward homeless and mental health programs and 15 percent to tribes that do not participate in the sports-betting market.
The initiative would authorize major online betting operators active in at least ten states to partner with a California tribe to deploy a mobile sportsbook, subject to a $100m upfront fee that could be redeemed against future tax liabilities based on a headline 10 percent of net revenue after bonus deductions. Tribes could deploy their own online sportsbooks subject to a lower, $15m upfront fee.
Shortly after the announcement, supporters of the tribal ballot initiative released a statement saying civil rights leader Dolores Huerta will support the tribal in-person, retail wagering ballot measure and opposes legalizing mobile wagering in the state.
“The in-person [measure] will empower tribes to create new economic opportunities for their members and all Californians through safe, responsible sports wagering,” said Huerta. In 1962, Huerta along with Cesar Chavez founded the National Farm Workers Association, the predecessor to the United Farm Workers’ Union.
On Monday, Secretary of State Shirley Weber announced the measure had enough valid petition signatures to be eligible for the ballot on November 8. Weber will officially “certify the initiative as qualified” on Thursday (June 30), according to a letter to all 58 county clerks in California.
Kathy Fairbanks, a spokeswoman for Yes On The Tribal Sports Wagering Act, a political action committee (PAC) to campaign for passage of the retail only ballot initiative, told VIXIO GamblingCompliance that these “online operators have made a catastrophic miscalculation with their measure that is opposed by two-thirds of voters.”
Fairbanks declined to discuss details of the campaign's media spending or campaign playbook.
“You can expect a well-funded, extensive voter education effort to make sure voters understand why they should vote yes on the in-person Tribal Sports Wagering Act and vote no on the corporate [proposition],” she said.
The initiative, which qualified for the November ballot in May, would allow tribal casino operators and racetracks to operate retail sports wagering in the state.
Besides sports betting, the initiative enables private citizens to launch civil enforcement actions against illegal gambling violations not pursued by the state attorney general.
When asked what happens if both propositions pass in November, Fairbanks said “we’re not going to engage in hypotheticals.”
“We’re confident we’ll pass the in-person measure and defeat the online measure,” she added.
Currently, gambling in California is permitted only at racetracks, cardrooms, lottery retailers, and tribal casinos, which is an $8bn business. The Golden State, with its 40m residents, represents a lucrative sports-betting opportunity for tribes and commercial gaming companies.
Legalizing wagering on games requires an amendment to the state constitution, which must be passed by a state-wide vote.
John Holden, an associate professor with the Spears School of Business at Oklahoma State University, said the most likely event is that “we see just mountains of money spent to the point that neither initiative passes.”
“The stakes seem pretty significant for each side,” Holden told VIXIO. “I would expect these initiatives to have more money spent for and against than any other sports-betting measure before.”
Record-Setting Referendums
In fact, the California ballot measures on sports wagering are on track to add up to the most expensive campaign in U.S. history.
The amount of money raised by campaign committees both for and against the two referendums as of Wednesday (June 29) topped $245m, according to data complied by the California Fair Political Practices Commission.
The coalition of commercial gaming companies has already raised more than $100m, with FanDuel, BetMGM and DraftKings each contributing $16.6m toward the campaign.
Tribal donations to two committees to pass their retail-only measure and defeat the commercial initiative totaled $111.07m, while cardrooms have raised $33.98m to defeat the tribal measure.
Another committee formed by cardrooms and titled "No on the Gambling Power Grab" raised $7m but was terminated on November 16, 2020, the commission reported.
Currently, the $245m raised by all parties of more than the $226m that was spent by both sides over 2020’s Proposition 22, which asked voters to decide whether app-based transportation and delivery drivers should be classified as independent contractors, exempting them from state labor laws.
Analysts expect more than $300m will be spent to try and legalize sports betting in California.
According to VIXIO forecasts, a sports-betting market in California that includes full online and mobile wagering would generate up to $2.45bn in annual gross revenue at maturity, whereas a market limited to physical sportsbooks at racetracks and tribal casinos would be worth around $262m annually.
Race To The Finish Line
With more than four months of campaigning to go until election day, one seasoned government affairs consultant believes it is anyone’s guess on which one may pass.
“This week’s signal that two [measures] will be on the ballot before California voters one confirms that this will be a down and dirty race that may end up burning both to the ground,” Brendan Bussmann, managing partner of B Global Advisors, told VIXIO in an email.
“Get your popcorn because it is going to be a fun race to watch.”
Bussmann reminded observers of California politics that polling on both sides show that each side wins off of their various testing points, but it will all come down to who can execute their campaign plan and get their message across to voters.
Although sports-betting measures were successful in 2020 in Louisiana, Maryland and South Dakota, that does not necessarily mean that it will be in 2022 in the largest state in the nation.
“It’s a different environment and different circumstances,” Bussmann said. “We can all remember the disastrous campaign in Colorado that squeaked by 12,000 votes in 2019. This is not a lock for either side or the issue in general.”
