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Is Digital Wagering A Good Fit For California?

Tribes say they favor it, but are just not sure on timing

Jill R. Dorson by Jill R. Dorson
December 2, 2021
in Features
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From the first day in 2019 that a coalition of California tribes announced they would file a ballot proposal to legalize retail sports betting in the state, the elephant in the room has been digital wagering. As the the biggest state by population in the U.S., California represents a potentially unique and incredibly lucrative opportunity for stakeholders. There’s been no question that the state’s tribes will drive the legalization of sports betting, but the question remains: What will that look like?

Digital wagering has proven to be where most of the handle, tax revenue, and profit are since the Professional and Amateur Sports Protection Act was struck down in May 2018. State after state has shown rapid growth on the digital side, with New Jersey leading the way. Among the first states to legalize, New Jersey’s October handle crossed the $1 billion handle threshold for the second straight month — and $1.18 billion out of the $1.3 billion wagered was bet digitally. In total, 90.5% of all wagers were placed online and the state took in $10.6 million in tax revenue. New Jersey has a population of about 8.9 million, compared to California’s 39.6 million.

It’s clear that California will eventually eclipse New Jersey’s numbers. But when?

“Tribes in California are concerned about too rapid an expansion of mobile gaming,” said Mark Macarro, chairman of the Pechanga Band of Luiseno Indians, at the National Indian Gaming Association’s mid-year conference in November. “With all of the other variables of things that affect our businesses … it’s this desire to be able to kind of be able to control the unknown. The tribes want the chance to see what the impacts will be like, and then decide what the next steps will be, which could be mobile. We’ll see.”

No consensus yet

The tribes and other stakeholders in California aren’t exactly aligned on what the landscape will look like. As of Wednesday, only one gaming initiative was qualified for the 2022 ballot. That initiative, which allows for retail wagering only at tribal casinos and four horse racetracks, is backed by a coalition of tribes, including Pechanga. And the original goal was to be on the 2020 ballot, but COVID-related restrictions made signature gathering difficult and ultimately forced the tribes to wait for 2022.

DraftKings, FanDuel say mobile sports betting ballot initiative respects tribal sovereignty; Sports-betting operators eye California’s wealth, vast population @GamblingComp https://t.co/kJVIyUlOlv

— Chris Sieroty (@sierotyfeatures) November 29, 2021

There are three other proposals in various stages of approval, including two from commercial interests that would allow for statewide mobile wagering and one from a group of four tribes headed up by the San Manuel Band of Mission Indians that would legalize retail and statewide sports betting. All but one of the proposals requires operators to be tethered to tribal casinos.

“There’s enough skittishness about what will happen to the brick-and-mortars if we open a firehose of opportunity [online], so our approach is measured,” Macarro said.

Traditionally, tribes across the U.S. have been slow to embrace digital wagering. Michigan‘s tribes became the first in 2019, and they did so in stunning fashion by agreeing to be regulated and taxed by the state. But of the 26 states in which federally recognized tribes offer gaming, so far only tribes in Arizona, Colorado, Connecticut, and Florida are offering statewide digital betting. Tribes in about eight other states currently offer retail wagering.

In general, Indian Country is concerned that digital wagering will hurt business at brick-and-mortar casinos and resorts, which are a major employer for many tribes. The goal, tribes have long said, is to continue to have jobs for tribal members, to be able to expand services offered by a tribe, and to preserve and improve opportunities for future generations.

Sports betting models vary

The models for how to offer digital vary wildly. While Michigan tribes gave up exclusivity for gaming (they offer both digital sports betting and iCasino), tribes in Arizona and Connecticut are working with their states, and betting is overseen by tribal regulators on reservation and the state off reservation. In Florida, where the Seminole Tribe went live Nov. 1 and the compact is facing a legal challenge, the Seminoles have a monopoly to offer retail and digital wagering statewide.

FLORIDA:

Seminoles filed for a stay to continue offering legal sports betting, but after a judge denied it, the tribe appealed to a higher court.

Meanwhile, tribe continues to take bets via its Hard Rock platform.https://t.co/8C1awEZHf1

— Sports Handle (@sports_handle) November 29, 2021

And in Colorado, where voters legalized wagering in 2019, tribes are offering retail and digital betting, but aren’t regulated by the state.

California has more than 100 tribes operating nearly 70 casinos. There are more gaming tribes in the state than in any other, though Oklahoma’s 39 tribes operate 130 casinos. But realistically, as the number of gaming tribes in a state grows, coming to a consensus on next steps is a challenge.

“Where are the tribes on this issue?” Director of Public Affairs for Pechanga Development Corporation Joseph Mejia asked at the NIGA conference. “Voters will recognize if the tribes are united, and that will be critical. Conversations are happening, but there are still some fundamental questions about whether or not tribes are willing to accept sports betting.”

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Jill R. Dorson

Jill R. Dorson

Jill has covered everything from steeplechase to the NFL and then some during a more than 30-year career in sports journalism. The highlight of her career was covering Oakland Raiders during the Charles Woodson/Jon Gruden era, including the infamous “Snow Bowl” and the Raiders’ 2003 trip to Super Bowl XXXVII. Her specialty these days is covering sports betting legislation across the country. You can reach Jill at jill@bettercollective.com

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