HIGHLAND, Calif. — As the ashes of Propositions 26 and 27 cool in California, the agents still hoping to bring legal sports betting to the most populated state in the union have a fanciful dream: the key players in the gambling industry here will sit around a large table and hammer something out.
The tribal casinos, card rooms, pari-mutuels, and national sportsbook brands could craft a mutually amenable proposition to put before voters, sparing the state of the type of pricey, tiring, scorched-earth marketing onslaught that sent both Prop 26 and 27 to resounding defeats in November.
Maybe this could happen. Maybe it could happen in 2023.
But according to San Manuel Band of Mission Indians chief operating officer Frank Sizemore and chief intergovernmental affairs officer Dan Little, that would require a key concession to a California Indian gaming industry that was arguably the only stakeholder to emerge from the Prop 26 and 27 defeats stronger.
Brands like DraftKings or FanDuel could enter the California sports betting market as technology providers, they told Gaming Today, but not as customer-facing sports betting brands. Native brands would be out front. Period.
“Sports wagering is No. 752 on people’s agenda. No one really cares. It’s just not that big of a deal to most people.” — Frank Sizemore
There would be, Sizemore said, “no co-branding,” with major national brands operating in the background, “similar to the way Cisco and others operate your computer system.”
“[San Manuel envisions] a structure in which they provide technology solutions to the tribes,” he continued, “and then the tribes are the operators of the game, in whatever form that is. But [national companies] they’re back-of-house technology providers.”
Little asserts that national sports betting operators would “still would do very well” in the arrangement, but it wouldn’t figure to be the payoff for companies like FanDuel and DraftKings that helped fund Prop 27 and its state-wide mobile provision.
And then there’s the other part.
“I think the bigger compromise is going to have to be for them to have a little humility and to understand they may have a role,” Little said.
IGT and Caesars officials told Legal Sports Report that they would be interested in such an arrangement.
San Manuel Speaks for Itself, but Tribes Unified Against Outsiders
San Manuel doesn’t speak for each of the 110 federally recognized tribes in California. Considering any ethnic groups as a bloc has long been a political miscalculation, borne out again by the fact that not every tribe here supported Prop 26, which would have allowed retail sports wagering at Native casinos and four horse racing tracks.
But tribes almost universally opposed Prop 27 and wielded their capital with the voting public and hundreds of millions of dollars to paint the ballot measure as a legalized invasion and attack on their economic sovereignty. Several espoused the back-of-the-house possibility at a recent tribal conference.
The invasion, Little said, has long been underway in California because the state has no specific laws making daily fantasy sports legal — or illegal. Scores of sites work in the void in the state, with Californians, according to various reports, comprising as much as 10% of the national DFS market.
DraftKings and FanDuel, which continue offering DFS after mutating into sports betting operations, are major players in the state.
“What’s problematic about companies like DraftKings is they’ve been operating illegal daily fantasy sports in California for years,” Little contended. “And through that time they develop databases and they should not be allowed to benefit from those databases.”
San Manuel Out Front, Not Out-Spent in Opposition to Prop 27
San Manuel spent more than any other tribe — in excess of $100 million — in anti-27 advertising, which put the proprietors of the Yaamava’ Resort and Casino in Southern California, and Palms Casino Resort in Las Vegas, in a prominent position to speak loudly and carry a big check.
“California has 110 tribes in the state. Just the sheer number of tribes here, that’s almost 20 professional sports teams,” Sizemore said. “You’ve got the pari-mutuels. There’s a lot of different folks who all want their hands in the cookie jar. It’s got to run through the tribes.”
The biggest of cookie jars nationally is the crock of cash online casinos would infuse into the industry and state coffers of states that legalize. iGaming is legal and underway in just seven states, but captains of the gambling industry began making the rhetorical pivot to the online casino as the next evolution when sports betting had become legal in barely half of the United States.
Bally’s chairman Soo Kim riffed at an industry conference last year about the need to gamify sports bets and inject more chance into the skill-based process. This summer in Boston, delivering a keynote speech at the National Council of Legislators from Gaming States summer conference, DraftKings CEO Jason Robins implored Massachusetts lawmakers to push toward iGaming as sports betting legislation was still being hammered out.
Tribes uniformly see casino games offered online and beyond their retail properties as an existential threat to their economic independence. And they see sports betting, especially online sports betting, as the gateway. That made fighting Prop 27 more of a priority than promoting 26.
“Their agenda is full internet gambling because that’s where they know the money is,” Little said. “And it’s kind of a ruse for the leagues and the teams and the true sports fans that want it. This is just a stepping stone for them to get the full online gambling, which I don’t think the leagues and a lot of other folks support.”
Tribes Don’t See Sports Betting as an Inevitable Gambling Addition
Little and Sizemore are admittedly surprised Prop 26 lost by the margin it did but are heartened by the fact that it fared better than Prop 27 in such a caustic campaign. They don’t seem devastated by the fact they won’t soon be taking bets at a 909 sports bar that seems primed to be converted into a sportsbook at Yaamava’ casino in the Inland Empire.
And they don’t feel like the legalization of sports betting in California has any timetable right now.
“This whole idea of inevitability, I’m not sure we subscribe to that thought,” Little said. “If you look at the election results, I don’t think anyone ever expected it to be that bad. And we had a high level of confidence that we were going to win because tribes have been in the state for thousands of years and have very good relationships. They’re part of the community.
“So when these companies took on the tribes, we knew they were going to have a really hard time. But we didn’t realize it was that bad. I mean, they got what, 17% of the vote? You look at overall sports wagering as a 4% to maybe 15% of the population actually is interested in it.”
Tribes Question Locals’ Interest in Sports Betting
Investing in a low-margin part of the gambling ecosystem — given tepid election results — with the ancillary potential of allowing monied competition into California is nothing tribal leadership is currently interested in pursuing, Little said.
“Why would we want to change the constitution for something that has low margins, does not provide a lot of tax revenue and, in the grand scheme of things in the state of California, is only supported by a very small portion of the population?” Little posited. “Frank and I take our direction from the tribal leadership and right now I think they’re kind of like everyone else, just kind of digesting election results.
“But I don’t think there’s any clear path right now of where we want to go, except for the fact that overwhelmingly, voters just said, ‘no,’ they don’t want sports wagering in California.”
Tribes in for the Long Game as Sports Betting Map Awaits California
San Manuel seems willing to play the long game while threatening not to play at all.
“I think it’s perfectly acceptable for the tribes not to have sports wagering,” Sizemore said. “We haven’t had it for 20-plus years at tribal casinos here in California.
“I definitely could see a scenario where tribes don’t really care. We used to say when we were building our campaign team, sports wagering is No. 752 on people’s agenda. No one really cares. It’s just not that big of a deal to most people.”
It’s a big deal to a lot of massive sports betting companies. But the prize apparently comes with major caveats.