Tribal casinos make bold play to control sports betting in California and legislators are not happy

Betting that California is moving toward legalizing sports wagers, American Indian tribes are looking to dominate the action.

A powerful coalition of tribes recently proposed a state constitutional amendment that would allow bets only inside their casinos or the state’s four major horse tracks. Their plan would also exclude licensed card clubs, which often compete with the tribes, and ban mobile or online wagering.

State lawmakers have been proceeding cautiously toward drafting their own amendment to create a system for gamblers to bet on the 49ers, Warriors, Giants and other sports teams, which they say could generate hundreds of millions in tax revenue. Their plan probably would allow people to place bets on their smartphones and laptops.

But the tribes’ proposal, unveiled last month, represents a preemptive strike. Should it pass, tribal casinos would be granted a near-monopoly on sports betting while severely limiting bettors’ options — and the money the state could collect.

Eighteen tribes submitted the proposed constitutional amendment to the state attorney general’s office Nov. 13. Now, they’re waiting for it to be assigned a title and summary that would let proponents begin collecting signatures to qualify a measure for the November 2020 ballot. The move comes in the wake of the Supreme Court’s May 2018 ruling that gave states the right to legalize and tax sports wagers.

Since then, more than a third of all states have voted to legalize sports betting, and 13 are already allowing wagers.

As written, the constitutional amendment would limit sports betting to casinos and racetracks, while imposing a 10% tax on bets made at the tracks. No payments would be required from tribal casinos, which as sovereign governments are exempt from state taxation. Tribal casinos would probably pay state and local governments, but the amount and means of paying would be negotiated in compacts with each tribe.

Card clubs would be left out. Meanwhile, the proposal would expand tribal casino offerings to include roulette, craps and other dice games, something the tribes have long desired. Three such casinos now operate in the Bay Area: San Pablo Lytton Casino, Graton Resort and Casino in Rohnert Park and River Rock Casino in Geyserville.

State Sen. Bill Dodd, D-Napa — who along with Assemblyman Adam Gray, D-Merced, introduced a bill in June aimed at placing an amendment before voters legalizing sports wagering — is among the critics of the tribes’ proposal. They intended to hold hearings around the state and negotiate with the tribes and other gambling interests before crafting a final version of the legislation.

Lawmakers need to gain two-thirds approval from each chamber of the Legislature to place a constitutional amendment on the ballot. The tribes would need to collect 997,139 signatures of registered voters to qualify their amendment. Both would require a majority vote.

Dodd said the tribal plan offers too little to taxpayers, sports bettors or those who want to eradicate illegal sports wagering, usually done through bookies or unlawful offshore betting apps.

“It’s all about the tribes,” Dodd said. “It’s not in the best interest of all Californians.”

California’s tribal casinos raked in $8.4 billion in 2016, the most recent year for which figures were available, according to the Casino City Indian Gaming Industry Report. These casinos were expected to pay the state $48.5 million under individually negotiated compacts for the fiscal year that ended June 30, according to the state Gambling Control Commission.

Those funds support regulation and local government services and help prevent problem gambling.

Gambling experts agree that the future of sports wagering probably exists not inside smoky casinos or other brick-and-mortar sites but on mobile phones, as is done in Europe and much of the rest of the betting world.

Dodd said gamblers who already place bets illegally on their phones — using offshore apps they’ve downloaded — aren’t likely to exchange that convenience and make a trip to the nearest tribal casino. There are 69 in California along with four full-time racetracks, including Golden Gate Fields in Albany.

“We are not going to get sports gaming out of the shadows” without mobile betting, Dodd said.

The tribes say their proposal, which would bar visitors from placing bets on high school and in-state college teams, recognizes that casinos and racetracks have the most experience with “well-regulated” gambling in California.

“Tribal leaders believe this measure represents a viable path toward voter approval of sports betting,” said Jacob Mejia, a spokesman for the coalition. “The measure provides a solid framework and requires additional legislation for implementation.”

Allowing mobile betting in the proposal, he said, could doom it at the ballot box.

“Voters have legitimate concerns about mobile sports betting and would be highly likely to oppose a proposal that allows mobile betting,” he said. “This measure represents a viable and measured path toward well-regulated sports wagering in California. We don’t rule it out in the future, but we think the proposed measure is the right approach at this point.”

While the proposal doesn’t require any payments to the state, Mejia said, each casino would need to negotiate a compact that would require “revenue sharing” with the state.

Kyle Kirkland, president of the California Gaming Association, which represents card clubs, called the tribal proposal “a self-serving effort by some tribal casinos to expand their gaming monopoly.”

He said his association would work with legislators to craft a fair and comprehensive proposal.

“Californians want and deserve safe, lawful choices for their gaming activities,” Kirkland said, “not just those alternatives dictated by self-interested tribal operators.”

Gaming experts estimate that $150 billion in sports bets are placed illegally across the country each year. Legal sports wagers in California could generate “a couple hundred million” in tax revenue from a pool of about $10 billion in bets, said Paul Payne, a spokesman for Dodd.

Max Bichsel, the U.S. vice president for Gambling.com, a news and information website that compares legal online betting sites, said the tribal casinos’ move makes sense.

“The focus is protecting what’s theirs, and they’re being rightly protective,” said Bichsel, whose company’s website makes money when it connects gamblers to other sites that take bets.

Tribal casinos contend they hold an exclusive right to casino-style gambling after California voters passed Proposition 1A in 2000. The law gave the state’s American Indian tribes the exclusive right to bargain compacts with the governor for slot machine gambling and certain card games like blackjack.

Bichsel said introducing sports betting at sites like casinos and racetracks could ease the transition in California, which is thought to be the nation’s largest market because of its nearly 40 million residents.

Despite the tribes’ proposal, Dodd and Gray plan to proceed with their own plan to amend the state Constitution, starting with a legislative hearing in January.

Dodd said he hopes to work out a plan that brings in hundreds of millions of dollars in taxes and involves all of California’s gambling interests.

“We’ve got a lot of work to do,” he said.

https://www.sfchronicle.com/bayarea/article/Tribal-casinos-make-bold-play-to-control-sports-14888319.php