Ending the long-running feud between California’s card rooms and gaming tribes is the idea behind a bill by State Senator Bill Dodd (l.), who sees it as “akin to Middle East peace.” The tribes see it more like a stab in the back, or as one tribal leader characterized it, a “sucker punch.”
Dodd says he’s trying to end an old fight. “I probably have more friends in tribal lands than I do in card room lands,” he told GGB News. “I’ve tried not to pick winners and losers but to do the right thing.”
On June 2, Dodd’s bill, SCA 6, was voted out of the Senate Governmental Organization Committee by a vote of 9-3. It would legalize sports betting in the Golden State, giving gaming tribes, racetracks and the state a new source of income, while legalizing the controversial house-banked games practiced at the state’s 66 card rooms—games the tribes consider illegal, and have been fighting for more than a decade.
Besides being offered at brick-and-mortar casinos, sportsbooks would also be available online and via apps.
The sweetener for the tribes is that they would be able to offer craps and roulette, like Las Vegas-style casinos. But tribes fear the deal offered to the card clubs is enough to turn the whole proposal into a poison pill.
If passed by the Senate, the bill would go to the Assembly, where its co-sponsor is Assemblyman Adam Gray. If passed there, it would go on the November ballot, and voters would decide whether to pass it and amend the state constitution. Getting on the ballot requires a two-thirds vote of both chambers of the legislature. The deadline is June 25.
Although the U.S. Supreme Court lifted the federal ban on sports betting two years ago, California has not marshaled support for a bill because of the bitter rivalry between gaming tribes and card clubs. California is considered the prize of prizes in the sports betting world because of its huge population and large number of professional sports teams.
The Standoff
Earlier this year, a coalition of 18 gaming tribes and the racetracks gathered signatures to put a measure on the ballot to legalize sports betting at tribal casinos and racetracks—but left out card clubs. The coronavirus interrupted the petition process and the effort was abandoned—for the moment. There’s still time to reach the goal before the deadline later this month.
Dodd’s bill would tax gross revenue from sports betting at 10 percent for brick-and-mortar locations and 15 percent on mobile betting. He says the state could eventually collect as much as $700 million annually. In a state facing a $54 billion deficit, that wouldn’t be a huge revenue source, but it would be a steady one.
Dodd has been searching for a way to quell the long-simmering feud between the card clubs and tribal casinos since he became chairman of the Governmental Organization Committee three years ago.
But James Siva, chairman of California Nations Indian Gaming Association (CNIGA), told GGB News that Dodd’s proposal is a stealth bill masquerading as a compromise: “It’s a bill trying to hide behind the tribes and sports wagering issue to legalize the illegal action the card clubs have done for several years.”
He added, “They are not looking to add sports betting; they are trying to get a legal fix to their illegal house-banked games that they’re offering. They have in the past tried their own amendment to do this, and the voters voted it down. This is their attempt to maneuver behind the scenes, hiding behind sports betting issue.”
The proposal put forward by the tribes and racetracks is preferred by most tribes, Siva says. “The online portion of sports wagering puts tribes in an uncomfortable space legally, given how IGRA (the Indian Gaming Regulatory Act) looks at bets taken off tribal land. Tribes can’t legally take bets that aren’t made on tribal land.”
But that effort, suspended because of the pandemic, may be revived. “With this bill being put forward by Dodd, there will be a renewed effort, especially in Kern County which has easier restrictions on signature gathering,” he said.
Asked if the tribes have the political clout to push through a sports betting proposal that the card clubs completely oppose, Siva said, “I think tribes collectively have the political clout, but in the past the tribes have garnered the support of the voters. So we’re comfortable putting forward our amendment to the voters. They understand we are government gaming entities and our facilities help to fund our government needs, like schools and health care. We give back to our local communities. We have a good history going to the voters, and that’s where our comfort is.”
Experience shows that 85 percent of sportsbook revenue comes from online wagers. So how could California build a viable market without it? “You could still create a sports betting economy in California that would be a significant tax revenue-generator,” Siva said. “In our polling for the tribal initiative, we found a majority of California voters felt more comfortable establishing a brick-and-mortar base before going online—to combat online illicit activity, including age verification problems.”
Siva is concerned about the lack of overall regulation of gaming outside of tribal gaming. “We are highly regulated, and no tribal casino has ever had violations. Card clubs constantly have violations, upwards of millions of dollars, yet they want to expand that industry when they’ve demonstrated that they aren’t willing to hold themselves to the same level of safety. Card clubs have proven time and again that they aren’t willing to do so.”
Dodd said tribal opposition is not monolithic. “We’re in the middle of negotiations with tribes that want to come to the table. Some have some legitimate concerns about how the bill is written today. We are working out some issues, and others say ‘No,’ and ‘Hell, no.’ I believe my colleagues, when this comes to a floor vote, will take into consideration the tribes that want to work with the state on a framework.”
The next step, is hearings of the Appropriations Committee on June 18.
Pitched Battles, A Long History
The bill has actually been around for a year, but when it suddenly became active, tribal opposition peaked. “This is coming at them fairly quickly,” Dodd told GGB News. “Although the bill has been out for nearly a year, but they have concerns about that and timing. We think those are legitimate concerns.
“Those of us who have been in the legislature for a while have seen the fights between the tribes and the card rooms over the years. It pits members versus member and even tribe versus tribe, and if we can get this done, this is akin to Middle East peace. There are things in the initiative about card rooms that give the tribes heartburn. I think they have some legitimate concerns, and I wish more people would come to the table. It would be a much better bill.”
