California: Amendments submitted for sports betting proposition in effort to gain tribal support

Eagle1 Acquisitions Corp, the group of backers for a proposition to legalize sports betting in California, has submitted several amendments to its ballot initiative in an effort to gain tribal support. The updates are based on feedback received from tribal leadership, out-of-state operators, regulators, and other stakeholders.

Tabled in October, the Sports Wagering Regulation and Tribal Gaming Protection Act would allow for legal betting in California. If approved, the ballot would amend Article IV, section 19 of the state constitution. This would grant tribes exclusive rights to offer retail and online betting.

The first version of the ballot drew some support, but questions remained over some of its measures. Eagle1 says it has now amended the ballot to address them. Amendments include that sports wagering could not be offered until 1 July 2025, slightly earlier than the originally proposed date of 1 September 2025.

Furthermore, there is a rise in income to revenue share for tribes. Those tribes receiving approximately $1 million annually under current conditions would receive an estimated 15-20 times more under the proposed measures.

Moreover, sports betting GGR contributions to the tribal wagering revenue-sharing trust fund have also increased from 15% to 25%. Meanwhile, a requirement for in-person online gambling registration for those outside of a 10-mile radius of a casino would be removed after two years. 

As for other changes, the ballot now makes it easier for tribes to become their own affiliates. It was also agreed that any promotional credits would be taxed after five years.

Additionally, it was stated that tribes would not have to provide any financial backing to support the passage of the proposition. Eagle1 is set to bear the entire burden, including the signature campaign at a cost of approximately $25 million, and a public vote campaign that will likely cost several hundred million dollars.

The ballot claims that California has the potential to become the largest legalized sports betting market in the US, estimating annual wagers that could reach $60 billion and revenue of $3 billion.

Kasey Thompson, partner of Eagle1 Acquisitions Corp. and an architect of the proposition, said: "We took a proposal that had the support of more than 70 tribes and was one of the most tribal-focused propositions ever, made amendments based on tribal and regulator feedback and updated it for today’s legal landscape.

"What we are trying to do is create something that works for everyone. Tribal support is paramount to the success of this effort, and we will not put it on the ballot without approval from a majority of the tribes," Thompson added.

For his part, Reeve Collins, partner at Eagle1 and CEO of Pala Interactive, commented: "We removed language we were told did not work for the tribes and for the first time have created something inclusive for all – the tribes, land-based casinos, regulators, out-of-state operators and the people of California. This is a forward-thinking and tribal-centric proposition that finally paves the way for sports betting in California."

Eagle1 added that it will continue to work with tribal leaders to secure support for the proposition to get it on the ballot for the 2024 California election and ultimately pass it into law.

When the initial ballot was published, it was stated Pala Interactive had 180 days to gather the required signatures through a random sample. This, however, would push its deadline to 23 April 2024, late in the season.

Backers would need 874,641 for the ballot to be put forward for consideration with voters. Election officials would also need to verify a minimum of 500 signatures. The 2024 election will take place on 5 November.

Those submitting a ballot to the attorney-general must leave 65 days between submission and collecting signatures. This suggests signature collection would begin on 1 January.

Last November, voters in California rejected sports betting proposals. There are doubts over whether trying again so soon after will be successful. A survey conducted by FM3 Research shows state voters remain apprehensive about sports betting legalization.

According to the survey, opposition has barely dropped, with 63% against it this year compared to 65% last year. Those with strong objections accounted for 46% of the total responses, a figure that was down from 49% last year, but it’s still a near majority, showing any effort to legalize California sports betting next year has a steep hill to climb.