Crowded Field For California Online Betting Ballot Measures

November 8, 2021
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A coalition of California Indian tribes on Friday filed a ballot initiative to authorize tribes to operate retail and online sports betting via servers on tribal reservations, further crowding the field for a series of conflicting referendums on sports wagering next November.

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A coalition of California Indian tribes on Friday filed a ballot initiative to authorize tribes to operate retail and online sports betting via servers on tribal reservations, further crowding the field for a series of conflicting referendums on sports wagering next November.

A 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 by a group of four prominent tribes, in the first step before tribes can join cardrooms and major online sportsbook brands in collecting voter signatures to qualify their proposal for next year’s general election.

The latest ballot initiative would entitle California tribes to amend their gaming compacts to include craps, roulette and retail sportsbooks at their physical casinos, as well as state-wide online sports wagering with bets deemed to occur at the location of servers on Indian lands.

Participating tribes would be limited to just one online skin each and could only use the brand of their existing tribal casino, with co-branding by outside operators expressly prohibited. Rather than operate their own mobile sportsbooks, it would also be possible for smaller tribes to have branded skins on the platform of another tribe in return for 50 percent of the revenue they generate.

All player accounts would have to be created in person at a tribal casino.

Through new compact terms, tribes would agree to share 20 percent of adjusted sports-betting revenue after bonus allowances, with half going to a state homelessness and mental health fund and the other half to California tribes that choose not to participate in the sports-wagering market.

In an October 29 letter to tribal leaders seeking input on the initiative, proponents warned there was a “grave risk” that one of the two alternative ballot measures enabling DraftKings, FanDuel and other operators to operate online sports betting through tribal partnerships, or permitting cardrooms to join tribes and major sports teams in offer sports wagering, could be approved next November.

“Right now, tribes do not offer California voters an option for online sports wagering,” tribal leaders wrote in the letter. “If the DraftKings Measure or the Cardrooms Measure passes in November 2022, tribes would lose their exclusivity to class III gaming in California and such passage would accelerate the legalization of online gaming by non-tribal interests, threatening the existence of Indian gaming as we know it.”

That October 29 letter was signed by the tribal chairmen of the Rincon Band of Luiseño Indians, Federated Tribe of Graton Rancheria and Wilton Rancheria.

Friday’s ballot initiative was also signed by the chair of the San Manuel Band of Mission Indians, owner of one of California’s largest tribal casino-resorts near Los Angeles.

It is not clear how many other California tribes may support the initiative, although offering a tribal-centric ballot proposal for online sports betting has been a talking point among tribal officials for at least a few months given the likelihood of other measures being put before voters next year.

A broader alliance of California tribes has already qualified one ballot measure for a referendum next November to permit retail sportsbooks at tribal casinos and state-licensed racetracks.

The new measure was filed exactly one week after California’s two largest associations representing Indian gaming tribes confirmed their opposition to two other initiatives that would permit online sports betting.

Filed in August, the measure proposed by DraftKings, FanDuel, BetMGM and four other major sportsbook brands would require online operators to partner with a California tribe and serve as a tribal designee in offering state-wide mobile wagering subject to an upfront license fee of $100m.

The cardroom-backed measure envisions a broad sports-betting market involving a variety of tribal and commercial interests, with accompanying provisions to expand the range of card games permitted in cardroom venues.

Perhaps the key feature of the tribal measure filed on Friday is how it mirrors provisions in the landmark new compact between Florida and the Seminole Tribe that enables the tribe to exclusively offer state-wide mobile wagering as a form of tribal gaming under the federal Indian Gaming Regulatory Act (IGRA).

As a form of tribal gaming, online sports betting under the latest California measure would not be subject to state licensing, regulation or taxation, with the roles of tribes' commercial partners constrained by IGRA.

The new initiative was filed on the same day that the Seminole tribal compact was being challenged in federal court in Washington, D.C., with a judge due to issue an initial ruling on its legality as soon as this week.

The proposed ballot measure is now subject to a public comment period until December 6. Once it receives a state fiscal analysis and formal title and summary from the attorney general, proponents would then have six months to collect the nearly 998,000 voter signatures required to qualify for the ballot.

Both the cardroom- and operator-backed ballot initiatives for online sports betting have already received a title and proponents are eligible to begin circulating petitions.

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