Battle For Control Of Sports Betting In California Setting Up Showdown In 2022

November 16, 2021
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Sports betting remains a multi-billion-dollar illegal business in California, but tribal officials and lobbyists were optimistic Monday that voters will approve a ballot initiative next year to legalize retail wagering on games at Indian casinos and four racetracks across the state.

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Sports betting remains a multi-billion-dollar illegal business in California, but tribal officials and lobbyists were optimistic Monday that voters will approve a ballot initiative next year to legalize retail wagering on games at Indian casinos and four racetracks across the state.

The initiative, known as the California Legalize Sports Betting on American Indian Lands Initiative, was supported by a coalition of tribes that gathered more than enough signatures during 2020 to put it on the November 8, 2022 ballot.

Besides sports betting, the initiative allows tribes to offer games such as roulette and craps and enable private citizens to launch civil enforcement actions against illegal gambling violations not being pursued by the state attorney general.

The state’s cardrooms have come out in firm opposition to the proposal.

“We realize how much has changed now,” said James Silva, chairman of the California Nations Indian Gaming Association. “We see three other [sports-betting] initiatives, two that have been granted title and summary and a fourth that is going through that process now.”

“We continue to be supportive of the tribal initiative, the only initiative that has qualified for the 2022 ballot,” Silva told attendees on Monday at the National Indian Gaming Association’s mid-year conference at Pechanga Casino in Temecula, California.

Mark Macarro, chairman of the Pechanga Band of Luiseno Indians, said tribes believe in taking an incremental approach to legalizing sports betting.

“What we need to do here in California is protect brick-and-mortar casinos,” Macarro said.

“Mobile is another argument for another day,” he added. “There is skittishness about what could happen to brick-and-mortar casinos. That’s why we took the approach we did.”

Silva and Macarro were joined by Jacob Mejia, a spokesman for the tribal initiative that has qualified and director of public affairs at Pechanga Development Corporation, for the 40-miniute discussion on sports betting in California. The panelists estimated that illegal sports betting was a $6bn business in the Golden State.

Mejia reminded attendees that being the only initiative on next year’s ballot matters. Currently, their measure has about 60 percent support among registered voters, he said.

The other three measures include a proposal by cardrooms to offer mobile sports betting throughout the state, and another measure submitted by DraftKings, FanDuel and other operators to operate online sports betting through tribal partnerships.

Jonathan Edson, senior vice president of business development with FanDuel, said the company has just begun collecting signatures to place the proposal on the November 2022 ballot.

“It’s a long process here,” Edson said during a separate panel discussion Monday on the proposal.

Edson admitted that FanDuel and other gaming companies have been in conversation with tribes about their proposal since it was filed in September. Edson described the proposal as a complementary initiative to the retail sports-betting initiative that has already qualified for the ballot.

Last week, a coalition of California Indian tribes filed the fourth ballot initiative, further crowding the field for a potential series of conflicting referendums on sports wagering next November.

This one would authorize tribes to operate retail and online sports betting via servers on tribal reservations.

The ballot proposal titled "The Age-Verified Tribal Online and In-Person Sports Wagering and Homeless Solutions Act" was submitted to the California attorney general’s office in the first step before tribes can join cardrooms and major online sportsbook brands in collecting voter signatures to qualify the proposal for next year’s general election.

The proposal submitted by the San Manuel Band of Mission Indians, Rincon Band of Luiseno Indians, Federated Indians of Graton Rancheria, and the Federated Indians of the Wilton Rancheria is expected to be given the green light to begin collecting signatures in January.

For each of the three additional proposals to qualify for the ballot, 997,139 valid signatures are required. The deadline for signature verification in California is 131 days before the general election, which is around June 30, 2022.

Although the panelists sidestepped criticising their fellow tribes for submitting an online sports-betting proposal, they were quick to dismiss the initiative supported by the state’s cardroom industry.

Mejia said the proposal was nothing more than “trying to expand Nevada style gaming to their urban cardrooms.”

Silva agreed, saying they are “trying to legalize the illegal activity they are already engaged in as well as open up online to cardrooms … professional sports teams."

Mejia said the online ballot initiative was filed by four tribes who are part of the coalition that supports the initiative already on the ballot. However, the latest proposal leaves out the accountability measures for cardrooms that tribes included in the initiative on next year’s ballot.

Mejia explained to attendees who might not live in California that cardrooms have a track record of fines for violating federal anti-money laundering regulations.

Last week, the Bicycle Hotel & Casinos in Bell Gardens agreed to pay a $500,000 fine to settle allegations that it violated federal laws by failing to file reports about a “high-roller” Chinese national who gambled millions in cash.

“The card clubs represent some of the worst FinCEN (Financial Crimes Enforcement Network) violators on an ongoing basis for the last 20 years,” Macarro said. “They are constantly fined for criminal activities. Tribes have collectively been trying to change the laws to stop them from doing these things.”

Set aside sports betting, Macarro said, the problem is they do have local political support because they are funding local municipal activities in the cities they are operating in, so it makes it hard to argue against shutting these businesses down.

“They really are a hot mess,” Macarro said. “The regulators who are supposed to be watching them, they don’t do a very good job watching them. They need help and our initiative has language in there that will provide what is necessary.”

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