California Tribes Still Do Not Want Online Sportsbooks Operating Independently within State

Weeks after both California sports betting measures failed, it seems that the state's tribes are willing to consider working with commercial online sportsbooks on a joint proposal for the next round of legislative sessions. The catch? California tribes still do not want online sportsbooks operating as independent entities. Instead, they view them as a vehicle that can provide technological service and support.

Whether this qualifies as progress for sports betting in California depends on how you define the word.

It is a step forward in the most literal sense. The failure of both California sports betting bills this past November was at least in part due to perpetual dichotomy. Online sportsbooks and tribes were constantly pitted against one another. Their agendas were so disparate, in fact, they never came close to agreeing on a joint proposal they could take to the voters.

The end result was two separate measures. There was Proposition 26, which was backed by most California tribes and would have legalized only in-person wagering on tribal grounds. And then there was Proposition 27, a bill that would have legalized all forms of sports betting and permitted commercial retailers to apply for licenses within the state.

This failure to unite under one procedural umbrella wound up costing both sides. California voters became so fatigued from the constant advertising and warring propaganda that the state's entire sentiment on sports betting shifted. Polls initially showed legal sports betting, in some form, was a formality. Yet, California tribes and online sportsbooks both watched as their proposals burned to the ground.

That has necessitated more cooperation for future attempts to legalize sports betting in California. And when framed that way, it seems like the tribes are extending an olive branch to their corporate competition. But have they really?

California Tribes Still Hoping to Prevent Online Sportsbooks from having Unconditional Access

As Brant James noted in an extensive feature for Gaming Today, experts are in near-universal agreement on how California sports betting be approved in 2023: common ground must be found between the tribes and retail bookmakers. That's encouraging to some extent. It means California has a clear path forward. If all the major stakeholders would rather offer sports betting than not have it all, that's an incentive to start working together.

Lo and behold, California tribes are discussing exactly this scenario. Two key figures admit as much: San Manuel Tribe of Mission Indians chief operating officer Frank Sizemore and chief intergovernmental affairs officer Dan Little. However, it turns out their inclination to work with online sportsbooks requires a major concession from the latter party. Here's Brand James of Gaming Today with the lowdown:

"Brands like DraftKings or FanDuel could enter the California sports betting market as technology providers, they told Gaming Today, but not as customer-facing sports betting brands. Native brands would be out front. Period. There would be, Sizemore said, 'no co-branding,' with major national brands operating in the background, 'similar to the way Cisco and others operate your computer system.

"'[San Manuel envisions] a structure in which they provide technology solutions to the tribes,' he continued, 'and then the tribes are the operators of the game, in whatever form that is. But [national companies], they’re back-of-house technology providers.' Little asserts that national sports betting operators would 'still would do very well' in the arrangement, but it wouldn’t figure to be the payoff for companies like FanDuel and DraftKings that helped fund Prop 27 and its state-wide mobile provision."

The final line says it all. This model would not be in line with what the major companies were seeking in Prop 27. Places like FanDuel and DraftKings want both maximum exposure and the ability to work directly with consumers. This unofficial proposal from the California tribes runs counter to that entire goal. It can't even be described as a partnership if online sportsbooks aren't allowed to indulge in co-branding.

The Outlook for Online Sports Betting in California Doesn't Seem Good

Maybe major online sportsbooks will accept the terms outlined above after their loss at the polls this past November. They would still stand to earn a ton of money by helping California tribes run their on-site machines and online services.

There is also precedent for similar setups. When Florida initially legalized sports betting, the Seminole tribe developed a mobile betting app in partnership with the Hard Rock casino. The main difference: Hard Rock wasn't prohibited from including their branding; they were more than a behind-the-scenes partner.

California tribes can try to grease the wheels of an agreement by loosening their terms. Even if they don't support a bill that allows online sportsbooks to directly court consumers, they could approve some level of branding and perhaps even allot for a certain amount of direct advertising.

Frankly, this is the only way we see the United States' major online sportsbooks signing up for this proposal. And if the California tribes don't adjust their request, it's back to the drawing board. Californians will still be able to register for an account at some of the top reviewed online sportsbooks in the business, but the actual legalization of sports betting will continue to elude them.

What's more, if the California tribes and online sportsbooks don't come together during the 2023 legislative meetings, the prospect of competing initiatives once again makes it less likely that the state changes anything prior to the next batch of major elections. And those don't take place until November 2024.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: