California One Step Closer to Sportsbook Regulation

• Rich Caesar
• December 11, 2023

The Sports Wagering Regulation and Tribal Gaming Protection Act, a ballot initiative, underwent a few important amendments and needs to gather 875,000 signatures in 180 days to appear on the November 2024 ballot. If approved, the Act would grant tribes exclusive rights to offer retail and online betting in what would likely become the largest sports betting market in the US.

In the last few weeks, there have been significant developments regarding possible regulation of sportsbooks in the state of California. The Sports Wagering Regulation and Tribal Gaming Protection Act, a ballot initiative filed with the state’s attorney-general, is making waves as it seeks to redefine the landscape of sports betting in the state. The Act is also known as Initiative 23-0030 Amdt. #1.

The Act amends a section of the California Constitution, adds sections to the Business and Professions Code and Government Code, and provides for a Model Form Sports Wagering Compact Amendment that tribes may elect to adopt consistent with terms of this measure. The Act is designed to promote tribal economic development, tribal self-sufficiency, and strong tribal governments. It entrusts tribal governments with the primary responsibility for conducting casino-style gaming.

The Act underwent several amendments to gain further tribal support. These amendments include:

• Delaying the start of sports wagering until July 1, 2025.
• Increasing the income to revenue share for tribes.
• Increasing the sports betting Gross Gaming Revenue (GGR) contributions to the tribal wagering revenue sharing trust fund from 15% to 25%.
• Removing the requirement for in-person online gambling registration for those outside of a 10-mile radius from a casino after two years.
• The next steps involve legislative hearings and a public vote. The Act needs to secure more support from tribes, out-of-state operators, regulators, and other stakeholders.

If approved, the Act would grant tribes exclusive rights to offer retail and online betting. This could potentially make California the largest legalized sports betting market in the US, with annual wagers estimated to reach $60 billion and revenue $3 billion. However, the regulatory structure in a particular state impacts tribes’ sports betting operations in multiple ways, including whether and where tribes can offer mobile wagering, what in-state commercial competition tribal operations will face, and to what extent state law and state regulations will apply to a tribe’s sports betting operations.

The organization behind the gathering of signatures for the Sports Wagering Regulation and Tribal Gaming Protection Act in California is a group called Californians for Community Safety, Equality and Reinvestment. They are leading the campaign in support of the initiative.

The Act, which needs to gather 875,000 signatures in 180 days to qualify for the November 2024 ballot, was filed by Ryan Tyler Walz and Reeve Collins. They are effectively seeking tribal exclusivity over an online and retail sports betting market in California. The process of gathering signatures is a crucial step for the Act to qualify for the November 2024 ballot.

One of the key amendments allows tribes to accept in-person account registrations for sports wagering at facilities within 10 miles of their Indian lands. This move is seen as a way to increase accessibility and convenience for bettors, while also ensuring that the tribes maintain control over the operations.

Another notable change is the cap on management service providers partnering with tribes to operate online sports betting. These providers are now limited to 40% of net revenues, a move that ensures the majority of the profits stay within the tribal communities.

The amendments also include stipulations on branding and age restrictions. All California sports betting sites and mobile apps must be branded exclusively under the tribe’s federally recognized name, and the minimum age for placing a sports wager is established as 21.

These developments represent a significant step in the ongoing saga of gambling regulation in California. As the Act continues to evolve, all eyes will be on the Golden State, watching closely as this story unfolds. The future of the Act and sports betting in California is still uncertain, but it seems the state is firmly on the road towards regulation.

The California Nations Indian Gaming Association, however, expressed frustration as the sponsors of the two recently filed initiatives did not first reach out to the State’s largest tribal gaming association for consultation and input. They emphasized that decisions driving the future of tribal governments should be made by tribal governments.

The Act also faced opposition from various quarters. Critics argued that if enacted, it would give tribal casinos the ability to put card rooms out of business. The cities opposed to the measure now say it puts more than 32,000 jobs, $1.6 billion in wages, and $5.5 billion in total economic impact at risk.

In conclusion, the Sports Wagering Regulation and Tribal Gaming Protection Act represents a significant chapter in the ongoing saga of gambling regulation in California. Its implications for the future of sports betting and tribal gaming in the state will be closely watched by stakeholders and observers alike.

The journey to this point begins in 1988 with the enactment of the Indian Gaming Regulatory Act (IGRA). This federal law established the jurisdictional framework that governs Indian gaming, promoting tribal economic development, tribal self-sufficiency, and strong tribal governments. Under IGRA, the federal government provided a framework for states and tribes to find common ground and work together to generate funding for programs to promote the welfare of Native Americans and their surrounding communities by means of regulated forms of Indian gaming.

The IGRA was a direct response to the Supreme Court ruling in favor of the Cabazon tribe in California when the authorities tried to shut down their bingo parlors and card clubs in 1986. As the Cabazon tribe won, these two legal decisions paved the framework for future developments regarding tribal gaming in the US.

Today, of 110 federally recognized tribes in California, at least 72 own a casino.

In 2000, Californians amended the State Constitution to entrust tribal governments with the primary responsibility for conducting casino-style gaming. For decades, federally recognized California tribal governments have operated Indian gaming casinos on their own tribal lands pursuant to IGRA and tribal-state agreements, known as “compacts,” generating much-needed resources.

Fast forward to 2023, two ballot initiatives were filed with the state’s attorney-general. One of them was the Sports Wagering Regulation and Tribal Gaming Protection Act, which proposed a detailed framework for how sports betting would work under tribes in California.