How California's Ugly Sports-Betting War Could Lead To Common Ground

August 30, 2022
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It is getting nastier every day in California as gaming tribes fight to keep sports-betting interlopers off their turf, but no matter how bitter the conflict becomes, the seeds of future business relationships are being sown.

It is getting nastier every day in California as gaming tribes fight to keep sports-betting interlopers off their turf, but no matter how bitter the conflict becomes, the seeds of future business relationships are being sown.

“Partnering is a strong word, but there’s a role here for those guys as a vendor,” a senior California tribal casino executive, who requested anonymity, told VIXIO GamblingCompliance in a phone interview.

FanDuel, one of the commercial sports-betting operators hoping to operate in California, did not return a request for comment.

So here is how the California sports-betting scenario could play out.

Proposition 26, which would limit sports betting to Indian casinos and a handful of racetracks, and Proposition 27, which would enable a coalition including FanDuel and DraftKings to launch state-wide online wagering, are in trouble.

Internal polling for California tribes on Friday (August 26) showed Prop 26 split almost evenly on yes, no, and undecided. That would mean about 33 percent of voters support the tribal-backed sports-betting referendum.

The poll on Prop 27 showed 29 percent of voters supporting, 51 percent opposing and the rest undecided.

Moreover, both the Democratic and Republican parties of California, who rarely agree on anything, have come out in opposition to Prop 27.

If both propositions fail, that sets the stage for further conflict in sports betting in 2024 in California.

“We don’t want a $150m fight every two years about sports wagering,” said the California tribal gaming executive.

Tribes and commercial sports-betting companies already have spent more than $357m on their campaigns and are likely to double the previous California record for a ballot initiative of $222m spent by Uber, Lyft and others in 2020.

“Our focus is on beating them (the commercial sports-betting operators) this year, but we are committed to doing something positive in ’24; not just negative,” the tribal gaming executive said.

A group of three prominent California tribes led by the San Manuel Band of Mission Indians and Rincon Band of Luiseno Indians is already collecting voter signatures for a potential sequel to this year's sports-betting ballot measures, with that initiative authorizing both retail and mobile wagering but giving tribes greater control over the online market than Prop 27.

Such a scenario could open the door for the commercial sports-betting companies to collaborate with the tribes, which have zero experience in running sportsbooks.

And there is a precedent for this.

Just six days before California’s election on November 8, the 24th anniversary of the passage of Proposition 5 will occur.

Prop 5 amended California law to enable tribal casinos to install slot machines and offer banked card games.

Perhaps more significantly, the passage of Prop 5 gave California tribes a decisive victory over the Nevada casino industry, which spent $25m in a vain attempt to defeat the proposition and crush the fledgling Indian gaming industry.

The outcome resulted in the explosion of Indian gaming, not just in California but across the country, and the industry produced $39bn in revenue in 2021.

Today, Nevada casino companies such as Caesars Entertainment, Boyd Gaming and Station Casinos are in business with California tribal gaming operations.

The Proposition 5 campaign helped prepare California’s gaming tribes for this year’s battle with commercial sports-betting companies, according to Victor Rocha, editor of the Indian gaming website Pechanga.net.

“For tribes, this is an existential threat. For DraftKings and FanDuel, this is just business,” Rocha said.

         

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