California State Government legalizing Sports Betting could keep gambling money in the state instead of allowing illegal, offshore sportsbooks to profit off Californians

DraftKings and FanDuel funded a massive effort to legalize sports betting in California last year.

Their efforts ultimately failed. But most in gaming believe that the online sports betting giants will make another push in 2024.

However, tribes believe the push for California sports betting could be put on hold for an election cycle.

Tribal leaders believe victory in ’22 could stifle efforts in ’24

The two companies sponsored Proposition 27 last year. The proposal would legalize online sports betting and allow non-tribal operators to run sportsbooks in the Golden State. They spent hundreds of millions of dollars convincing voters to pass it.

In response, most California tribes sponsored Proposition 26. The ballot initiative would allow in-person sports betting at the state’s tribal casinos.

Voters overwhelmingly rejected both ballot measures last November. Just 16.6% of the electorate voted for Prop 27, while 29.9% favored Prop 26.

According to PlayUSA’s Matt Kredell, tribal leaders think the lack of support could sideline major operators in California. At least until 2026.

While speaking at the Western Indian Gaming Conference last week, Scott Crowell, an attorney for the Rincon Tribe, first echoed the sentiment.

“The reality may be that we beat them so badly in 2022 that they may not even pursue an effort in 2024,” said Crowell. “But if that happens, expect them to be back in 2026.”

Later on during the panel, Crowell said the only way California gets sports betting is if the tribes are in control. Not the major online operators.

“‘We’ll operate, we’ll do it under our brands, we’ll control it, you just get out of our way.’ That model, if it’s not illegal, it’s dead in California.”

Tribes think they could easily squash a 2024 attempt

California tribes spent hundreds of millions as well. But tribes spent the money to ensure Prop 27 failed. Since they have exclusivity over casino gaming, the tribes believe that applies to a possible sports betting industry as well.

Furthermore, rhetoric from tribal leaders during the 2022 campaign didn’t make it appear like there was much of an appetite on their end to legalize sports betting. As a result, they are typically focused on keeping those operators out of the market. Not for legalizing it themselves.

Jacob Mejia, vice president of public and external affairs for the Pechanga Development Corporation, said they would easily stifle any ballot initiatives next year.

“It probably will not take as much, certainly $220 million, to defeat an online sports betitng measure in 2024.”

Most voters in California could not support either proposition

Most industry analysts think legalizing sports betting in California depends on how aggressively tribes pursue it. The San Manuel Tribe has already come up short in its signature-gathering effort to put an initiative on the 2024 ballot.

Prop 26

Proposition 26 was backed by most of the Native American tribes in California. It would have allowed only in-person betting at tribal casinos and racetracks. It would have also allowed tribes to add table games like roulette at their casinos.

Since tribes are sovereign entities, the state can’t tax them directly. Instead, the tribes would negotiate revenue-sharing payments with their local governments. The tribes earmarked part of the revenue for regulatory costs and to help fund gambling addiction and mental health programs. The proposition also would have made it easier for tribes to sue card rooms in California.

Those opposing Prop 26 argued that the passage would give tribes a monopoly on gambling in the state.

Prop 27

Proposition 27 was created to allow sports betting online and via mobile devices. Companies such as DraftKings, BetMGM and FanDuel strongly supported the measure. Major League Baseball also voiced support for Prop 27.

The proposition promised to provide tax revenue toward helping the homeless and mentally ill.

Those against Prop 27 claimed the gaming companies were deceptive about tax revenue allocations and that any money raised would not reduce the homeless problem in California.

The future of sports betting in California

Tribes in California plan to meet soon to discuss sports betting and how online gaming could benefit the state and communities.

A major benefit of legalizing sports betting in California still remains. The state government could keep gambling money in the state instead of allowing illegal, offshore sportsbooks to profit off Californians.

No matter what proposal is brought forward, tribes in California will play an important role in legalizing sports betting. Given the significant loss in 2022, if operators don’t come to an agreement and get the tribes on their side, they will probably be looking at another devastating defeat in 2024.