In May, California’s Secretary of State certified that an initiative to legalize sports betting qualified for the November 2022 ballot.
If approved by voters, the initiative would amend the state constitution and approve a statute to bring sports betting to tribal casinos and racetracks. It would also allow tribes to add roulette and craps to the Class III games they now offer.
The ballot question was promoted by the Coalition to Authorize Regulated Sports Wagering, made up of 18 California tribes. The group reportedly invested $11 million in its campaign, which gathered more than 1 million pro-sports betting signatures at the height of the Covid-19 pandemic.
James Siva is chairman of the California Nations Indian Gaming Association (CNIGA), which represents the majority of the state’s gaming tribes. He is also vice chairman of the Morongo Band of Mission Indians, a pioneer of tribal gaming in the U.S.
“Morongo has been in Indian gaming for as long as Indian gaming has been around,” Siva said. “We were a plaintiff in the case that helped set the framework for tribal gaming.” He referred to California vs. Cabazon Band of Mission Indians, which upheld tribal sovereignty and led to widespread legal gaming on Indian reservations. The case began when state and local governments attempted to regulate bingo games held on the Cabazon and Morongo reservations in Riverside County. The tribes fought back, and in the landmark 1987 decision, the U.S. Supreme Court ruled in their favor.
Not surprisingly, Siva fully expects California voters to support legal sport betting run by tribes. “In the past with Prop. 5 and Prop. IA [measures that created tribal gaming in California in the early 2000s], the voters have been supportive of tribal gaming. I don’t see that changing for sports betting. The tribal initiative will garner majority support from California voters.”
The proposal does not simply reaffirm the tribes’ right to offer gaming but expands it, Siva acknowledged. “But taking that into account, the tribes do have the exclusive right for Class III gaming. So it makes sense for tribes to control sports betting, and exclusivity was granted by California voters by those propositions I mentioned.”
As for the opposition, Siva expects it to be “mostly from the state’s card clubs, who feel they’re being carved out. But they’re not legally allowed to offer Class III gaming.”
‘Leaving the Door Open’ for Mobile
Does he expect pushback from online sports betting providers like FanDuel and DraftKings? The operators have good reason to want mobile sports betting in the state—which this measure currently excludes.
“I don’t think they’ll come out and oppose it,” said Siva. “The initiative doesn’t speak to online, but it doesn’t prohibit any expansion into online. I think if they’re supportive of the measure, it leaves the door open” for mobile sportsbooks “eventually, somewhere down the road.
“The view of the national market has changed drastically” since sports betting went mainstream starting in 2018, he observed. “I think online sports betting is inevitable, but it doesn’t change the fact that if that happens, tribes should lead the entry point for that portion of sports betting as well.”
Siva said the chief argument against the new industry is that tribes “are being greedy, and that it’s an overreach and an unfair expansion of our gaming. But the reality for tribes, the forefront issue for us is to protect the sovereignty and exclusivity we’ve been granted.”
How does the inclusion of craps and roulette fit into the mix? Quite simply, “It’s something that would benefit tribal casinos,” said Siva. “That’s also something we put into the initiative to put it in the hands of the voters to decide. They’ve seen our track record as far. We’re very different from commercial casinos. We do nothing but improve the local economy, and we’re adding jobs that improve the economies.”
Siva said it’s a misconception “that every tribe operates a casino and every tribe is successful in tribal gaming. While there are some, that’s a minority. Most tribal casinos are small and in rural areas. They provide basic, fundamental necessities for their members, such as education and healthcare. The big, resort-style casinos overwhelm the narrative, but the vast majority are small rural casinos. That’s the truer representative of Indian gaming in California.”
It’s been said that the interests of small rural casinos—which rely on foot traffic for much of their business—is part of the reason there isn’t a mobile sports betting element is this measure.
“That’s part of it–that, and it’s a new form of gaming and the tribes behind the initiative believe that if you can keep it in brick-and-mortar for the beginning and have all your regulations, it gives you the groundwork to expand online. We are heavily regulated, so we tread very carefully with any new game or form of gaming. That’s the reason behind it.”
Who’s In, Who’s Out
As for the inclusion of racetracks in the ballot question, Siva said, they were included because they’re the only entities currently offering sports betting, in the form of bets on horse races. “To remove it would be taking away something they already have,” Siva said. “Card clubs are prohibited from offering Class III gaming, so this would be an expansion of their industry into unknown territory, whereas the racetracks already operate in that territory.
“Furthermore, the card clubs have shown they’re nowhere near as strict about regulations as tribal casinos. We’ve seen cases about money laundering. There hasn’t been any case like that in any tribal casino in the state.”
When sports betting does come to California, expect another gold rush in the Golden State. According to 2020 estimates from Eilers and Krejcik Gaming, a legal sports betting market in the state could bring in $2.5 billion in gross revenue annually, including between $250 million and $500 million in tax dollars. That would make California the largest market in the country.
