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As an online sports betting ballot measure in California looks headed for defeat, the state’s tribal gaming leaders have made it clear follow-up efforts will again face fierce financial and political resistance.

Proposition 27, an initiative on this year’s California ballot that would allow online sportsbooks to take mobile bets statewide, is significantly underwater in recent polls. Though supporting campaigns, led by DraftKings and FanDuel, have spent several hundred million dollars backing the effort, it has not been enough to move polls in their favor.

That, in large part, is due to a separate, well-funded campaign led by the state’s gaming tribes to oppose the initiative. Speaking at an industry conference in Las Vegas last week, Jacob Mejia, executive director of the California-based Tribal Alliance of Sovereign Indian Nations, said tribes will continue to oppose similar efforts in the future.

“Whoever these operators are, this is the lesson they have to take. Go to a tattoo shop, have this put somewhere on your body; ‘I will never underestimate California tribes again’,” Mejia said during a panel at the 2022 Global Gaming Expo.

A turning point in the campaign, the most expensive single-ballot issue in California history, came when Proposition 27 supporters erected billboards near tribal lands, Mejia said. This in turn galvanized support from tribal members statewide, helping build momentum for the “no” campaign.

“The manner in which they undertook this campaign was reprehensible,” Mejia said. “They recognized that on the merits, Proposition 27 wouldn’t pass.”

Though Proposition 26, a separate initiative backed by many of the state’s major gaming tribes that would allow retail sportsbooks at tribal casinos and several horse tracks, also seems headed for defeat, Native American leaders say protecting sovereignty by opposing the commercial sportsbook-backed mobile initiative is the far more pressing issue.

California’s gaming tribes were given exclusive rights to open certain aspects of “Las Vegas style” casino gaming on sovereign tribal lands through a 2000 ballot measure. In the ensuing decades, the tribes have battled the state’s poker rooms over permitted offerings, arguing for years that certain types of table games at these facilities were in violation of the 2000 initiative.

For many tribes and their surrounding communities, casino gaming facilities are the largest – and sometimes only – economic driver. Tribal nation members see casino gaming as not just a means for financial stability but as protection for their future.

“In California, there’s been so much goodwill that has been developed over the last 20-25 years, as tribes to pull themselves up out of abject poverty, using tribal government gaming as a resource, while not forgetting where we come from, and not forgetting that it’s not just about the tribes or members but it’s about supporting the community,” said James Siva, Vice Chairman of California’s Morongo Band of Mission Indians.

“I think those corporate guys overestimated that goodwill that the tribes have created.”

Though sports betting is a relatively low-margin gambling offering compared to other options such as slots or table games, tribal leaders are more worried that the legalization of mobile sports betting for out-of-state commercial sportsbook operators will open the door for them to launch online casinos. DraftKings and FanDuel already operate iCasino games in a handful of states and have acknowledged further legalization is a major component of their long-term corporate strategies.

Jacob Mejia, executive director of the Tribal Alliance of Sovereign Indian Nations: “The manner in which they undertook this campaign was reprehensible. They recognized that on the merits, Proposition 27 wouldn’t pass.”

California, home to nearly 40m people, will remain a major priority for all gambling entities, wether or not this year’s sports betting propositions pass or fail.

Speaking together at a Global Gaming Expo panel last week, DraftKings CEO Jason Robins and FanDuel CEO Amy Howe both said they would push for online sports betting legalization in 2024, should the 2022 referendum fail as expected. At a tribal gaming session a few hours later, Native American gaming leaders reaffirmed plans to oppose them.

“We say bring it on, which is not something we want to say it’s not something we want to do, but we want, we want to take care of our children, we want to grow their businesses, we want to take care of the future of our families,” said Victor Rocha, conference chairman of the Indian Gaming Association.

“That’s our priority; by fighting like it’s our only fight and our last fight.”

This sets up the potential for several hundred million dollars more spent on future campaigns to both bring online sports betting and oppose it. Though the California legislature could potentially open a pathway to legal online and/or retail sports betting during the 2023 legislative session, political and logistical realities make this seem incredibly unlikely.

Tribal leaders were encouraged that the tribal-backed retail-only measure has consistently polled better than the online initiative, even though the major gaming tribes have spent no money supporting it. Another tribal-led, retail-only measure is already positioned to land on the 2024 ballot, and there could be further moves to bring in-person betting in the future.

For online sports betting, this leaves two years for tribes, commercial sportsbook operators – and possibly other gaming entities – to figure out a solution forward. If no deal can be struck, 2024’s campaigns could eclipse the hundreds of millions spent on advertising in 2022.

Tribes in Connecticut, Arizona and Michigan all worked with commercial operators to offer online sports betting. In California, this remains a possibility, but the road forward remains incredibly difficult.

The pro-Proposition 27 campaign has hurt already strained relationships with the tribes, Rocha said. Any such potential compromise deal two years from now – or any time in the future – will create a very different environment for the commercial operators than they’ve enjoyed in other states.

“They are not going to be our partners anymore. They are going to be technology providers,” Rocha said. “We’re going to put them back in that box, and we’re going to send them back where they belong, as service providers.”

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