California Tribes will Maintain Sports Betting Monopoly for Foreseeable Future

There hasn't been much clarity surrounding the legalization of online sports betting in California, America's most populous state. As it stands, residents cannot access our best sports betting sites.

But experts attending the SBC Summit North America did clarify one thing—that the state's Tribes will be in control of any move to bring about a legal California sports betting platform, if and when it does go live.

This after what the tribes had deemed existential threats by wagering providers and other interests to their sovereignty through initiatives to legalize online sports betting in California without them.

However, according to the expert panel, it will be up to legal sports betting providers hoping to have a presence in California to rebuild trust with the tribes and forge the relationship necessary for them to be considered partners of the monopoly-holding tribes.

California tribes hold all of the power, as reconfirmed by the SBC Summit North America expert panel.

Bad blood?

It was in 2022 that FanDuel and DraftKings were two such providers that directly attempted to circumvent the powers that California tribes have over the gambling industry in the Golden State through Proposition 27. It put the question of legal sports betting expansion to the voters on the 2022 election ballot in direct opposition to the wishes of California's tribal entities.

It appears as though the bitterness from that incident hasn't exactly worn off.

In 2022, the provider plan won but then lost when voters overwhelmingly rejected the idea of a legal sports betting platform for their state. 

Since then, some of our best sportsbooks have spent millions of dollars to influence an expedited legal sports betting platform, and the tribes have spent millions to fight such an assault on their control over the state's gambling industry. 

As Andrew Alejandre, tribal chairman of the Pasketna Band of Nomlaki said, “When we see FanDuel and DraftKings start to rebuild that trust, start to come and mend those wounds that they left, then we may be able to move forward. The way they came in was just ridiculous, that was damaging. It will take some work. Building relationships, it takes time with tribes. We’re not just going to trust you."

He went on to say that, “Sovereignty, again, is one of the most important things that we have, and we're going to do everything we can to protect that. And when someone comes in and tries to set up shop, that's not going to happen.”

Making it right?

For their part, DraftKings and FanDuel have apologized for their attempts to go over the heads of tribal leaders in California. Leaders of both companies have all but acknowledged the fact that they may have stepped over the line by irritating the true stakeholders in the California scene, the tribes.

Frank Sizemore, FanDuel VP of Strategic Partnerships, issued a backhanded apology and acknowledged that sports betting will be running through the tribes going forward. 

On Thursday, he commented “If and when the crowd decides to legalize sports wagering, it'll be a tribally led initiative. We have no interest in running another initiative. We've learned our lessons and it did not go well.”

He went on to say that “We need to prove to the tribes that we can be a good partner, and they ask us to join them in that endeavor.”

What is at stake

California is by far the biggest prize in the U.S. legal sports betting industry that has yet to join the family. Chris Grove, managing director for Eilers and Krejcik Gaming, said “California is easily the largest prize in the U.S. sports betting market.” BetMGM's management team touted the Golden State as “one of the most important betting markets in the world.” 

The state boasts over 40 million residents, one of the biggest tourist sectors in the country, and 15 professional sports teams.

Figures from PlayCA.com project $300 million in taxes annually could benefit state tax coffers after the legalization of sports betting. An estimated $30 billion yearly handle could come from a California legal industry, along with operator revenue in the range of $2 billion per year.

Where does it leave California?

All of the legal wrangling has set the possibility of a legal sports betting platform for California back. While no timeline has officially been discussed, 2024 is likely undoable as a launch target timeline, and 2025 won't happen because there is no election during the year.

It leaves 2026 as the possible next chance that Californians will have a chance to vote on the viability of California sports betting apps for their state.

Hurdles remain however, including the California tribes' reluctance to expand the state's legal sports betting platform and to work with providers that have tried to undercut their authority in the past.