12/07/2024

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Inside California’s Latest Proposed (and Possibly DOA) Sports Betting Ballot Measures

Inside California’s Latest Proposed (and Possibly DOA) Sports Betting Ballot Measures

The cat is out of the bag: someone is trying to legalize retail and online sports betting sites again in California. 

Will the latest effort to bring legal sports betting to the Golden State succeed? History tells us no, but the potential prize is so large that another attempt is not necessarily surprising, even if this campaign came as something of a surprise. 

“The California Nations Indian Gaming Association is deeply disappointed that the sponsors of the two recently filed initiatives did not first reach out to the State’s largest tribal gaming association for consultation and input,” the casino-owning group said in a statement last Friday. 

California’s gaming tribes were key to sinking the 2022 ballot measure intended to legalize online sports wagering in the state, and their support or lack thereof will play a huge role in determining the success of the latest proposed propositions. 

It could be, then, that the latest California sports betting initiatives are dead on arrival, even if they do make it to the ballot, which is by no means certain. Still, someone (exactly who, remains a bit uncertain) is giving it the old college try. Such is the allure of the California market if someone can crack it. 

So what’s in these latest measures that were filed with the state’s attorney general? Covers took a peek under the hood of what’s being proposed, although that may be all that ever happens with these initiatives. 

A different dynamic duo

The first thing to know about this attempt to authorize event wagering in California is that it is two proposed ballot measures, and they are both trying to achieve similar goals. 

That is much different from the 2022 ballot battle, which saw two measures put to voters that were really in opposition to each other, one seeking retail wagering for the tribes and the other aiming to offer statewide online sports betting. 

The first proposed ballot measure this time around is “The Sports Wagering Regulation and Tribal Gaming Protection Act,” a 39-page piece of legislation that lays out the framework for what legal sports betting would look like if passed by voters. 

Part of its purpose, according to the document, “is to regulate online and in-person sports wagering in California to generate much-needed funding for governmental services to tribal communities to address continuing social/economic problems facing Native Americans and other Californians, such as homelessness and mental illness.”

It would do this, again, in part, by “regulating sports wagering to take it out of the black market, creating a regulatory structure that prevents minors from placing wagers, and protecting public safety by allowing sports wagering only at highly regulated and safe in-person tribal facilities and online sports wagering platforms, each with substantial experience in gaming operations.” 

The measure would amend the California constitution to allow federally recognized Native American tribes (and them alone) to offer online and in-person sports betting. Sports wagering would then only be legal at tribal gaming facilities and online platforms. The earliest wagering could begin is September 1, 2025.

In addition to sports betting, tribes could offer in-person roulette and dice games at their casinos. Sports bettors would have to be 21 or older, and those interested in wagering online would have to register for their accounts in person at a tribal casino.

Some of the revenue would flow to tribes that do not offer gaming in the state, as well as to a new “California Homelessness and Mental Health Fund.”

Leave no doubt

While players may be located off tribal lands when they place a wager, that action “shall be deemed” to happen at a tribal casino where the servers processing the bet are located. The concept is almost identical to the one proposed and still under legal siege in Florida with the state’s Seminole tribe.

Tribes can offer just one individually branded online sportsbook and it would have to be their brand that is used.

“For the avoidance of doubt, clauses (i) and (iii) shall not permit any brand, co-brand, or otherwise derivative brand of a company engaged in sports wagering or online gaming operations in the United States whose ultimate parent company is not wholly owned by the tribe using such brand,” the proposed ballot measure states.

The initiative would permit a hub-and-spoke setup as well, wherein tribes not offering sports betting could act as a customer-acquisition tool for those who are in return for at least 50% of the profit. That, too, is similar to the compact struck between Florida and the state’s Seminole Tribe, which is supposed to partner with parimutuel operators. Essentially, the spoke tribe could be the consumer-facing part of the business, marketing sports betting to consumers, but the hub tribe would be in the backend processing the wagers.

Tribes could use a third party to help them run their online sportsbooks, but those contractors could receive no more than 40% of net revenues from the operation and the contracts are capped at seven-year terms. All of this is outlined in a “Model Form Sports Wagering Compact Amendment” that is contained in the proposed legislation, which tribes could choose to use if they want, or they could negotiate their own deal with the state instead.

Door Number Two

The second measure is called the “Tribal Gaming Protection Act,” and it is much shorter than the first proposed initiative. The legislation would amend the state constitution to block the legislature from authorizing in-person or online sports betting by anyone who is not a federally recognized tribe.

Moreover, the proposal would allow the legislature or the people, via ballot measure, to authorize the tribes to operate sports betting. If legislation is passed that way, the governor would be authorized to negotiate a gaming compact or compact amendment and the legislature could ratify that agreement, albeit with some regulatory conditions. 

There are some general guidelines for those rules, such as requiring bettors to be 21 or older and ensuring non-gaming tribes get a cut. However, the act is supposed to be “comprehensive,” it says, meaning if it or other sports betting-related measures appear on the same statewide ballot, their provisions “shall be deemed to be in conflict” with each other.

A similar provision is contained in the first measure, meaning only one act may stand if both are approved by voters. 

“In the event that this Act receives a greater number of affirmative votes, the provisions of this Act shall prevail in their entirety, and all provisions of the other Act or Acts shall be null and void,” the second proposal states.

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