California tribal leaders would rather see their own legal sports betting initiative fail on the November 2022 ballot than allow a second proposal from commercial entities to succeed. And while it’s become clear that the tribes are fractured over digital wagering, many are united in trying again to kill the efforts of outside interests to legalize.
Several years ago, the tribes successfully killed sports betting bills brought forth in the California State Legislature, and if their strong stance during that process is any indication, they’re ready to fight for what they say is rightfully theirs, no matter the cost or toll.
Just as a group of tribes led by the Pechanga Band of Luiseno Indians were granted an extension to gather signatures to qualify a retail-only sports betting initiative for the November 2022 ballot, state Sen. Bill Dodd in the summer of 2020 brought forth a legal wagering bill for the second consecutive session. But the tribes prevented it from even getting to a vote.
“The legislature tried again, but we killed it,” James Siva, president of the California Nations Indian Gaming Association, said during a panel at the Indian Gaming Association convention in Anaheim last week. “Members in key leadership roles in the legislature were not happy to see tribes take control of this early on. They have different opinions about what they would want to see for sports betting … but since [our initiative was] qualified, there have been no other attempts.”
Two years later, Siva is still simmering. Dodd brought his most recent bill in the heart of the COVID-19 pandemic, when, Siva said, tribes across the country were trying to keep their people safe and fed and clothed during hard lockdowns that closed down many casinos, essentially taking their lifeblood away.
“Right when that member put the bill forward, it was at the height of the pandemic. … That’s the moment they chose to attack tribal sovereignty,” Siva said. “That’s the moment they picked.”
Sovereignty is the real issue
While legal sports betting appears to be the issue at hand, Siva’s comments reveal the true concern — tribal sovereignty. By federal law, tribes across the country have sovereignty, meaning freedom from traditional government control. Activities on tribal land are not subject to most state laws, though they are bound by some federal statutes. In essence, a tribal reservation is more like another country than another jurisdiction within a state.
At the moment when tribes were granted exclusivity for gaming by Congress in 1988, it brought gambling revenue and jobs that have allowed tribes from Florida to Michigan to Wyoming to California to achieve new economic independence. The number of Indians living in poverty has dramatically decreased, while the depth and breadth of services that tribes can now offer their people and surrounding communities has drastically increased.
NIGA Tradeshow: Leaders fear corporate infringement on tribal sovereignty via sports betting California https://t.co/7PdpxlRcu7
— Sue Schneider (@SuziQSchneider) April 22, 2022
And California’s tribes have zero interest in ceding those gains to anyone.
Lawmakers try to “erode sovereignty with a smile on their face,” said Sycuan Band of the Kumeyaay Nation chairman Cody Martinez as he reached over to put an arm around Siva during the IGA panel. He then said sarcastically, “The government is your friend. We have to be careful.
“The more we continue to look and act like corporate entities instead of tribal governments, it’s a detriment to us and our gaming that we built with so much hard work. We can draw a fine line between a FanDuel and the Sycuan Band of the Kumeyaay Nation . That’s our name on that building. That’s our reputation. … We’re not a corporate entity and the tribes should be very careful. The more you can’t differentiate between a tribal government and corporate entity, that’s a scary road to go down.”
Martinez described a host of services, from elder care to education, that his tribal government offers members. He suggested those services would get cut back if commercial operators or the California government were allowed to control what sports betting looks like.
All tribes have different needs, goals
Martinez’s tribe owns and operates the Sycuan Casino Resort in suburban San Diego. It is among the smaller gaming tribes in California, and his tribe’s agenda is different than that of the Pechangas or the San Manuel Band of Mission Indians, two of the bigger, more powerful tribes in the state.
Looking in from the outside, people in general tend to view “the tribes” as one big group of people who share bloodlines, a culture, and goals. But that is like saying that France and England are similar just because they are both in Europe. And it’s at the core of why the road to legal sports betting in California is fraught with unique challenges.
Since the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act nearly four years ago, multiple states with tribes have legalized wagering. But the process has been different in every state. In Michigan, the 12 tribes there agreed to be treated as commercial entities, meaning they are regulated and taxed by the state. The state also has three commercial casinos, each of which has a digital sports betting platform.
In Connecticut, the state’s two tribes gave up a modicum of exclusivity by allowing the state lottery to have skin in the game, and they agreed to the pay the state a tax on wagering in order to offer legal betting. In Arizona, the tribes agreed to an inequitable situation in which there are 20 event wagering licenses — 10 each for the tribes and professional sports stadiums — even while were at least 15 gaming tribes that sought licenses.
And in Washington state, the tribes were granted the right to exclusivity for retail wagering. They pay no taxes but do, like other tribes across the country, offer myriad services to the surrounding community. The state gaming board has a hand in overseeing betting.
Issue of mobile wagering divisive
California isn’t only the biggest state in the nation, it is also the biggest tribal gaming state in the nation. There are more than 100 tribes and they operate nearly 69 casinos. Many have been vocal about embracing the idea of digital wagering, but all want to do it on their own terms. The idea of statewide mobile wagering has created a rift, making it difficult to appear unified in a fight against commercial operators.
“All of the tribes were united at one time, but it’s this issue of mobile that has driven us into different camps,” Martinez said.
Deal is close, but fumble on the 1-yard line.
"We have one remaining point of contention that is easily resolved if some sense of mutual respect is afforded for the specific needs of our community." Mashantucket Pequot's Rodney Butler https://t.co/jaiJjRqB7x
— Sports Handle (@sports_handle) March 3, 2021
Being divided makes it hard to negotiate as a bigger, more powerful group. Just ask Rodney Butler, tribal chairman of the Mashantucket Pequot Tribe (Foxwoods Casino) in Connecticut. His tribe and the Mohegans are the only two in Connecticut, and they sometimes struggled to find common ground while jointly negotiating with the state.
