The International Center for Gaming Regulation (IGCR) convened last week to discuss the upcoming Prop 27 and Prop 26 ballot votes in California. ICGR Distinguished Senior Fellows Steven Light and Kathyrn Rand discussed what effects a ‘Yes’ vote would have on Californian Tribes, whether it be the ‘Tribal’ or ‘commercial’ ballot that is approved.
Prop 26 passing would allow for in-person wagering throughout the state. It would retain the Tribal compacts already in place, although there would be renegotiation. In particular, Tribal racetracks, roulette and dice games would need to be remodeled, with racetracks becoming ‘full participants’ in Californian sports wagering.
Light says the bill would act as a ‘lifeline’ to racetracks in the Golden State by authorizing them as commercial entities.
Most pertinently, California gaming Tribes would hold on to a ‘near-market exclusivity’ on gambling if the bill were to pass.
But what if Prop 27 were to pass? Light and Rand argue that Tribes would still have a large part to play in commercial operators moving into California. Tribal compacts would more likely be altered into ‘hybrid’ models rather than purely commercial models.
Rand commented: “Prop 27’s approach is more similar to New York than Arizona, which allows sports franchises and sports stadiums to act as hosts for sports betting. With the NY model, the mobile operator has an advantage if they partner with a Tribe – and California has far more gaming Tribes than NY does.”
Light agrees, saying: “An agreement would have to be hammered out around the hybrid model. There are hefty licensing fees, so just to get into the market – a $100m licensing fee from the operator and a $10m licensing fee from the Tribe.”
This would mean that only the largest of commercial operators – the likes of FanDuel, DraftKings and Penn Entertainment – would be entering the Californian market, probably partnering with a Tribe. Light says it would likely only be the most successful Tribes or ones with robust operations that would “get into the mix.”
Light further said: “Tribes in essence would become commercial operators, the tribal-state model compact would be ripe for renegotiation in California.”