California Sports Betting Initiative Pulled as Tribes Reject Idea

Article ByDavid Weir

January 23, 2024

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Posted in: US Gambling News, California Gambling News, US Sports Betting News

A controversial campaign to legalize sports betting in California through a ballot initiative in 2024 involving offshore sportsbooks and California Tribes has ended this week.

Kasey Thompson, the main proponent of the initiative, recently announced the withdrawal of his group’s efforts amidst significant opposition from major gaming Tribes in the state.

“My intent was to unite the Tribes and not divide them. I can now see the support is not coming, and I always promised not to move forward without it. I am a man of my word and will not create any more division,” Thompson said in a statement sent to various media outlets on Tuesday.

His proposal gained support from a faction of nongaming tribes, but faced staunch opposition from the California Nation Indian Gaming Association (CNIGA). The trade group includes influential Tribes like the Morongo Band of Mission Indians, Pechanga Band of Luiseno Indians, and San Manuel Band of Mission Indians.

A big part of their opposition was because Thompson jumped the gun by announcing the proposals before having discussions with the Tribes. The proposed conversion of offshore sportsbooks to legal, tribally partnered operations also raised eyebrows with lawmakers and the public.

“I think that was his biggest mistake, the time line he left for tribes and his other partners. The manner in which they filed and the time line they created wasn’t beneficial for anybody,” said CNIGA Chairman James Siva.

“Tribes are always willing to have conversations. But when you put our backs against the wall, we’re going to do what’s needed to protect our exclusivity, which is an extension to our sovereignty, the most important thing to us.”

Controversial Idea

The plans were initially announced in October 2023. Filed by Pala Interactive founder Thompson and cryptocurrency developer Reeve Collins, Thompson initially said that he would drop the proposals if the tribes didn’t back the idea.

When it became clear that most tribes were not keen on the involvement of offshore sportsbooks, and that their backs were up after an announcement was made before consulting them, Thompson offered a $25 million check to sweeten the deal.

When the tribes rejected that offer, Thompson eventually stuck to his word and ceased his efforts.

“I tried to do something tribal that I thought was great,” he said this week.

“They didn’t want it. I think the tribes have it figured out in the future, and there’s no reason for me to be involved anymore.”

Thompson planned a $5 million-dollar campaign to gather signatures for the ballot, but that effort never materialized. He said he had a major petitioning firm lined up and ready to go, but was awaiting approval from the tribes first. From the time the proposal was announced, that never looked likely to happen.

Reflecting on the campaign, Thompson said he would like to think some aspects of his deal could eventually end up being part of a legal California sports betting market, such as the proposed 25% revenue share via a Revenue Sharing Trust Fund for the tribes, or even his idea for involving offshore ‘books.

Commercial Operators Also Against

The opposition to the initiatives wasn’t limited to tribal groups. Major commercial operators forming the Sports Betting Alliance (SBA), including FanDuel, DraftKings, Fanatics, and BetMGM, also expressed their disapproval.

Leading sports betting firms DraftKings and FanDuel were the main financial backers of a 2022 California online sports betting bill, Proposition 27, which got as far as a state referendum, but then only received 16% approval from voters.

A similar bill put through at the same time, Proposition 26, attempted to legalize California retail sportsbooks at the state’s tribal casinos. That also failed with just 33% of the vote.

Prop 27 was a costly defeat for gambling operators, ending in one of the largest margins against any proposition referendum vote in U.S. history. Between the two sides, more than $500 million was spent on convincing voters.

California’s Sports Betting Future

This failed 2024 ballot initiative shows just how alluring a Golden State sports betting market is. Despite the clear opposition from voters and other roadblocks, the huge potential for such a market means there is no shortage of hopeful entrepreneurs and politicians willing to try new proposals.

The tribal California casinos market is one of the most lucrative in the U.S., and its Daily Fantasy Sports market is also on top of that pile. So much so that FanDuel recently bought a luxury $71 million office space in Beverly Hills.

Should someone crack the code and find a way to make it work with tribes and voters, the market may have the potential to beat New York sports betting as the nation’s biggest. That could mean some $850 million or more in taxes, as New York received in 2023 from its record-breaking sports betting year.

Key Tribal figures in California have indicated that any pathway to legalization must be Tribe-led.

Siva recently suggested that a successful sports betting proposal in California would likely need to originate from the tribes and might not be feasible until 2028.

He also raised the possibility of an incremental approach to sports betting, starting with the more publicly palatable retail sportsbooks at tribal casinos before moving to online platforms. He emphasized the importance of not rushing into poorly conceived initiatives, which could complicate future efforts.