“You never know the truth. You know a truth.”—Unknown
A story attracting a great deal of attention in the world of sports betting is what is going on in California—and for good reason. California is the most heavily populated state in the nation with almost 40 million residents. It is the fifth-largest economy in the world as measured by GDP, larger than both the UK and India. It also hosts more tourist visits than any other state. In short, as states go, it is potentially a very big prize in the sports betting cluster-truck.
Obviously, a great many people have read the initiative petition supported by the tribes that will be subject to a vote during a California November 8, 2022, election. From reading this document, people list the bullet-point details of the proposition highlighting that it is retail only, participation is limited only to the tribes and tracks, players need to be over 21 years of age, no betting on California colleges is allowed, and the like. As one who was directly involved with many of the actors in this developing drama, there is so much more to all of this, and understanding the larger story adds an element of interest and texture to it all. Allow me to add a bit of nuance to this story.
First, the tribes have a richly deserved trust issue with California’s gaming regulators. Much of this has to do with the ex-top regulator for the state, a man named Bob Lytle.
Bob Lytle had an interesting December 2007. For the start of that December, Mr. Lytle was the head gaming regulator in California. On December 20, he sent off a letter to the two lobbyists for the cardroom sector relaxing the requirements for non-banked games, an interpretation that is generally understood to make those games more profitable for the card rooms. It was also an interpretation, it has been argued, that hurt the tribal operations. Ten days after sending this letter, Bob Lytle resigned as the top gaming regulator in the state. One day later he started working for a California card room. An interesting add-on to all of this is the suggestion that prior to him leaving the employment of the state, he instructed the regulators to ease up on an investigation of the card room he was joining.
If we fast-forward to July 11, 2016, we find Bob Lytle signing a settlement agreement with the state of California to surrender a ton of his money to the state, along with an agreement that he will never be able to hold a gaming license in the state as long as he lives. And while it took a fair amount of ethically-challenged behavior on Bob’s part to get to this point, he did have help. For instance, he admitted to receiving confidential information regarding a card room client of his from a special agent inside of the California Bureau of Gaming Control by the name of James Parker. And as hard as that is to believe, James Parker was cohabitating with Tina Littleton, the executive director of the California Gambling Control Commission. Oh, and James Parker had at least one family member working for a card room owned by the head lobbyist for the card room industry. When James Parker stepped down from his job with the state, he started working for—wait for it—card rooms—and on and on it goes. Moreover, when much of this nonsense became public, both the chairman of the Gambling Control Commission and the executive director agreed to recuse themselves from cases involving Mr. Lytle, who they both used to work with, and then they both decided to resign effective on the same day.
The point is, there were some serious ethical curiosities in the regulatory process in California, and the tribes have not been happy about it. They believe that a dirty regulatory process damages the image of all gaming in the state. Many of the tribes also believe the state has clearly given extra-legal advantages to the card rooms, at the expense of the tribal casinos. The point is, there is a trust deficit on the part of the tribes with the California regulators—and the California regulators absolutely own this reality.
It is also the case that the card room segment, currently featuring fewer than 70 active establishments, has also become the target of numerous—with an emphasis on the word numerous – federal raids. These raids were the result of issues concerning prostitution, drug trafficking, money laundering, illegal wagering, and so on and so forth. This bothers the tribes, for they are heavily dependent on gaming in the state to build strong tribal governments, to achieve tribal self-sufficiency and to foster tribal economic development. When there is a gambling segment within the state that behaves with an apparent disregard for the law, this potentially damages all gambling participants, and this runs the risk of damaging the tribal goals within the state. This does not make the tribes happy.
Moreover, the number of federal raids on the California card rooms relating to money laundering has been amazing within the state. It appears that since March 2011 there were more raids and settlement payments involving California card rooms related to money laundering than in the entire commercial gaming sector for the rest of the country. The tribes understand that one of the main concerns about money laundering is that it is often undertaken to finance terrorism and crime, and they find the fact that the card rooms do not appear to care about this to be a clear sign of bad citizenship. It also damages the image of the gaming industry on a larger scale, and again, this does not make the tribes happy for they are heavily dependent upon a viable and sustainable image of the industry.
The tribes are also not overly fond of many of the legislators within the state. First and foremost, the tribes are very alive to the fact most California legislators had little interest in the tribes before they gained the ability to generate casinos revenues and therefore make political contributions and pay lobbyists. Gaming has brought many things to the tribes and one of those things is the attention and recognition of the legislators and this has everything to do with money. Contrary to the thought of many legislators, tribal people actually have memories, are not stupid, and get this.
