For California Sports Betting, The Battle Between Cardrooms And Tribes Looms Large

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California sports betting

A representative of California cardrooms alleges that the proposed sports betting ballot initiative filed by chairs of the state’s leading Native American gaming tribes has a hidden agenda to put competitors out of business.

It’s clear that the tribal leaders didn’t include the cardrooms in their sports betting measure introduced last month. The tribes favor limiting sports betting in California to brick-and-mortar tribal casinos and the state’s five racetracks.

The snub is not a surprise given the antagonistic relationship between California’s two largest gaming entities.

But Kyle Kirkland, president of the California Gaming Association, contends that the initiative does more than attempt to keep cardrooms from participating in sports betting. It’s trying to put them out of business.

“We’re not going to be bullied out of existence,” Kirkland said. “If you’ve ever been bullied, you can only be bullied for so long. We’re past the point of so long.”

When dealing with CA tribes and cardrooms, it always comes back to blackjack

The main issue the tribes have with CA cardrooms is that tribal casinos claim their gaming compacts with the state and a 2000 ballot initiative grant them exclusivity over house-banked games.

California permits cardrooms to offer games like blackjack, baccarat and pai gow poker as long as players act as the bank. The house takes a cut from each hand played.

For decades, cardrooms have contracted with companies that provide third-party players to serve as the bank, making the playing experience similar to the typical casino-style games for which tribes were granted exclusivity.

The state approves and regulates these third-party players. Tribes have challenged the arrangement in multiple court cases, including a case against the state of California and then-Gov. Jerry Brown, which was dismissed earlier this year.

Kirkland noted that many tribal casinos use a similar workaround to offer a form of roulette and craps in their casinos currently. Another part of the proposed ballot initiative is to allow tribes to offer Vegas-style roulette and craps.

“It’s grossly hypocritical to say we can’t offer blackjack-style games when they offer roulette- and craps-style games,” Kirkland said.

Is the California sports betting initiative ‘a Trojan horse?’

Kirkland asserts that the true purpose of the initiative is not to legalize sports betting but to establish a workaround for the tribes to come after cardrooms on the long-disputed issue of player-banked card games.

Near the end of the initiative, in Section 5.2, the Private Attorneys General Act for the Gambling Control Act is amended to read that any person or entity that becomes aware of a violation of conduct may file a civil action as long as they first file a request for the Attorney General to commence the action and the AG does not file suit within 90 days.

This could lead to the tribes going after the cardrooms directly rather than suing the state over the player-banked card games. The cardrooms won’t have the same recourse because the tribes’ gaming compacts make them exempt from lawsuits.

“The sports betting initiative is almost a Trojan horse,” Kirkland said. “The tribes have been actively and purposefully looking to push the cardrooms out of business. This is an ongoing effort by tribes to get police powers over cardrooms and gaming in California.”

He added that initiative would also allow the tribes to file civil actions against bingo parlors or any other competition they want to put out of business.

Cardrooms favor a more inclusive approach to sports betting

Kirkland affirmed that cardrooms support the legislative effort by Sen. Bill Dodd and Assemblyman Adam Gray to come up with a sports betting initiative that benefits all stakeholder groups.

The chairmen will hold a joint-Governmental Organization Committee informational hearing on sports betting in Sacramento on Jan. 8.

In addition to the cardrooms, Kirkland said the California Gaming Association supports a sports betting bill that incorporates the professional sports leagues, sports teams in the state, mobile wagering specialists such as DraftKings and FanDuel, horse racing and the tribes.

“Certainly, cardrooms advocate for something that is more inclusive and allows for accommodating some mobile gaming aspects of it, keeping in mind the leagues, how the lottery fits in, and generating money for the state,” Kirkland said. “The tribes’ proposal provides no incremental revenue to the state of California.”

Californians won’t convert to legal wagering without mobile

Kirkland emphasized that cardrooms are advocating for online and mobile sports betting.

He pointed out that, in New Jersey sports betting, more than 80% of wagering is through mobile apps.

“You can argue that putting this initiative on the ballot forces illegal activity to continue in California because 80% of the market will continue in some unlawful form. You have to have mobile gaming be a part of it, otherwise it will still be in the shadows.”

Why should California cardrooms have sports betting?

As states have legalized sports betting across the country, casinos (including the tribal variety) and racetracks tend to be the focus for getting sports betting.

So why should a cardroom get a sportsbook? After all, sports wagering does not involve cards, unless you count parlay cards.

Kirkland, who owns Club One Casino in Fresno, pointed out that it would be naive to think sports betting isn’t already happening at his cardroom without his involvement.

If the tribal initiative passes, he asserts that Club One customers will continue to have bets on games, and it won’t be because they drove to Morongo.

“The reality is that sports betting is at cardrooms right now because patrons bet on sports and will in any gaming institution,” Kirkland said. “It’s happening already at my cardroom. Games on are my TVs and they’re betting on the games. I’m highly aware of what is going on out there. The idea is to bring it to a more regulated and transparent environment while capturing money for the gaming industry and the state.”

Cardrooms content with defeating tribes’ sports betting initiative in 2020

While Kirkland would love to see the legislature put a sports betting initiative on the ballot in 2020 to provide a more inclusive alternative to the tribes’ measure, he is realistic of that being a long shot.

Reaching the high two-thirds threshold of legislative support to get a constitutional amendment on the ballot seems impossible against opposition from the influential tribes.

He thinks it could happen eventually. Still, it would take a coalition of support. Not only from the state cardrooms, lottery, sports teams and mobile industry leaders but also from cities supported by cardroom jobs and revenue. The California Teachers Union must recognize the contribution to education that a fully realized sports betting market could bring.

Kirkland believes time constraints and money needs make it too late in the game for the cardrooms to put their own initiative on the ballot for 2020. The only alternative the cardrooms have left is to lead a campaign to defeat the tribes’ initiative when it gets on the ballot.

“I think a lot of people are frustrated with what the tribes put forth because it wasn’t inclusive, was an end-around on the legislature, and only supports them,” Kirkland said. “It’s my understanding that a ‘no’ campaign is cheaper than doing an initiative.”

But will Californians watching state after state get legal sports betting vote no on the only option presented for them to have it?

“I think the public is more savvy than that,” Kirkland said. “I think when the public gets more educated on that there is no benefit for them here as a consumer or California as a state, that they will vote down this initiative.”