Amended California Sports Betting Initiative Increases Tribal Revenue Share

Written By Matthew Kredell on December 4, 2023
California Sports Betting Initiative Amended With Changes

California sports betting initiative proponents submitted changes to their proposal to the state attorney general on Monday.

The amended initiative increases revenue sharing to limited- and non-gaming tribes while removing provisions that larger tribes found problematic.

Kasey Thompson told PlayUSA the final sports betting initiative language incorporates changes suggested by tribes, regulators and out-of-state operators.

“This is now the best California sports betting initiative ever because of the way it benefits all tribes,” said Thompson, spokesperson for the California sports betting initiative and CEO of Eagle 1 Acquisition Co., the company behind the initiative. “I think we’ve got a bill that works for every stakeholder, every out-of-state operator, every land-based casino, and a majority of the tribes right now.”

Key changes to California sports betting initiative

Backers of the initiative originally submitted essentially the same language filed by three California Indian tribes in 2021, with two controversial additions.

Chairs of the San Manuel Band of Mission Indians, Rincon Band of Luiseno Indians and Wilton Rancheria submitted a comment letter to the attorney general highlighting two provisions the tribal leaders said “advances the agenda of offshore online gaming operators to exploit and monetize their illicit assets.”

In amending the initiative, proponents removed both provisions the tribes called problematic.

Other key changes in the finalized initiative include:

  • Increasing the percentage of operator revenue going to Revenue Sharing Trust Fund (RSTF) tribes to 25%. This eliminates the 10% to homelessness and mental health funding.
  • Limits the in-person sign-up requirement for online sports betting accounts to the first two years. Allows mobile sign-up within 10 miles of tribal casinos.
  • Adding a five-year sunset for promotional credits. Promotional credits start at 15% in year one and decrease 3% each subsequent year until they reach zero.
  • Changing the start date for California online sports betting to no earlier than July 1, 2025.

As originally filed, they gave 15% of revenue to RSTF tribes. Now the entire 25% tax supports California tribes that currently make little to no money from gaming.

The 72 RSTF tribes currently receive $1.1 million annually, the same amount they have received since Class III gaming began in the state more than 20 years ago.

“This is a life-changing amount for many rural California tribes,” Thompson said. “We’re talking about tribal reservations that often face third-world conditions. This initiative gives them a shot to make real money from gaming, potentially 15 times what they are making right now.”

Final initiative language doesn’t mention offshore market

Initiative proponents have made a proposal to tribes in which they facilitate the transfer of the California operations of a significant portion of offshore sites currently operating online gaming illegally in the state.

But the initiative doesn’t include that plan. It’s a separate agreement that Thompson and Eagle 1 will work on with tribes.

The language proposed to go in front of voters is the same as many tribes supported previously, with the above changes.

“We’re working with tribal leaders to distribute assets if and when regulated by the stringent California regulatory bodies and IGRA law,” Thompson said. “What will go in front of voters is the option to legalize online sports betting to benefit the state’s Indian tribes.”

What the California sports betting initiative would do

Here are the main details of the California sports betting initiative:

  • Amends the state constitution to allow sports betting on professional, collegiate and some amateur sports (such as the Olympics). Prohibits wagering on high school sports.
  • Allows tribal compacts with the state to include sports betting.
  • Lays out how tribes can partner with online sports betting operators as management service providers. Tribes serve as the sports betting operators.
  • Caps such management service provider contracts to 40% of net revenues and seven years in length, consistent with the Indian Gaming Regulatory Act (IGRA).
  • Management service providers pay a 25% tax, with all of it going to RSTF tribes.
  • Creates a hub-and-spoke model by which other tribes can partner as affiliates with the tribes who offer online sports betting.
  • Legalizes craps and roulette at tribal casinos.

A secondary initiative filed by the proponents, which went unchanged, would merely amend the state constitution to ensure that the state legislature may not authorize in-person or online sports betting for any person or entity other than an Indian tribe.

Next steps for California sports betting initiative

Coming procedural steps for the initiative include the state producing a fiscal estimate by Dec. 18 and the attorney general releasing a circulating title and summary by Jan. 2.

Once they have the title and summary, proponents can begin collecting signatures on the initiative. Qualifying for the ballot requires producing 874,641 valid signatures. Ensuring that many signatures are valid typically requires submitting about 1.1 million total signatures.

Thompson reasserted that, if the initiative has enough tribal support to move forward, Eagle 1 will fund the initiative from signature collection through the ballot campaign.

“This will remain a zero-cost initiative to the tribes,” Thompson said. “We will carry the burden of passing this initiative, beginning with the $25 million signature campaign through the ballot campaign, which could cost hundreds of millions.”

Photo by PlayUSA
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Matthew Kredell

Matthew Kredell serves as senior lead writer of legislative affairs involving online gambling at PlayUSA. He began covering efforts to legalize and regulate online gambling in 2007 after federal passage of the Unlawful Internet Gambling Enforcement Act disrupted his hobby of playing small-stakes online poker. He has since interviewed more than 300 lawmakers around the country and written extensively about online gambling legislation. He has led coverage of bills to legalize online gambling in most states. A lifelong Angeleno and USC journalism alum, Matthew started his career working as a sportswriter for a decade at the Los Angeles Daily News. He has written on a variety of topics for Playboy Magazine, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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