California Sports Betting Debate Picks Up Due to Missed Opportunity for Super Bowl Betting

In California, there are three tribes that are looking to block an online sports betting initiative that is operator-backed. This past Wednesday, the three California-based tribes announced that they had forced the Tribal Sovereignty and Safe Gaming committee. The new committee will be backed by a massive investment.

According to a release, the tribes are committed financially to beating the operators and have a $100 million initial campaign budget. The campaign is backed by:

• Wilton Rancheria
• The San Manuel Band of Mission Indians
• The Rincon Band of Luisueño Indians

The San Manuel tribe both owns and operates the Yaamava’ Resort & Casino at San Manuel, located outside Los Angeles. In 2021, the tribe also bought Las Vegas’ Palms Casino.

The $100 million initial campaign budget is the same amount that US sportsbook operators had pledged to spend when they launched their own initiative in 2021. The campaign has since been steadily progressing. It has collected a quarter of almost a million signatures that are required to get on the ballot this coming November.

This initiative has the support of seven US-based sportsbooks. These are: 

• BetMGM
• DraftKings
• Bally’s
• Fanatics Betting & Gaming
• Wynn
• FanDuel
• Penn National/Barstool Sportsbook

The initiative needs to make it on the ballot and to be approved by voters to be implemented. If this happens, widespread mobile wagering with a tax rate of 10% would be allowed. But, the newly-formed tribal committee feels those operators would be exporting money from the state. They also feel they have a proven record of questionable operating practices.

For instance, an article from Bloomberg Tax talked about DraftKings and FanDuel paying less tax because of write-offs on bonuses. In addition, the tribe campaign pointed to the fact that in 2000, voters in California decided to give exclusive rights to operate gaming in California to sovereign Native American nations.

Since then, two decades have passed with this precedent in place. The tribes feel the online sports betting measure that is sponsored by out-of-state corporations would violate this promise of sovereignty.

When it comes to Californian politics, tribes have traditionally held a lot of sway. As recently as 2020, legislative attempts to legalize California sports betting have been successfully defeated.

Another sticking point for the tribal committee has been the lack of in-person age verification that is in the operator-backed measure. The tribes feel that in-person age verification is an important principle when it comes to creating a safe online sports betting environment. However, the operator-backed initiative is fighting back and saying it will not be deterred.

Their measure is looking to be pretty popular with Californians. So, they are hoping to get on the ballot and get approved come November. Plus, their measure would also allow for money to be sent toward funding ventures to help homelessness as well as to support mental health care.

Because almost half of the country now has legal online sports betting, supporters feel this shows it can be regulated safely. It also has shown that it can generate a large amount of revenue to help states’ funding. Plus, the operator-backed initiative touts that it can provide millions in revenue for the California Tribes themselves, both gaming and non-gaming.

Representatives for the initiative say they have been making significant progress on getting the signatures they need.

There are actually two other California sports betting initiatives that are looking to make it on the ballot this coming November. They are:

• A tribal-backed question to legalize retail betting only.
• A cardroom-backed question that would allow them to receive a slice of sports betting.

With the Super Bowl taking place this past weekend in Los Angeles, potential Californian bettors were able to see what they were missing out on firsthand. The missed opportunity from the state for Super Bowl betting could have generated around $300-$400 million in sports betting handle for the state, according to analysts.

With an assumed 7% hold as well as a tax rate of 10%, this could have generated around $25 million in GGF as well as around $2.5 million in taxes for California. New York sports betting has been a big success and California sports betting could prove to be even bigger. New York has half the population of California and yet is already the largest sports betting state in the United States only one month after launching.

Written by Allie Nelson, our US Sports Betting Industry Expert.