Why CA Tribes Think Online Sports Betting Could Ruin What They’ve Built

California tribes filed a proposed ballot initiative Wednesday to amend the state constitution to allow for sports betting at Indian gaming casinos and licensed racetracks.

The effort from a powerful coalition of 18 Native American tribes leaves out the state’s cardrooms isn’t surprising given the longtime animosity between the state’s two main gaming stakeholders.

But why are tribes, even when giving themselves a dominant position in the state’s sports betting landscape, not asking for online wagering? After all, mobile and online wagers make up about 75% of all sports bets made in New Jersey.

Comments made by California tribal leaders last month at the Global Gaming Expo (G2E) in Las Vegas provide insight into their perspective on sports betting and why they are wary of putting it online.

CA tribes fear mobile sports betting as gateway to iGaming

Gambling has become essential to tribes in the state. California is the nation’s largest Indian gaming state, with 69 Indian casinos and annual revenues totaling $7 billion. It’s the top revenue source for their tribal governments, providing jobs for their people and money to protect their interests.

Speaking at a panel on the next five years of tribal gaming, Pechanga chairman Mark Macarro expressed that mobile sports betting in itself, with its single-digit profit margins, didn’t pose a threat to Indian country.

However, he feared that, through an unintended consequence or a loophole, mobile sports betting could quickly evolve into full mobile casino gaming.

“If that were to happen, we think, in California, it could potentially be a disaster,” Macarro said. “So, we have a lot of tribal leaders in California who are worried about that.”

He added that California tribes had the same concern about online poker in the past, which is why Pechanga fought to defeat previous efforts to legalize online poker.

CA tribes want to take it slow with sports betting

Panelists spoke about not being in a rush to get in on the small profit margins they see in sports betting.

Sure, they would welcome any bump in revenue. However, with small gains and big risks, if it were up to them, they would rather wait five years to analyze the impact that sports betting has on casinos, particularly tribal casinos, nationally.

“Everyone seems to want sports betting, and it’s being led by the industry, by the sports leagues and by the media companies,” said Victor Rocha, president of the tribal gaming advisory firm Victor Strategies and owner/editor of Pechanga.net, who moderated the panel.

“The industry is saying ‘Go, go, go!’ and we’re saying ‘slow, slow, slow.’”

In announcing the proposed ballot measure, chairman Anthony Roberts of the Yocha Dehe Wintun Nation lauded the initiative as a “viable and measured path that provides Californians with the opportunity to wager on sports.”

“Measured” is the keyword.

Then why are they pushing a ballot initiative to legalize sports betting?

With the national momentum to legalize and regulate sports betting, tribes can’t deny that it’s coming to California eventually. Nineteen states and Washington, D.C., now have legalized sports wagering.

The ballot measure is a way for tribes to give Californians a way to Legally Bet on Sports while maintaining control of how it’s rolled out.

“The last 12 years, there was a lot of talk about internet poker and internet gaming,” Macarro said. “Right now, it’s sports betting. Whatever comes next, we want to be a part of it. We want some sense of control about it so it doesn’t overtake us. We need to be in the mix. We need to position ourselves to be in the mix.”

Outside forces are pushing for sports betting. Assemblyman Adam Gray and Sen. Bill Dodd authored Assembly Constitutional Amendment 16 and are planning to hold the first hearing in the next month for all stakeholders to express what they want to see legal sports betting look like in California.

This is the way for the tribes to take control and allow legal sports betting to roll out at a pace with which they are comfortable.

“We’ve never seen anything like this go from nothing to something so big,” Rocha said. “It’s like the industry was waiting for it. You need to get in front of it because this is a much bigger issue than us. There are other people involved in it.”

Presence of sports leagues changes the dynamic

There was plenty of industry momentum for online poker as well, and California’s Indian tribes had the strength to delay it for a decade until it got to the point that the energy dissipated. Online poker received no consideration in California during the past two years.

Sports betting brings another stakeholder to the party in the professional sports leagues. There are 16 sports teams in California over the four major professional sports leagues.

They also are pushing for legalized sports betting in states across the nation, and they possess a great deal of influence themselves.

“We need to understand that it’s being pushed,” Rocha said. “This isn’t a normal fight. This is one where we’re getting resistance and pushback from people we’ve never really been on the battlefield against.”

It bears noticing that the tribal proposal does not include any league asks, such as an official league data mandate, even though many tribes have long-standing relationships with sports teams.

Online wagering will be a key discussion point in California

If the tribes are putting out their own initiative, rather than waiting for the legislature’s bill, shows anything, it’s that mobile betting in the state will be at the forefront of future legislative hearings.

Rocha stressed that the tribes in California won’t be pressured or forced into making decisions by online sports betting companies, such as FanDuel and DraftKings, wanting to enter the state.

“The industry needs to understand that we’re not going to roll over for you guys,” Rocha said. “Just because you want to get your business off the ground doesn’t mean we need to help you. We’re going to take our time and do it right.”