Moreover, the legislators are not very responsible people in the eyes of some of the tribes. For instance, when the card rooms were being rung-up in federal raids time after time after time, the sound from the legislators was quite muted—as in totally silent. None of them thought this may need looking in to, or suggested better laws were needed, or at least some effort expended to get to the bottom of it all. No, they were quite silent. They did accept contributions from the people involved in these money laundering settlements—but other than that—they were silent.
The legislature was silent about all of the raids on the card rooms because nobody is making contributions to politicians to stop money laundering in the state. Actually, I would suspect that certain members of the legislature would want the money laundering to continue, for after all, it creates a better chance of political contributions. And that is generally the way it goes with a group I prefer to refer to as “a parliament of whores.” Also, I have not found an instance of a California politician returning a campaign contribution as a result of it coming from someone raided and paying a settlement for money laundering.
That is not to suggest the legislators will not fight for something. They really fight to get on the California Senate and Assembly Government Organization Committees. These are the committees that oversee many of the supposed sin industries within the state including gaming, alcohol, and tobacco.
These committees are notoriously famous for being excellent platforms to raise money by the legislators assigned to them. The senate version of this committee has 15 members, meaning that of the 40 people who hold senate positions, the chances are better than one in three that they are on this committee. The assembly, which has 80 members has a G.O. Committee of 24; that is, the assembly members have a 30 percent chance of being on this committee. This is the place to be if the goal is to line one’s pockets with campaign contributions.
These two committees also have hearings, and these can be joint hearings, informational hearings, and oversight hearings—and these often seem to be scheduled to remind people that they should be contributing to the people on these committees. The last silly effort in gaming was a farce of a hearing featuring both committees together. It was to discuss sports betting and involved Senator Bill Dodd, chairman of the Senate GO Committee.
It will probably not surprise anyone who understands California gaming politics to note that Senator Dodd has a son who is a lawyer who represented a card room in Senator Dodd’s district. The son has also gone on record to suggest that a card room is a favored gaming solution in that district rather than a tribal casino. Oh, and the bill under discussion by Senator Dodd involved a pretty big give to the card rooms. Like I said, a “parliament of whores.”
It is my guess the members of these two committees who assembled together starting in January of 2020 were able to leverage these hearings to generate a fair number of political contributions. I hope so for the committee was otherwise doomed to fail and insightful people within the state knew it—and if they did not know it, they could have asked the tribes. In fact, several tribal leaders explained this clearly. That hearing adjourned over a year ago and will not rise from the dead. It was actually dead on arrival, but again, was a great forum for these legislators to start the money flowing.
It is also important to understand, according to Gambling Compliance, 75 percent of the card rooms are in Democratic districts, and in California the legislature is much more concerned with party affiliation rather than be bothered by matters of law. This is why the legislature has been terrified of addressing the card room issue. Money laundering and violations of gaming law and regulations are bad, but these Democrats need political contributions, and their behavior clearly reflects this priority.
And then there is the new attorney general, who, while in the legislature, had a bit of a friends and family program involving contributions to his wife’s charity. It seems that in 2017 Mr. Bonta created a non-profit called the Bonta California Progress Foundation. One of the first contributions this non-profit made was $25,000 to Literacy Lab, an entity where Bonta’s wife earned a six-figure salary as its CEO. And this is just the start of a story that sees Mr. Bonta directing hundreds of thousands of dollars to his wife’s charities.
The honorable AG, while a legislator, also appears to have been involved in helping start an investigation into the state gaming regulators—and the target was the clean regulatory group who followed the less than clean regulatory group. I would guess the AG would deny this investigation had anything to do with a large contributor of his who owned a card room—and was a felon—who was in a battle with these clean regulators. Oh well, at least he wasn’t raided for money laundering. It has been this type of nonsense that has made Bonta the favorite of the card rooms who are a huge contributor to his campaign for reelection. One would guess he will find a way to ensure there is a thumb on the scales to favor the card rooms going forward.
Indigenous populations began settling in the land mass that is now California many thousands of years ago. These people and their descendants have had to survive an incredible array of hardships and threats over these many centuries. At points in this timeline their very existence was in question. They have withstood this onslaught with resilience and strength. They also have understood that they need to stand up for themselves for institution after institution has failed them because of racism and greed. In that sense, little has changed in California. That is the tribal truth.
