California tribal casinos put millions on the table for November ballot measure on sports, other betting
Indian tribes in California are gambling big money to legalize sports betting in the state, but they are not in lockstep with what they are supporting.
Analysts are predicting more than $200 million will be spent to sway the public to allow sports betting in some form.
To date, only the initiative backed by the Federated Indians of Graton Rancheria, which owns Graton Resort & Casino in Sonoma County, has made the Nov. 8 ballot. In addition to sports betting, it would allow dice games like craps as well as roulette.
Voters may be confused if the three other proposed measures make the ballot. Differences include which tribes could offer sports betting, if card rooms would be able to, if online betting is an option, as well as if outside entities like DraftKings and FanDuel could be partners.
Since the 2018 Supreme Court ruling that opened sports betting to all states, more than 30 have done so. Goldman Sachs estimates the sports betting industry in the United States could grow from the $900 million market of today to raking in $40 billion in revenues in the next decade.
Money is the driver
While Ballotpedia lists the Federated Indians of Graton Rancheria as having spent $1.85 million supporting the initiative that has qualified for the ballot, no one from the tribe would comment for this story.
The Koi Nation, which hopes to build a $600 million casino on the edge of Windsor in Sonoma County, would undoubtedly benefit if the initiative passes. Instead of having to remodel like other casinos, it could incorporate a sportsbook and the other games of chance into its initial design. Even so, the tribe is sitting out this fight, at least in the media.
“The Koi Nation has no comment on California ballot measures. The tribe’s sole focus is bringing its land into federal trust as part of the planning and development of its Shiloh Resort & Casino in Sonoma,” Sam Singer, spokesman for the Koi Nation, told the Business Journal.
Still, tribal casinos in California are betting voters want the option to legally place sports bets without leaving the state.
“It’s about money. They are businesses, so that is what they are supposed to be about in large part. Sports betting also allows them to be more competitive,” explained Anthony Lucas, a professor of casino management at the University of Nevada Las Vegas who has developed award-winning research on the business aspects of the global gaming industry. “They can hang onto their clientele by eliminating a reason to go to Las Vegas.”
While live sports betting only represents about 3% of gaming revenues in Nevada, according to Lucas, that doesn’t mean there isn’t substantial money to be made by tribal casinos.
After all, the Silver State in 2021 collected $13.4 billion in gambling revenue, according to the Nevada Gaming Control Board. That beat the record of $12.8 billion set in 2007.
Three percent of $13.4 billion is $402,000,000, which is about what Nevada made off sportsbooks last year.
To further prove sports betting is big business, the American Gaming Association predicted a record 31.4 million people in the United States would place bets worth about $7.61 billion on the Super Bowl in February. (Exact figures will be released in April.) The number of people betting was up 35% from 2020.
“You will definitely see gaming proliferate,” Lucas said.
Challenges ahead for tribal casinos
Tribal casinos survived a legal challenge last month when the state Supreme Court ruled against card rooms in Los Angeles and Sacramento counties. The card rooms’ attorney contends the ballot measure that has qualified for the Nov. 8 election violates the state Constitution because it covers more than one subject.
California law allows card rooms to have "games of skill" such as poker where people play against one another. At tribal casinos people participate in "games of chance" like blackjack and slots where the opponent is the house.
Maurice Suh, partner in the Los Angeles law office of Gibson, Dunn & Crutcher, is not giving up. He filed the case on March 4 in Los Angeles Superior Court.
“While we are disappointed that the Supreme Court chose not to hear this critically important case now, this is not the end of the case, but rather the beginning,” Suh told the Business Journal. “We believe in the strength of our arguments. We now look forward to having a court analyze our writ petition on the merits. The law simply does not allow the tribal casinos to insert these kinds of self-serving provisions beneath the cover of a ‘sports betting’ initiative.”
The same week the court made its ruling, the Berkeley Institute of Governmental Studies released a poll that asked people their thoughts on the ballot initiative, specifically as it pertained to sports betting. Forty-five percent said they were inclined to vote for it, 33% said a no vote was probable, while 22% were undecided.
In the survey, men more than women supported the sports betting initiative, and younger voters more so than older people.
“It is rare these days for a political issue to not be seen as partisan, but legalizing sports betting in California appears to be one of them, at least for the time being,” said Eric Schickler, Berkeley IGS co-director.