California Tribes, Online Books Hint At Less Adversarial Future On Sports Betting

California represents the nation’s largest prospective sports betting market, yet no formal effort to legalize sports wagering in the Golden State has surfaced since 2022.

Two competing sports betting initiatives between California tribes and the nation’s major online sportsbooks experienced catastrophic failure in 2022. Going forward, though, the lines are blurring somewhat, and the two sides could find themselves with more in common than what separates them.

Sportsbooks have not only begun talking with tribal gaming leaders to align but also brought several influential figures into their own companies.

Cooperation can beat competition

California’s Proposition 26 (sports wagering on tribal lands) and Proposition 27 (online sports wagering outside of tribal lands) attracted more than $500 million combined in campaign contributions, only to see 33% and 17.7% support, respectively.

Now, the tribes and sportsbooks sit on the sidelines for California sports betting, a potentially multi-billion-dollar annual revenue source. While on the sidelines, they are planning their next steps.

Some of those steps have already been taken, and they point to the two sides coming together rather than trying to undermine each other once again.

FanDuel made a trio of hires with tribal gaming experience between October 2023 and January 2024:

• Former San Manuel Band of Mission Indians Chief Operating Officer Rikki Tanenbaum in October 2023
• Former San Manuel vice president of operations Frank Sizemore in January 2024
• Former National Indian Gaming Commission chairman E. Sequoyah Simermeyer, who resigned from his position to become FanDuel’s vice president for strategic partnerships.

Additionally, Sports Betting Alliance President Jeremy Kudon joined the Indian Gaming Association’s podcast, The New Normal. During the show, Kudon spoke with tribal gaming leader Victor Rocha and NIGC Executive Director Jason Giles about the need for a regulated sports betting market in California.

The Sports Betting Alliance represents four major US sportsbooks: BetMGM, DraftKings, Fanatics and FanDuel.

Online sports betting has stood in the way

The 2022 election cycle overwhelmed Californians with sports betting ads. Supporters of each measure were out for blood against the opposition while trying to tout their cause as the best option.

Voters said no entirely, rejecting both measures. As a result, we don’t know if voters would have passed one unified measure or if they did not want to legalize California sports betting.

California tribes first attempted to legalize sports betting in 2020 but failed to obtain enough signatures for a ballot initiative, partly due to the coronavirus pandemic. They’ve opposed online sports betting since day one, expressing concerns that it would hurt their business.

All of the top US sports betting markets offer online and mobile wagering, though, and the same major players operate everywhere. If California is to succeed in a similar fashion, it may need to follow a similar path forward. However, as 2022 showed, any path forward would likely need to involve the tribes.

Tribes target cardrooms, too

California’s tribes have exclusive gambling rights in the state according to the 1987 Indian Gaming Regulatory Act. However, California cardrooms were in business before then, and they have coexisted with tribal casinos ever since.

That could soon change, as Gov. Gavin Newsom signed Senate Bill 549 into law in October. This bill allows the tribes one collective chance to sue cardrooms for offering games other than poker.

Currently, only tribes can offer lottery games, slot machines, and “banked” card games, defined by a house edge, like in blackjack.

Cardrooms can offer player-dealer games, like poker, which has no house edge. Instead, the house takes a fee, known in poker as “rake.”

To offer blackjack, baccarat and other card games, cardrooms utilize third-party proposition players. These players serve as the bank, while the house takes a fee from players for each hand dealt. 

TPPPs are legal under California state law, but SB 549 enables the tribes to challenge that status. 

The tribes have until April 2025 to file a lawsuit, and whatever the state decides will become final. If the tribes win, cardrooms will have to stop allowing all games that use TPPPs. If they lose, the cardrooms can carry on as they have been.