Caesars Entertainment has friends on both sides of California’s sports betting election campaign, and so the company has decided to remain neutral, at least according to CEO Tom Reeg. The election on November 8 includes dueling sports betting measures that would amend the California constitution.
Caesars’ neutral stance is in contrast to other Las Vegas gaming firms that have picked sides in a donnybrook that includes most gaming tribes who back Proposition 26 and retail-only sports betting, and out-of-state operators who don’t mind if Proposition 26 passes, but definitely want Proposition 27 to pass so they can introduce online sports wagering to the Golden State.
Reeg told investment analysts on a recent earnings call why he chooses to be the Switzerland of gaming companies: One reason is that Caesars has a “decades-long” business relationship with several tribes, such as the Rincon Band of Luiseño Mission Indians, which owns Harrah’s Southern California Resort.
The Rincon band, like the great majority of tribes, are backing Proposition 26. Besides giving tribes and racetracks exclusive rights to retail sports betting, it would also allow the tribes to expand their gaming offerings to include craps and roulette.
Proposition 27, bankrolled by seven sports betting operators led by BetMGM, FanDuel and DraftKings, seeks to legalize online sports betting. The operators would need to be tethered to tribal casinos, but the tribes still oppose it because they wouldn’t control it.
With regards to Caesars’ position, Reeg said, “We don’t want to be in opposition to tribal interests when we’re their partner. So, we’ve remained neutral in California throughout. You should expect that to be the case in any state where tribes are at odds with the commercial interests.”
However, if either or both measures pass, Caesars would take part in the market, which would be the largest in the U.S. by far.
With three months remaining in the campaign, the bitterness has only just begun, as well as the expense. So far, the four groups participating in the election have reported in excess of $230 million in contributions.
The most recent campaign ad, a 30-second ad, comes from “Californians for Solutions for Homelessness and Mental Health Solutions,” the operators’ measure, seemingly pitting “wealthy tribes” against “poorer tribes.” Although the measure’s top selling point is that it would earmark 85 percent of taxes to combat homelessness and treat mental health issues, another 15 percent would go for an economic development fund for non-gaming tribes. The committee has $100 million to pay for similar ads.
The ad talks about how Proposition 27 would direct money to smaller tribes that “for years have been left in the dust,” and snipes that “Wealthy tribes with big casinos make billions while small tribes struggle in poverty.”
Glenn Lodge, Chairman of the Chemehuevi Indian Tribe, has attacked this approach: “It’s shameful to attack tribes that have a proven track record of sharing hundreds of millions with limited and non-gaming tribes like mine.” He added, “These out-of-state corporations should stop the divisive and misleading attacks.”
James Siva, chairman of the California Nations Indian Gaming Association, calls the ad campaign, “Shameful, despicable,” adding “The out-of-state corporations and their Wall Street investors funding Prop 27 have deceptively tried to convince voters that their measure will help tribes. The truth is now out.”
The opponents of Proposition 27 have also released some strongly worded ads of their own, accusing the operators of misleading voters about how much tribes would get. The “Californians for Solutions” ad declares: “It doesn’t tell you 90% of the profits go to the out-of-state corporations,” continuing, “A tiny share goes to the homeless and even less to tribes. And a big loophole says the cost to promote betting reduces money for the tribes.”
Things are complicated by the fact that some tribes do support Proposition 27: including the Middletown Rancheria of Pomo Indians and the Santa Rosa Indian Community of the Santa Rosa Rancheria.
