Two California Sports Betting Measures Reopen Legal Discussions

California sports betting failed in 2022, but a pair of recent proposals suggest there’s reason to believe that there will be more attempts at legalization in the coming months.

The California Attorney General’s office received two new proposals called “The Tribal Gaming Protection Act” and “The Sports Wagering Regulation and Tribal Gaming Protection Act.” The first deals with the creation of the legal sports betting market, and the second, the rules and regulations that would govern it.

Both proposals were submitted with a promise that changes would not go into effect until September 1, 2025.

Both proposals are centered on the principles of a hub and spoke model found in other states with sports betting.

Essentially, a hub and spoke model means that the external entities (such as FanDuel, DraftKings, and others) are reliant upon a central source they’re all attached to. In this case, the “hub” would be gaming servers on native territory to avoid conflicts with the Indian Gaming Regulatory Act.

The hub and spoke model might not be new to the sports wagering scene, but it is divisive. It’s the principle behind Florida’s sports betting ecosystem that has descended into legal chaos with trips to the federal court system and a series of appeals. The U.S. Supreme Court has also weighed in on hub and spoke models in cases involving Apple and Toys“R”Us, and the general takeaway is that such a model is tricky to navigate and comes with implicit risk.

The proposals were filed by Ryan Tyler Walz, who does not have any public ties to the sports betting industry. Pala Interactive (an online gaming B2B platform) co-founder Reeve Collins was listed as a point of contact, although Pala itself does not appear to be behind the bill.

Under the terms of the proposals, sportsbooks would be allowed to offer their services via partnerships with local tribal casinos and must be branded in conjunction with their partner. However, there can only be one branded website per tribe, and there is no co-branding within multiple commercial operators.

Operators would also be eligible for different tiers of licensing based on the services they aimed to provide.

Sportsbook partners cannot exceed 40% of their tribal partner’s revenue and may not sign agreements exceeding seven years. Users must sign up for accounts by visiting retail wagering facilities. Users must be 21 or older and may bet on collegiate or professional sports.

More details of the proposals include requirements for the tribes to pay 15% of their gross gaming revenue (GGR) to the Tribal Sports Wagering Revenue Trust Fund, a kitty that does not yet exist but would be established if the bills are adopted.

Tribal operators would also need to pay 10% of the adjusted GGR to another new project, the California Homeless and Mental Health Fund.

According to a statement released by the Nations Indian Gaming Association (CNIGA), the authors of the proposals did not present their ideas or seek input from anyone in their office.

“The California Nations Indian Gaming Association is deeply disappointed that the sponsors of the two recently filed initiatives did not first reach out to the State’s largest gaming association for consultations and input,” CNIGA said. “Instead, CNIGA and our member tribes were alerted to their existence when they were filed with the Attorney General.”

Both initiatives are targeting an appearance in the November 2024 general election. Comments on both will be accepted up until November 27, 2023.

Sportsbook companies and many tribal gaming groups banded together last year to push Propositions 26 and 27 ahead of the general election. Despite the combined spending totaling more than half a billion dollars, both measures failed, and California sports betting was kept under lock and key.

California Gov. Gavin Newsom opposed Proposition 27, the more popular of the two measures.

"It would hurt California's Indian Tribes, increase the risks of underage gambling, and push billions of dollars out of California and into the pockets of out-of-state corporationsm,” Newsom said via Politico ahead of the election. “Vote No on 27.”