“I do not envy my brothers and sisters in California with 100 tribes,” Butler said. “It was difficult enough with two.” Butler said that when his tribe and the Mohegans were at odds, “negotiations broke down” with the state.
Tribes want mobile, but what comes next?
Both Martinez and Siva, as well as panel moderator Victor Rocha of Pechanga, were careful to say that tribes do, in fact, want mobile wagering, and are open to working with commercial operators. But the timing of when mobile would go live and who would control it are of paramount importance to the tribes. As stakeholders in the industry often discuss, sports betting is a potential gateway to iCasino, which is where the real profit is.
Though the current initiative proposals don’t address iCasino, once an operator has market access via sports betting, that access could extend to online gaming.
So far in the U.S., Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia have legalized online casino games. Some of those states, in addition to Nevada, also allow online poker, which California’s tribes have been opposed to. Indian Country was at odds with itself about online poker in California in 2015, and ultimately killed a 2016 legislative effort that would have legalized it.
Tribal leaders are fiercely protective of their sovereignty and, by extension, their exclusivity to gaming.
“Commercial entities are coming for online sports betting now, but what they are really coming for is online gaming in the future,” Siva said. “If you open the door for commercial entities to come into the state and have one form of online gaming, they’ll eventually going to come back and want all forms of online gaming.”
Said Martinez: “Once you’re in bed with an operator, if you have to partner … once they are in, they are never going to leave.”
Timeline, control critical concerns
The commercial initiative that is in the signature phase has the backing of the country’s biggest sports betting companies — DraftKings and FanDuel — as well as casino companies BetMGM, Penn National Gaming, and Bally’s. All also offer iGaming.
So far, seven potential operators have signed on. From a tribal perspective, that means seven potential commercial entities might try to partner with tribes, but if that occurs, what would the other 53 tribes do? The operators, in this scenario, would have control. Should the tribes create their own initiative for digital gaming — and there is one in the signature-collecting stage — the numbers don’t necessarily change, but the dynamic does.
Sports betting could soon become a big moneymaker if legalized in California expected to generate billions in revenue. @JakeKESQ goes in-depth on the ballot measures coming in November that could change the sports betting landscape in this election year
— KESQ News Channel 3 (@KESQ) April 15, 2022
Instead of a limited number of operators interviewing tribes to find a match, it would instead be the tribes themselves seeking out partners or having the freedom to white label or run their own operations. It may seem like a small distinction, but from a tribal viewpoint, it allows them to maintain control not just of who to partner with, but the tax rate, timeline, regulatory structure, and many other details.
“What’s been brought up from this division is what tribal government gaming looks like,” Siva said. “For over 30 years, we’ve operated here and spent a lot of time securing the right to have that, but now we are entering a phase where we must embrace technology. That’s the conversation that is coming out of these two measures.”
Said Rocha: “The tribes have a different timeline than corporate America. I’m sure deals are being made, they are just not being talked about.”
In fact, DraftKings and several other major operators were sponsors at the IGA conference, and representatives from many wagering companies were invited to participate on panels.
Lobbyists on both sides of the issue have been polling and putting out press releases over the last few months. In September, the committee running the operators’ proposal, called the “California Solutions to Homelessness and Mental Health Act,” released a poll suggesting broad support exists for the measure. Since then, civic and business groups, faith-based groups, and even the NAACP have voiced a stance either for or against the tribal initiative or against the commercial proposal.
Last week, ahead of the IGA conference, FM3 Research released a memo concerning polling of 1,094 California voters in April. It reported that 53% oppose the “corporate online sports betting ballot initiative” based on its title and summary. The percentage opposed, according to the release, is up from 48% in November. The group declined to release raw polling data.
With lots of cooks, consensus hard to find
Connecticut’s government and its two tribes took about four years of actively discussing and hammering out details to legalize not only retail and digital sports betting, but also iCasino. In California, with more than 30 times as many voices, the process is sure to be slow and deliberate with potholes along the way.
Had COVID-19 not happened, the state’s tribes would likely already be offering wagering at their casinos. The original plan was to get an initiative on the ballot in 2020, but lockdowns prevented the tribes from collecting signatures in time. They’re aware that their proposal may now seem a little “conservative,” but in 2019, when they started, only 11 states had launched sports betting, and five of those only offered retail wagering. Fewer than 20 states had legalized by the end of 2019. And the tribes still stand behind the idea that the measure they have on the ballot “protects Indian gaming,” according to Martinez.
Happy Easter everyone! All day today I’ll be standing outside grocery stores all over LA county to help gather signatures to support an initiative landing on the November ballot to use legalized gambling money to subsidize housing for homeless https://t.co/FPMZM5dffd
— Bryan James (@BryanJamezzz) April 17, 2022
If there is any consensus among the state’s tribes, it is that they don’t support the proposal put forth by the operators. That measure has not yet qualified for the ballot. There is a May 3 deadline, according to the California Secretary of State’s website, for the committee to gather the 997,139 signatures needed to qualify. As of Friday, the operators’ proposal was still listed under “Circulating Initiatives with 25% of Signatures Reached.” A second digital proposal, put forth by a small group of tribes, has until July 11 to qualify.
Should more than one proposal land on the ballot in November, history says there will be confusion among voters, who in turn might not vote for any of them. That’s perfectly fine with the tribes, who are willing to wait until 2024 or beyond, if that’s what it takes to get digital — or retail — wagering done on their terms.
“The tribes’ attitude is, ‘Let’s be cautious about this,'” Rocha said. “But the industry said, ‘Look, you’re not moving fast enough.’
“We have exclusivity. We are not going to give that up.”