California Props. 26, 27 pit tribal casinos against sportsbooks

Southern California’s Native American tribes spent a fortune building luxurious gaming palaces. Now they’re spending big to fight companies that could be a finger tap or mouse click away from a lucrative new gambling market.

Tribes with casinos and online sportsbooks have spent at least $400 million — enough to give every Californian $10 — to support or oppose Props. 26 and 27, measures on the Nov. 8 general election ballot that could legalize sports betting in California.

RELATED: Confused about California Props. 26 and 27? Here’s what each would do

A coalition of tribes, among others, supports Prop. 26, saying it would enhance a system that fuels the local economy and tribal self-sufficiency. Sportsbooks, including BetMGM, DraftKings and FanDuel, are backing Prop. 27, which promises to raise hundreds of millions annually to give homeless people housing and services.

As it deluges TV screens and social media with ads, the sports betting showdown is already the most expensive ballot measure fight in U.S. history, the Associated Press reported. At stake is who controls what would be the nation’s biggest legal sports betting marketplace, according to the American Gaming Association, an industry group.

Legal sports wagers generated $4.3 billion in revenue in 2021, up 177% from the year before, the association reported. As the most populous U.S. state, California, with more than 20 pro sports teams, promises to add to that.

The Southern California News Group sought to interview officials from several Southern California tribes with casinos, including the Agua Caliente Band of Cahuilla Indians and the Cahuilla Band of Indians.

Most didn’t respond. A spokesperson for the Morongo Band of Mission Indians, which runs a casino near Cabazon in Riverside County, declined to comment.

The San Manuel Band of Mission Indians, which operates the Yaamava’ Resort & Casino near Highland in San Bernardino County, considers Prop. 27 an “infringement on tribal sovereignty (and) the ability for tribes to make their own decisions and determine how to roll out gaming,” said Frank Sizemore, San Manuel’s chief of staff.

Online betting “is the Trojan Horse,” Sizemore added, accusing sportsbooks of “trying to sneak into California to get an online casino.”

The battle over sports betting is another example of tribes having to fight for what’s theirs, said Jacob Coin, executive advisor to San Manuel’s tribal chair.

“Any time tribes had something of value, somebody was coming up with ways to take it away from them,” Coin said. “(Before) it was timber, wool, land, water, gas and oil or whatever resource tribes had control over.”

He added: “The only way that we can build economies, generate revenues and do what governments do is because of the success (we’ve had) with tribal gaming … It took three decades to build up to where we are today beyond the reservations and that’s what is at risk here if there is a significant change in public policy regarding gaming here in California.”

Nathan Click, a Yes on 27 campaign spokesperson, rejected the argument that Prop. 27 would siphon business from casinos.

“It actually hasn’t made a dent in in-person casino traffic” in states with online gaming and casinos, he said. “Those entities, we have two very different customer bases.”

Attacks on Prop. 27 are hypocritical, Click said, because tribes are pushing for a 2024 ballot measure that would allow them to offer online sports betting.

“The hundreds of millions in revenue generated each year by Prop. 27 to help solve homelessness will create thousands of jobs — funding more case workers, substance abuse counselors and construction jobs for new housing,” Click said.

The Pechanga Band of Luiseňo Indians, which runs a casino outside Temecula, supports Prop. 26 because it “builds on the voter framework that voters have continued to support to enable tribes towards tribal self-sufficiency while also contributing to our regional economy,” said Jacob Mejia, the tribe’s vice president of public affairs.

Prop. 27, Mejia said, threatens the economic model that helps tribes support themselves.

The road to Props. 26 and 27 started in the U.S. Supreme Court with a 2018 ruling that opened the floodgates for legal sports wagers. Today, 31 states allow sports betting with five more set to join them, the American Gaming Association reported.

In California, talks in the legislature to set up a legal betting marketplace broke down in 2020.

“We looked at the playing field about a year and a half ago and said ‘It looks like this conversation’s going to be happening on the ballot and we can either be part of that conversation or not,’” Click said.

The key difference between Props. 26 and 27 is how wagers on sporting events would be placed.

Prop. 26 would require that bets be placed in person at a tribal casino or one of four horse racing tracks, such as Santa Anita Park in Los Angeles County. Under Prop. 27, bets would be made online.

Prop. 27 would restrict online gaming licenses to larger companies. It would allow tribes to offer betting, but they’d have to relinquish some of their rights under federal law — an unacceptable condition for tribal leaders.