Dodd thinks tribal opposition is so fierce because of “history.”
When California voter allowed gaming for Indians, “who had had so much taken away from them, that was a great sign of respect,” he said. “They’ve taken the reins and built these beautiful brick-and-mortar casinos and done a great job of taking care of their citizens. It’s worked very well. Any time there’s a change, I think they look at that totally as a lack of respect. They’re trying to protect what they believe is their right. I understand that.”
However, he said “The card clubs have been in existence for a long time and the tribes don’t have an exclusive on sports gaming. What they receive out of this will be much better than the little they’re giving up.”
He wouldn’t name the tribes talking to him, but said he is “negotiating with some leading tribes, very recognizable names. They have come to the table and we hope others follow suit.”
Gaming tribes are considered by some the most powerful lobby in California. Does Dodd have the political cover to pass this bill against their opposition?
“They opposed it going into my committee, and it was voted out of the committee,” he said. “They do have an intense lobby. We’ve got a lot of intense lobbies: labor, environmental, teachers, nurses, and because of what they can do to a candidate who crosses them or for someone running for office, they have the economic power to do amazing things. It was a formidable fight to get nine ‘yes’ votes and three ‘no’ votes.”
What’s changed, says, Dodd, is the coronavirus. “We’re looking at a half a billion dollars in the near future in a state that’s in the red. This in itself won’t do anything, but we have to look at as many funding sources as possible.”
Dodd also pointed out that billions of dollars are being spent on illegal sports betting in California. “If we tax it right and not overtax it like we did with marijuana, not only do we get a safer regulated system, we get taxes from it. We get problem gaming help for those people who are out of control” (1 percent of revenues would go to treat problem gambling).
Asked if card clubs are getting away with illegal behavior, Dodd said they have been a focus of law enforcement. “Just last week the attorney general raided three card rooms and shut them down and is making them sell their businesses. That started before the coronavirus.”
As for the banked card games, which tribes insist are illegal, Dodd said, “The reality is that over the last 20 years, four different attorneys general have allowed them to play the games they’re playing today, and the tribes also have filed lawsuits that have made it to appeals courts. They haven’t won one of them.” Acting on that, the card rooms have expanded and built hotels.
“The idea that we’re going to take that away overnight—which is what the tribes want—well, it’s not going to happen,” Dodd said. “We’re looking for a framework that will define the rotation of the dealer and how that should work. We know the card games should be different from those played in Nevada.” The rules for third-party dealers are “murky,” he said.
“Some people might look at that and say that’s totally different from a Nevada game, but a competitor like a tribe says that’s a Nevada-style game. The definitions aren’t clear enough, and that’s why we are putting it in, to make it clear once and for all—and move on.”
The state, he said, “has issues that are more important than fights between tribes and card rooms, and the sooner we can deal with that, the sooner we can turn to those things we need to be doing.”
Tribal Perspective
Daniel Salgado is chairman of the Cahuilla Band of Indians, operators of the Cahuilla Casino in Southern California, which has 330 slot machines. He said the concerns of smaller tribes are rarely at the top of the list when gaming is discussed.
He feels betrayed about Dodd’s bill. “It’s not a compromise,” Salgado told GGB News. “There was no discussion of what he’s proposing when we had conversations with him last year about the card clubs’ illegal activities.”
He added, “We were following that process when, in the midst of a pandemic, we have Dodd coming out with this (bill), which undermines any conversation we had in the past. There’s not one tribe that supports this. To even hint that there’s any kind of collaboration is totally false. He can’t point to one tribe that he has, or a hint of support.”
Salgado believes voters will continue to support what they supported in 2000, when they amended the state constitution to allow Indian gaming. “The tribes have demonstrated over the years their ability to offer gaming that protects the community. Tribal gaming is one of the most highly regulated industries. It has three regulators: state and federal government and tribal.”
Salgado supports the tribal initiative that almost qualified for the ballot, only to be stopped in its tracks by Governor Gavin Newsom’s executive order confining most people to their homes.
“Each tribe has its own perspective, but that was gathering support,” he said. “There’s so much opposition to this bill, why was it done in the darkness and why it was done in an accelerated format, which is the only way it could survive. Without this pandemic, it wouldn’t have happened. This is a sucker punch.
“We’re down, the economy is down. We’re trying to deal with the pandemic and protests and the federal government and the CARES Act, which has been of very little benefit to the California tribes. And in the midst of that, we have to deal with this.”
No Benefit to Smaller Tribes
A small casino like the Cahuilla would be harmed, not helped by the Dodd bill, Salgado said.
“We didn’t ask for craps and roulette. To say they’re giving us something we didn’t ask for is patronizing. We operate with fewer slot machines because we don’t have the foot traffic. Craps and roulette requires higher volume, a dealer on either side and surveillance. We can’t cover those costs.”
The same is true of sports wagering, he said. “It requires significant volume for bets to be placed. We don’t see that volume. To think that all tribes would benefit couldn’t be further from the truth.
“Tell them to come visit one of the tribes that’s not as successful and see what the impacts of gaming can have. To think there’s enough and tribes have enough and all the tribes are well off couldn’t be further from the truth.”
Smaller tribes, he said, would be forced to seek loans if they wanted to enter the new market that would be created by the legislation. “Banks won’t want to finance us because the rules have changed, and it’ll have a ripple effect,” Salgado said. “This is not the time to be doing this.”
