Online sports betting a push for local gaming tribes

Casino-operating tribes in Kings and Tulare counties do not agree on whether or not voters should approve Proposition 27 to allow online gambling

CENTRAL VALLEY – Local tribes operating their own casinos find themselves on opposing sides when it comes to hotly debated Proposition 27 on this November’s ballot.

The proposition, backed by seven sports betting firms, would allow Californians to place digital bets online directly through Indian gaming organizations with state compacts or companies working under the name and in cooperation with California tribes. Prop. 27 allows betting on college and professional sports, as well as non-athletic events such as awards shows and video game competitions, but bans any betting on elections and high school sports.

Many Californians are already familiar with the debate after watching competing TV advertisements featuring tribal leaders this summer.

Only a handful of California tribes are backing Proposition 27. Among the supporters is Lemoore’s Tachi Yokut Tribe, which has a major casino on their reservation, Tachi Palace Casino & Resort, near Lemoore.

“Prop. 27 will provide us with economic opportunity to fortify our Tribe’s future for generations and protect Tribal sovereignty,” Leo Sisco, chairman of the Santa Rosa Rancheria Tachi Yokut Tribe, wrote in a released statement. “And it is the only measure that will deliver hundreds of millions of dollars each year to help solve homelessness and address mental health in California. The tribe has counted on gaming since 1983 to raise their members out of poverty.”

Tribes supporting the measure may expect financing from some of the out of state firms to promote sports betting through the local brand providing a net positive for the tribe. If passed, proponents say the California Solutions to Homelessness and Mental Health Support Act, would provide hundreds of millions of dollars each year to tackle California’s homelessness and mental health crises by licensing, regulating and taxing online sports betting. 

According to the state’s independent Legislative Analyst’s Office (LAO), Prop. 27 would require tribes and licensed gambling companies to deposit 10% of all monthly profits on betting transactions into a new state fund. Most of the money in the newly created California Online Sports Betting Trust Fund (COSBTF) would be spent on addressing homelessness and gambling addiction (85%) with the rest going to tribes not involved in online sports betting. The tribes could use their share of the 15% for costs associated with their sovereign governments, health and economic development. The LAO estimates the fund would increase state revenues by hundreds of millions of dollars probably topping off at half a billion dollars.

It would also increase state costs by tens of millions to fund a new unit to regulate online sports betting. The unit would be housed in the Department of Justice and would set the requirements to obtain an online sports betting license and investigate illegal activities. The state’s new regulatory unit could also take certain enforcement actions such as requiring unlicensed entities to provide a list of any names of people placing bets with them and blocking online access to these entities. In addition to huge new revenues, costs would also be offset by new fines and penalties. Any bets placed with an unlicensed entity would be fined 15% of the total amount of the bet. The proposition also allows for a $1,000 penalty for each day the fine is not paid.

More than 50 Indian tribes from across the state strongly oppose Prop 27 because they say it would disrupt their current casino operations, which have been in place for decades. Two coalitions of tribes oppose Prop 27 with familiar Central California names like Table Mountain, North Fork Rancheria, Picayune Rancheria and the Santa Ynez Band of Chumash on the coast as well as the Tule Tribe in Tulare County.

Tule River Tribal Council Chairman Neil Peyron said he feared the measure would drive business away from Indian casinos and pose a threat to their self-reliance as part of the proposition requires tribes to agree to a certain amount of state regulation.

“The Tribe is a ‘No’ on Prop 27,” Peyron declared.

The Tule Tribe, owners of Eagle Mt. Casino, is constructing their new 40-acre casino near Porterville that will employ 750 when it opens in December. The new facility will feature 1,750 slot machines, up from 1,200 at their current casino located 12 miles up a winding road east of town. Their new Tulare County casino also boasts a 2,000-seat concert hall and 700-seat restaurant, a massive investment for the tribe facing an uncertain future. A new hotel will be added in a later phase of the project.

Opponents claim that out-of-state corporations have written the ballot measure to legalize online sports betting in California —but only on their terms. They state that 90% of sports betting profits will be shipped out of California because only gambling companies operating in multiple states will be eligible for a license. The LAO confirms licenses will only be granted to larger companies, such as those that have online sports betting licenses in at least ten U.S. states or territories, but did not provide information on if and how profits would leave the state.

Prop Polling

One recent poll found 58% of respondents would vote ‘No’ on Prop 27 compared to 33% ‘Yes’ votes.

The pro-27 campaign scoffed at the poll: “This isn’t worth the paper it’s printed on. Our own polling shows Californians support Prop 27 and creating permanent solutions to homelessness and mental health care by taxing and regulating online sports betting. The opposition wouldn’t be spending $100 million if they weren’t concerned our measure will pass. Look at their actions, not their press releases.”

Another poll conducted in April by David Binder Research found that 59% of Californians would support the initiative and that the measure maintains a wide lead even after simulating multiple sports betting measures on the ballot and a well-funded “No” campaign.

Miguel Perez, executive director of the Kings/ Tulare Homeless Alliance, said the $100 million licensing fee for gambling companies would pay for affordable housing for the homeless, mental health services and financial support for tribes in both counties. Tribes will pay a substantially lower licensing fee if they choose to operate their own sports betting platform but also have the option of partnering with an existing online gambling company who would pay for the license fee.

A portion of all revenue generated from sports betting will be shared among tribes who choose not to participate in the online sports betting marketplace. Using fiscal estimates provided by the state of California, this measure would double the amount of revenue that non-gaming tribes receive from gaming in California. Tribes operating larger casinos pay nearly $150 million each year to tribes that either do not operate casinos or have less than 350 slot machines.

California currently has compacts with 79 tribes, according to the LAO. Tribes currently operate 66 casinos in 28 counties. Last year, tribes paid around $65 million to support state regulatory and gambling addiction program costs. Tribes also paid tens of millions of dollars to local governments last year under current laws, partnerships and agreements.

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