Tribal and commercial operators both failed to get online betting passed in California

The Indian Gaming Association and Pechanga.net of America presented a Tribal Gaming Seminar at ICE in London last week. One of the presentations to attendees focused on learning lessons from recent attempts, failures, and successful launches of online casino gaming and sports betting in the U.S.

This was done in light of what legacy gaming providers such as tribal operators are willing to participate in as far as regulatory models and to demonstrate the evolving attitudes of tribal operators looking for a win-win situation with other stakeholders.

The seminar outline suggests that new operators need to secure the cooperation of current stakeholders in the gambling industry before launching products in those states, some of them large and potentially very lucrative, like California where the Pechanga Band of Indians operates Pechanga Resort Casino near Temecula, California. The casino is one of the largest resort casinos in America with over 5,400 slot machines and about 200,000 sq ft of gaming space.

Tribal and Commercial Propositioned Both Failed in November

Two separate ballot propositions for sports betting failed to pass in California during the last regular election when residents were asked whether or not they wanted online betting – a positive result could have eventually led to online casino regulation as well. One of the propositions was backed by commercial operators and the other one was primarily backed by the state’s tribes.

Commercial global brands were unable to push their referendums across the finish line, largely due to a lack of understanding about the tribes’ unique positions in the markets as well as the political clout they heft, along with the revenue goals the legacy operators seek for their constituents – the tribal members.

The synopsis stated that the tribes are not opposed to innovation, modernization, and expansion into new verticals and channels as long as it doesn’t threaten their future participation and involvement in them.

According to an in-depth report on CDC Gaming Reports, when asked how he expects online gaming to change over the next two years, Mark Macarro, Pechanga Band of Indians Chairman, told listeners at the seminar that iGaming is inevitable in the state of California and that Millennials are driving the new gaming channels.

“I think there’s a demographic proclivity to want to play online. It doesn’t exist right now with the Baby Boomers and Gen X. But Millennials are different players and we’re not sure that slot machines will be what they want to play”, he said.

Not in my Backyard Unless I Play Too

Macarro was joined on the panel by California Nations Indian Gaming Association (CNIGA) chairman James Siva. The CNIGA chairman was also of the opinion that the commercial betting bill was rejected because voters expected the commercial interests to cooperate with tribal gaming interests in the state.

Siva enumerated the number of tribal gaming interests in the US at 270 and noted that 70 of those tribes’ locations are within the state’s borders.

Tribal gaming represents about a quarter of all gaming revenue in the US and 44% of that occurs in California, according to Siva.

“So you break that down and that means that California tribes represent nearly a tenth of the entire gaming market of the U.S. Commercial, tribal, everything”.

He noted that perhaps cooperation or diplomacy may have been a more successful tactic than steamrolling, per see.

“Either they massively underestimated the size and reach of those tribes, both politically and financially, or they maybe had bad campaign consultants”, he said.

Panelists Agree Tribal/Commercial Partnerships may be way Forward.

“I think there’s still a path for tribes and the commercial operators to work together, but it’s going to be a path and relationship that’s decided by the tribes. This isn’t the first time we’ve had commercial entities want a seat at the table as equal to tribes”, Siva said.

This need for commercial entities to respect the sovereignty of the California tribes and negotiate with them for access to California, as they would with legislators and regulators in other states, was reiterated by Macarro, who promised that the tribes would always counter non-diplomatic attempts to launch in the state

“Among the things we learned is that if you have two similar-sounding measures in front of the voters on the same ballot, they will get confused and vote no”, he said.

“So if nothing else changes from the corporates, if they make another run at this without doing a lot of the stuff we talked about as being necessary to be successful, it’ll be regarded as hostile by the tribes. And all we would have to do is put another ballot on the initiative. Confuse the voters, they’ll vote no, and both will go down in flames again”, he said.

Source: ICE London: Tribes tout igaming as ‘inevitable’ future of gambling in California, CDC Gaming Reports, February 8, 2023