California Tribes Target Cardrooms As Sports-Betting Ballot Battle Broadens

October 5, 2022
As election day draws ever closer on November 8, a new poll shows a measure to legalize retail sports betting at tribal casinos and racetracks heading for defeat, handing a victory to cardrooms in California that see the ballot initiative as a threat to their businesses.


As election day draws ever closer on November 8, a new poll shows a measure to legalize retail sports betting at tribal casinos and racetracks heading for defeat, handing a victory to cardrooms in California that see the ballot initiative as a threat to their businesses.

Proposition 26 would allow tribal casinos and the state’s four horse racetracks to offer in-person sports betting, with tribes required to renegotiate their compacts with Governor Gavin Newsom, a Democrat, and have the amendments approved by the U.S. Department of the Interior before wagering could begin.

The proposition would also allow tribal casinos to begin offering roulette and dice games, including craps.

Besides sports betting and table games, the ballot initiative would further empower private citizens to launch civil enforcement actions against illegal gambling violations not being pursued by the state attorney general.

Tribes have for years claimed that state officials have not done enough to eradicate allegedly unlawful card games offered by commercial cardrooms.

Cardrooms have raised more than $36m to defeat Proposition 26, warning that if it passes some of them could go bankrupt defending themselves even if the lawsuits are eventually dismissed. Should a state judge rule against a cardroom in a lawsuit, it could change how they operate in California.

California law prohibits cardrooms from having any financial stake in the outcome of the games played in their venues.

As such, an employee acts as the dealer and a representative from a state-licensed third-party operator as the banker. The banker collects from losers and pays the winners.

The cardrooms earn revenue by collecting a fee from each player during each hand. The fee is based on the bet limit at each table, according to state gaming regulations.

On Tuesday (October 4), a coalition of California Indian tribes launched a new state-wide commercial highlighting that several of the cardroom casinos funding the No on Proposition 26 campaign have been fined millions of dollars for violating federal anti-money laundering laws.

“Cardroom casino operators have a deplorable track record of criminal behaviour, offering unlawful gambling, money laundering, fraud and misleading regulators,” Anthony Robert, chairman of the Yocha Dehe Wintun Nation, said in a statement.

Roberts criticized several cardrooms for spending millions of dollars attacking California Indian tribes.

Hawaiian Gardens Casino has donated more than $10.08m to the No on Proposition 26 campaign, according to state filings. In December 2019, the cardroom was fined $3.1m by the California Department of Justice for violating the Bank Secrecy Act (BSA) and misleading gambling regulators.

Hawaiian Gardens was also fined $2.8m by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) for repeated anti-money laundering violations.

Bicycle Casino, Artichoke Joe’s and Casino M8trix, which collectively have paid nearly $15m to settle federal and state complaints for violating anti-money laundering provisions of the BSA, have donated more than $5m to the No on Proposition 26 campaign.

In a complaint filed in December, Blackstone Gaming was accused by the Bureau of Gambling Control of a continuing “failure to fulfil their obligations with respect to permissible gambling and maintaining the required separation between a third-party provider and a gambling enterprise.”

Blackstone Gaming has donated $1.48m to the campaign, while the accusation is before the California Gambling Control Commission.

Becky Warren, a spokeswoman for the No on Proposition 26 campaign, called the tribes’ commercial a “desperate attack to distract from a failing and flawed measure which nearly two out of three California voters are opposed to.”

According to a University of California Berkeley Institute of Governmental Studies poll released on Tuesday, 42 percent of registered voters expressed their opposition to Proposition 26, while only 31 percent were in favor.

“It’s clear that five wealthy tribes behind Proposition 26 want to eliminate their competition and see a massive expansion of gambling,” Warren told VIXIO GamblingCompliance in an email.

The poll found even greater opposition to Proposition 27, an alternative ballot measure backed by seven commercial sports-betting companies that would allow for state-wide mobile wagering.

Tribes in California have lobbied hard against Proposition 27, raising more than $210m to campaign against the initiative and in favor of Prop 26. The Berkeley IGS poll found 53 percent of registered voters are opposed to legalizing mobile sports betting, with only 27 percent supportive of the ballot measure.

Still, voter views of Indian tribes that operate casinos and other forms of legalized gambling in California are generally positive, with nearly three times as many voters saying they view them favorably (55 percent), as unfavorably (19 percent).

By contrast, the reverse is true of the companies that operate sports-betting websites, such as DraftKings and FanDuel, with only 14 percent of voters offering a favorable opinion and 48 percent viewing them unfavorably, according to the Berkeley poll.

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