On Thursday, tribal leaders and sportsbook operator officials reiterated that any hopes for legal California sports betting would require agreements from state gaming tribes.
In 2022, a California tribe led efforts to defeat an operator-pushed online sports betting ballot measure that was overwhelmingly rejected by voters. Andrew Alejandro, Chairman of the Paskenta Band of Nomlaki Indians, said tribes were prepared to do so again.
“Sovereignty, again, is one of the most important things that we have, and we’re going to do everything we can to protect that,” Alejandro said during a panel at Thursday’s SBC Summit gaming conference. “And when someone comes in and tries to set up shop, that’s not going to happen.”
Commercial interests are now in agreement. Officials from FanDuel, which along with rival DraftKings owns roughly 70% of the US online sports betting market share, have publicly apologized in recent months for the 2022 efforts.
Frank Sizemore, FanDuel VP of Strategic Partnerships, reaffirmed that any future California sportsbooks will have tribal consent.
“If and when the crowd decides to legalize sports wagering, it’ll be a tribally led initiative,” Sizemore said. “We have no interest in running another initiative. We’ve learned our lessons and it did not go well.”
California sports betting background
With nearly 40 million residents, California is far and away the nation’s most populated state — and largest potential sports betting market. This led DraftKings, FanDuel, and a group of other major mobile sportsbook operators to spend tens of millions of dollars on what became the most expensive ballot measure in California history.
California’s gaming tribes saw it as an existential threat to their sovereignty. The tribes had battled for decades against commercial card rooms and horse tracks, which they have argued in court infringe on the exclusive gaming rights granted to them by a 2020 ballot measure.
The out-of-state commercial sports betting initiative, tribes said, not only jeopardized those rights but threatened the long-term sustainability of their communities.
California’s major gaming tribes spent tens of millions of their dollars on a campaign to defeat the sportsbook-backed mobile ballot measure. Though the tribes had also backed a competing proposal to approve retail sportsbooks on reservation lands, tribal leaders said the priority was defeating the online initiative.
These efforts worked, as Golden State voters overwhelmingly rejected both sports betting initiatives, showing even stronger opposition to the mobile ballot measure. California became the first state to reject a standalone sports betting ballot measure.
Complex dynamics cloud future efforts
With California still a major untapped market, leading US sportsbooks have changed their approach to try to find new ways to enter the state.
FanDuel’s Sizemore, who had worked on behalf of the San Manuel Band of Mission Indians to defeat the commercial sportsbook ballot measure, said company leaders are now on an “apology tour” to California tribes. Sizemore said FanDuel would only support a single, unified ballot measure going forward.
When, or if, that happens remains to be seen. California’s constitution requires gambling expansions such as sports betting to garner majority support on a ballot measure.
Neither tribal nor commercial gamine stakeholders have publicly discussed a timeline for a future initiative. With a 2024 ballot measure logistically and legally impractical, 2026 would present the next potential opportunity.
For California tribes, a future sports betting partnership comes down to trust, as tribal leaders reiterated during Thursday’s seminar. While acknowledging the technology and brand name assets of a commercial sportsbook partnership, there are still significant hurdles before California tribes feel comfortable reaching a deal.
Potential market structure remains undetermined
The parameters of such a deal are also hard to discern.
California has several dozen gaming tribes, each with a wide range of different goals, needs, and histories. Combined with the dozen (or more) operators that would like to enter the state, it creates a difficult market structure to navigate.
Sports betting in California could also upend the tribes existing tax-free status with the state. Instead of a tax paid back to the state government, a portion of California tribal gaming revenues are redirected toward a fund that benefits programs such as education, transportation, and healthcare. Officials from both sides said the state government would likely receive some tax revenue from a new sports betting market, but it is far too early to determine such a structure.
Sportsbook access is also undetermined. Gaming tribes in several states have supported in-person-only sports betting as a way to attract bettors to on-reservation casinos. Unsurprisingly, the commercial operators back a statewide mobile market.
A retail-only, mobile, or retail-then-mobile structure is still years away. Even if placed on the 2026 ballot, the first legal sports betting option in the nation’s most populated state won’t begin taking bets until 2027.
Officials have repeatedly said that preserving the extensive gaming rights remains tribal stakeholders’ top priority. Expanding with outside partners on a relatively low-margin offering such as sports betting, especially after those partners spent millions of dollars trying to circumvent a partnership, remains a complex and ongoing issue.
The two sides have reached an agreement on any potential sports betting efforts being led by the tribes. Still, the campaign to circumvent tribal sovereignty has scared Indian Country, Alejandro said, and any effort to work toward a partnership will take time.
“(Talks can begin) when we see the FanDuels and the DraftKings start to build that trust, start to come and mend those wounds that they left,” Alejandro said. “The way they came in was just ridiculous. And that really was damaging. It’s going to take some work.”