California is the holy grail for sports betting operators but all attempts to pass legislation have failed due to opposition from the state’s Native American tribes. However, that reluctance could be waning as they attempt to forge a solution that is in the best interests of all the tribes.
What’s the Issue?
California’s tribal nations have a monopoly on the largest casino market in the country in which 76 casinos are operated by 73 of the state’s 109 tribal nations. Revenues derived from those casinos are roughly $9 billion per year and that money has greatly enhanced the lives of those living in the tribal communities throughout the state.
Even those tribes that have only a limited gaming presence, or none at all, get a cut of the overall profits. It’s been nearly a quarter of a century since tribal gaming began in California and since its inception, the tribes whose casinos are located in major population centers agreed to share $1.1 million annually through a revenue-sharing trust fund (RSTF) to assist those rural tribes without a gaming profit center.
That monetary amount for the partial and non-gaming tribes has not increased since the fund began despite casino revenues increasing and the value of the dollar plunging over the decades. Therefore, a slight rift has developed between the haves and the have-nots of California’s tribal nations.
The iGaming Imperative
The gaming tribes are making plenty of money and have been skeptical about online sports betting being launched without their total control. They also know that the next logical step after mobile sports betting is online casino gaming, which they believe could imperil their land-based casinos that have been a cash cow for so long.
“We still think that not only does online sports betting have to be for every tribe, but we better be in that driver’s seat, and we better control our destiny because it’s going to eventually lead into iGaming,” said Johnny Hernandez Jr., vice chairman of the San Manuel Band of Mission Indians. “And if iGaming comes online and tribes don’t control it, guess what, brick and mortar is going to go away, and tribes are going to be back into potential poverty. We can’t stand back and let that happen.”
Time to Strike Drawing Near
However, the gaming tribes also understand that the market is too big not to eventually be tapped, and right now they are in control. The national sportsbooks are contrite after trying to get mobile sports betting launched without the support of the tribes a few years ago. The FanDuels and DraftKings of the world understand they will have to wait patiently and bend the knee to the will of the tribal leaders, at least for now.
Hernandez Jr. said, “It has to benefit all tribes and we have to be unified on how we do that. If we break up and we scatter … I think if you look at the commercial operators and what they did in 2022, they tried to divide tribes. They got the three RSTF tribes on their side. Meanwhile, there’s some truth to that [RSTF tribes being underfunded]. Unfortunately, it’s not an easy fix. But if you divide tribes, we’re all doomed to fail.”
Seizing the Moment
The time to strike may be coming sooner than later as unity is the key to the tribe’s success, and if the alliance becomes fractured, it will weaken their position and they could lose control of what will be an enormously lucrative market.
Cahuilla Band of Indians Chairman Daniel Salgado, said, “We want to provide for RSTF tribes. And my thing has been how long do we continue to allow those conditions to be going on when we have a potential solution out here that fixes a lot of those problems? How long should those RSTF tribes continue to suffer while we try to figure out what that looks like?”