No on 27 ads warn of children getting hooked on online betting. By limiting wagers to in-person bets, it “enables people to feel comfortable that only adults are betting because you can check IDs,” said Kathy Fairbanks, spokesperson for the Yes on 26 campaign.

Click said a regulated sports betting market “actually does a good job of preventing kids from accessing (gambling) platforms and only Prop. 27 fines an operator that knowingly takes (money) from a minor. None of those protections are in Prop. 26.”

A coalition that includes taxpayer advocates and unions along with veterans, small business and social justice groups is fighting Prop. 26, arguing it will lead to more underage gambling and addiction while allowing five wealthy tribes to expand their monopoly on gaming. But most of the money and advertising is centered on Prop. 27.

“It’s possible that this incredible negative spending against 27 will ultimately sink both propositions, especially if voters lump them together,” said Isaac Hale, an assistant professor of politics at Occidental College in Los Angeles.

“But I think defeating 27 is goal No. 1 for the major gaming tribes … and if the side effect is 26 goes down too, I think they can live with that.”

Besides legalizing in-person sports betting, Prop. 26 also would let casinos offer roulette and dice games.

“I think this is just a case where these two items have been on their wish list for a long time and propositions are very expensive so (the tribes thought) why not roll it into one,” Hale said.

Fairbanks said Prop. 26 would give tribes “the opportunity to expand and offer more games to patrons.”

The measure also allows casinos to take cardrooms to court over alleged violations of gaming rules. For years, tribes have argued that cardrooms skirt the law in how they offer poker and other card games.

I. Nelson Rose, a professor and gaming law expert, said via email that the provision “would destroy the card club industry” and a major source of tax revenue for cities.

“The tribes … let their personal antagonism toward the state’s card clubs, small (and) almost inconsequential competitors, add a nasty little provision to Prop. 26,” Rose said via email.

Legitimate cardrooms “have nothing to worry about” from Prop. 26, Fairbanks said.

“The cardrooms however have taken this opportunity to blow this out of proportion and fearmonger,” she said. “The provision is there to give tribes an opportunity to take a very specific penal code to court and get a ruling one way or the other.”

Polls show homelessness is a top concern for most Californians. While money for homelessness is a key theme of Yes on 27 ads, “(they) seldom seem to mention what the proposition actually does,” Hale said.

“Voters should be aware that a vote for 27 is a vote to legalize online sports betting and how you feel about that should probably be the main determinant of how you vote.”

Click said the Yes on 27 campaign has “always been upfront about what our measure does. It creates hundreds of millions of dollars each year that help solve homelessness by legalizing and regulating online sports betting.”

Yes on 27 ads also promise more money to less well-off tribes that don’t have casinos. Gaming tribes already send millions of dollars annually to non-gaming tribes, but Click said Prop. 27 would double that amount.

If he lived in California, Rose said he’d vote against both measures.

“Both have major defects which outweigh whether you are pro- or anti-gambling,” he said, adding that Prop. 27 “blatantly locks out all competitors of the companies which wrote and paid for the initiative, giving them a multi-billion-dollar oligopoly.”

A Berkeley IGS poll conducted in late September found just 31% of likely voters backing Prop. 26 and 27% saying they’d vote for Prop. 27.

If both pass, Prop. 27’s backers have said online betting run by sportsbooks can co-exist with in-person betting at casinos and racetracks. Prop. 26 supporters don’t see it that way.

If a judge rules the measures are incompatible, the measure with the most votes would win, Hale said. Otherwise, both would be enacted and California would have in-person betting at casinos and racetracks and online betting through sportsbooks, Hale added.

Cerritos resident Mike Wada, who regularly visits two casinos, said he supports both ballot measures.

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Wada would like to see craps and roulette offered at tribal casinos the way they are in Las Vegas. While he’s concerned Prop. 27 would send money out of California and potentially make it easier for kids to gamble, he said it’s easier to place a sports bet from home.

Wada said he’d still frequent casinos if Prop. 27 passes.

“I’m entertained by the spinning of the wheels, the colors of the machines and there is something more entertaining in that than sitting around waiting for the outcome of a bet you placed, whether it’s a sporting event or horse race,” he said.

If Prop. 26 and 27 fail, both sides might be back before the voters in a few years with new ballot measures, Hale said.

“There’s just too much money (in sports betting) for this to be the last word.”