California Sports Betting Bid Failure Benefits Tribes

After both proposals to legalize sports betting in California failed at the November polls, it stands to reason that nobody comes off looking like a winner. The voting public has spoken, and they roundly voted down both the tribal-backed initiative (Proposition 26) and the retail sportsbook-bankrolled bill (Proposition 27). Everybody involved literally lost. But then again, maybe not. The sentiments emerging out of Election Week suggest the state's Native American Tribes may actually come out on top after the failed California sports betting bid.

This will no doubt sound counterintuitive. If anything, many believe the tribes may have lost twice.

Proposition 26 called for on-site sports betting at tribal grounds only. Passing that bill was the preferred end result. But Proposition 27 also allowed on-site sports betting at tribal grounds and casinos; it also just so happened to legalize online sports betting for corporations such as FanDuel, DraftKings, Caesars, etc.

Dig a little deeper, though, and you find that the failure of both California sports betting initiatives may actually set the stage for the tribes to preserve both their present and long-term viability in the gambling industry.

California Tribes Don't Have to Worry About Competition from Online Sportsbooks

The latest failed California sports betting bid does put a dent in the pockets of tribal casinos. On-site sports betting would have been a lucrative revenue stream. Now, they can't touch it.

But tribal casinos already can't touch that business. Their financials can't miss money they were never making in the first place. It will be business as usual for them looking ahead to the foreseeable future. So, they are still making a bunch of money.

More importantly, the botched California sports betting bids means that online sportsbooks will continue to be left out of the market. That's great news for tribal casinos. Legalizing sports betting at their brick-and-mortar operations alone was the best-case scenario. But keeping out larger corporations with massive reaches that don't operate inside the state is also a win.

If Proposition 27 had passed, tribal casinos would have needed to compete with retail sportsbooks for betting business. And the numbers suggest they would have lost. More than 75 percent of all legal sports betting in the United States last year took place online. It is tough for on-site establishments to compete with the convenience and immediacy of remote gambling.

Indeed, Proposition 27 did stipulate all online sportsbooks that were awarded licenses would need to partner with a tribal casino. But those relationships would not have prevented commercial sportsbooks from soaking up a lion's share of the available profits. At least now the state's tribes don't have to worry about losing foot traffic to people who opt for betting on sports online rather than making the trip to the casino.

Failed California Sports Betting Bids Could Give Leg Up to Tribal Casinos Down the Road

There is another potential benefit tribal casinos can reap from the failed California sports betting bids: the ability to control the California sports betting market when it actually does materialize.

Consider what Becca Giden, a director of policy at research firm Eilers & Krejcik Gaming, told CapRadio.org:

"The defeat of Prop. 27 and the national betting companies also strengthens tribes’ hand in any future negotiations by demonstrating their ability to block things they oppose. Their attitude can be 'Nothing gets by that we don’t approve of. So, come to the table willing to hear us out,’ and, most likely, ‘come to the table willing to accept the terms that we are proposing.’”

This logic tracks. California tribes raised and spent hundreds of millions of dollars not just to support their own Proposition 26, but to derail the campaign for Proposition 27. Even though their initiative didn't pass, they were successful on the latter front.

The messaging behind the anti-Prop-27 advertisements focused on all the revenue that would be leaving the state. Commercial sportsbooks do not assume much of a physical presence where they operate. That limits the number of jobs they create and, by extension, money they funnel back into those markets. This framing wound up resonating with many of the state's local politicians, who spoke out against Prop 27 with increasing force and frequency leading into Election Day.

That seems to bode well for California tribes next time they come to the bargaining table. And rest assured, they will return to the bargaining table. California is considered the most lucrative sports betting market in the United States. The efforts to legalize it won't suddenly dissipate.

When Might Legal Sports Betting Come to California?

There remains no clear answer to this question. But as far as we can tell, it won't be prior to the next round of major elections, which takes place in 2024.

So, barring any emergency pushes for legal sports betting, Californians will have to wait a few years for things to turn around.

Of course, people from California have other options. Not only can they travel to neighboring states with legal sports betting, but many of the sites from our reviews of the top online sportsbooks will allow anyone in the United States to set up and service accounts.

We strongly recommend that Californians explore their off-shore alternatives. After all, if the tribal casinos have gained leverage in sports gambling negotiations, there's a chance they continue to insist legal online sports betting be left off the 2024 ballot altogether.

Take a look at this list of the top online sportsbooks so you can decide which ones work for all of your sports betting needs: