If there is one thing that California’s tribes don’t like, it’s being told what to do. They made that clear in 250 million ways in 2022, when they spent about that much to kill a sports betting proposal backed by a consortium of seven commercial operators.
A year later, a businessman with previous ties to one California tribe is walking down the same pathway. Kasey Thompson, co-founder of Pala Interactive and a former owner of a poker magazine, in late October was the man behind a pair of initiative proposals that would give the state’s tribes a monopoly on sports betting and begin to lay the groundwork for online casino. The proposals were signed by Ryan Tyler Walz, who according to LinkedIn is the vice president of business development for Enshored, a company that works with startups. The listed contact is Reeve Collins, founder of SmartMedia Technologies and other tech startups. Collins co-founded Pala Interactive, which was purchased by Boyd Gaming last year, with Thompson.
What, exactly, tribal leaders think of the actual proposals is unclear. What some of them think of Thompson’s group and its methods is.
“They say they are going to give us [betting technology] for free, and that just brings up narratives that we’ve dealt with in all of our history,” Morongo Band of Mission Indians Vice Chairman and California Nations Indian Gaming Association President James Siva said. “You have that first opportunity to build a relationship with respect and integrity. If you get in good with the tribes, you’ll be in forever. We’re loyal.
“If you come in with this ‘we know what’s good for Indian Country’ kind of attitude, you’ll be done forever. We’ve dealt with this kind of derogatory, parental kind of thoughts before. It’s going to fail. That’s how I feel.”
Potentially good idea, flawed presentation
Siva made his comments Wednesday during The New Normal, a weekly webinar hosted by Victor Rocha, founder of Pechanga.net and conference chair for the Indian Gaming Association. His thoughts were echoed by Rocha and Jason Giles, executive director of the Indian Gaming Association.
“There was no respect, the whole thing has been very chaotic with no rhyme or reason other than someone feels like we have to rush sports betting here,” said Rocha, who has served as the voice of Indian Country on Twitter since rumors of the proposals surfaced in October. “Everybody has been insulted. Every tribal leader I have talked to says, ‘No, it’s not going to move.’ But I do believe this begins the conversation for 2026. Whether these guys are involved, I can’t say, but if they want to spend half a billion dollars on our behalf, that could change things. But I really don’t see a path for this.”
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The “this” that Rocha is referring to is Thompson’s pitch to bring legal sports betting to California using a recycled ballot initiative proposal and an inventive business plan. Thompson’s plan is to follow the pathway that PokerStars took to become legal in the U.S., which would involve “cleansing” the offshore companies and then partnering with the tribes so they can run their own wagering operations.
I thought we spoke the truth about California sports betting in today’s webcast. This latest attempt is a fool’s errand but, I believe, it opens the conversation to 2026. No, mobile will not be part of that conversation. The tribes will take an incremental approach.
— Victor Rocha (@VictorRocha1) November 8, 2023
Thompson put forth two proposals — one that simply allows for voters to approve a constitutional amendment that gives the tribes a betting monopoly, and one allows voters to decide on a “Model Form Sports Wagering Compact Amendment” that spells out in great detail how a hub-and-spoke model would make statewide mobile betting apps legal and how tribes would not only retain control, but would be the only branded sports betting entities in the state.
In an interview with Sports Handle, Thompson said his plan is to clean up black-market operators and then partner with tribes who can use those platforms to run their sports betting apps. The tribes would ultimately be 100% owners of the companies. At the outset, however, Thompson’s Eagle 1 Acquisition Co. would partner with the tribes with the goal of transitioning out of the partnership in five-seven years, leaving the platforms 100% tribal owned, as required by the Indian Gaming Regulatory Act. Thompson says Eagle 1 was created in 2021 and is well financed.
The plan is for Thompson’s group to pay for all of it — the signature gathering and the initiative campaign.
“All of this comes at zero cost to the tribes, right?” Thompson said. “All of it, I pay for it, including the signature campaign, that’s $25 million. It has to start in 45 days or so. I think last year’s [initiative campaign] was a half-billion dollars. It was the most expensive political bill in history. This is at zero cost to the tribes. Zero.”
Thompson’s goal is multilayered — to bring sports betting with the tribes in charge to the biggest state by population in the U.S., to start to rid America of black-market operators, and to make a buck. California, he said, would be among the first markets in which he has plans to kill the illegal market.
“That’s my [short-term] motivation, to make money,” he said. “Because once I leave that with the tribes in California, we are going to be operational elsewhere. The goal is for Eagle 1 to make money in short term and to leave the assets with the tribes for the long term.”
That element of the group’s end game — making money — is just the kind of disconnect that ruffles Indian Country. Tribal leaders across the country have long said that while gaming has brought their people out of poverty, they must remain in control to continue to keep tribal members employed, offer critical services on reservations, and maintain their political power.
“Our position is that any kind of expansion of Class III gaming in California starts and stops with the tribes,” Siva said. “And that continues to be our position, and we will defend it.”
Relationship with Pala tribe got muddled
Thompson says he has a long-standing relationship with Robert Smith, the Pala Band of Mission Indians tribal chief, and that Smith was initially on board with backing the proposals. He backed out, Thompson said, when other tribal members became concerned that if he signed the initiatives as a citizen of the state of California, it would put the tribe’s sovereignty into jeopardy. Every tribe in the state is its own nation and has a compact with the state. Tribes are extremely cautious about opening up their compacts or creating any situation that could even potentially result in a change to their sovereign status.
When Smith backed out, Thompson decided to move forward on his own, but without having contacted other tribal leaders in the state. He did send out a “Dear Tribal Chairman” letter inviting tribal leaders to meet with him to discuss the proposals, which were filed Oct. 27. The public-comment period closes Nov. 27, and until the end of the month, the proposals can be amended. In his letter, Thompson outlines the proposals and invites tribal leaders to share input so he can “implement your suggestions” into the proposals.
According to Siva and Rocha, whose cousin is the chairman of the Pechanga Band of Luiseno Indians, neither have met with Thompson. And the “Dear Tribal Chairman” letter was the first formal contact either tribe had with Thompson and his group.
Prior to that, rumors were floating that the Pala Band of Mission Indians would file initiative proposals. Siva said he asked any tribes that might be involved in the proposals to speak at the CNIGA Oct. 26 meeting, but “they declined.” Thompson’s group filed the initiative proposals the next day.
Some ideas appeal to both groups
While tribal leaders Wednesday did point out some positives in the proposals — they’re open to stamping out the black market and welcome additional regulatory guardrails — they also said that Californians have sports betting fatigue. Just a year after the tribes and commercial operators spent a combined nearly $500 million on vile advertising and two initiatives that failed spectacularly, tribal polling shows that “Californians are not ready for sports betting at this time.” Siva said polls from tribes “who are quite frankly on opposite sides of the issue” convinced Indian Country to sit out 2024, let the issue recede from voters’ memories, and try again in 2026.
But this latest filing may have already muddied the waters for that effort. Commercial operators have surely taken note of Thompson’s filing, and that could create pressure. Siva said that after the November 2022 election, “some operators did try to make amends, saying they really didn’t understand the culture, but that they understand now that they have to work with the tribes. The tribes are the entry point.” But Thompson’s proposals could make commercial operators feel threatened.
California tribal leaders dismiss 2024 sports-betting ballot measurehttps://t.co/NKovHPOtWd
— CDC Gaming Reports (@CDCNewswire) November 9, 2023
If there is a single point that Thompson and California’s biggest tribes do agree on, it is this: Major operators like BetMGM, DraftKings, FanDuel, and PENN Interactive will likely have to warm to the idea that in California they will not have branded platforms. Rather, they may act as management services providers on tribal-branded platforms and share revenue with the tribes.
“If sports betting does come to California,” Siva said, “it won’t be operator to operator. It will be a very different relationship.”
Said Thompson, “All of a sudden, you’re looking at a way that you could be a management services provider, right? They can get up to 40% in this [initiative proposal]. It happens all the time, there’s a management services provider … and now these companies would be able to participate in California and at zero cost for them to go fight” for entry.
At the end of the road, that’s exactly what sports betting may look like in California — platforms branded for Pechanga, Morongo, San Manuel, or Graton Rancheria — but how the state gets there remains to be seen.
Time is of the essence
It will be a pricey sprint for Thompson and his group to get their proposals onto the ballot. Given the late filing — later even in the election cycle then when the consortium of operators filed in 2021 — Siva said it would take a “Herculean effort,” which may not be far from the truth.
For the 2024 California election, initiative proponents must collect 874,641 verified signatures by about June 27. Proponents will need collect closer to 1.1 million signatures, as not all signatures will qualify. In Thompson’s estimation, his group won’t be able to start gathering until Jan. 1, which is when the proposal should clear the offices of the attorney general and secretary of state.
The language in the proposal is not new. Thompson told Sports Handle that text is taken from an initiative proposed in 2021 by a small but powerful group of tribes, including the San Manuel Band of Mission Indians and the Rincon Band of Luiseno Indians. That group in May 2022 stopped collecting signatures, instead uniting with the majority of the state’s other tribes to focus on killing the commercial proposal. The proposal was in conflict with a more widely-backed offering that would have allowed for brick-and-mortar sports betting only.
Thompson said language in the proposal is “verbatim to the San Manuel” proposal, and Thompson says the general lack of response from the tribes and commercial operators is a good thing.
“Isn’t it shocking that I asked 109 chairmen and chairwomen to not speak and then when they started hearing about what I had, not one of them has come out against, not one?” he said. “And then think about this, you have DraftKings, FanDuel, and the out-of-state operators, not one of those people have come out against. These people spent $200 million last year and they haven’t made a comment. It’s because, I’ll tell you what, they love it.”
But if the conversation during The New Normal was any indication, the tribes don’t “love it.” While Giles, Rocha, and Siva all pointed out some potential discussion points and ideas they do support, Thompson and his group made what tribes in any state would see as a major faux pas: moving forward without so much as an introduction.
“The narrative is that they want to start the conversation about sports betting,” Siva said. “Well, you’ve not been in the room. We’ve never stopped talking about it, and this forces the tribes to make a decision in a very short amount of time.
“Kasey has reached out to me. But if they want any chance, you have to get the tribes into a room and lay this out. Even though we are doing some of the work here, I am not going to do the work for them. We’re not going to hold a meeting just for them.”
Rocha may have put it more succinctly: “These guys just came in and upset the tribes.”
Eric Raskin contributed to this story.
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