In a state like California, it is often difficult to make big changes when it comes to gaming. Some of this stems from the fact there are many more stakeholders than other states, including the lottery, the horse racing industry, card rooms and tribal casinos.
However, one of those groups is often pegged as “the problem” far more often than others. California tribes, and tribal groups across America, are often deemed by critics to be obstructionist, out to thwart innovation and retain a monopoly.
During a discussion at last week’s SBC Summit Lisbon, a panel of tribal leaders and gaming veterans offered plenty of evidence to the contrary, providing insight into how tribal groups approach partnerships and where commercial gaming groups have erred in how to approach them.
Partnerships are more than term sheets
Pechanga Casino Resort President Sean Vasquez recalled how commercial groups would just show up with a term sheet and, in his estimation, expect tribes to be grateful to accept the opportunity.
“We’re not looking for some entity to come in and be extractive. You have to come in to be a partner. And I mean a real partner. Not a vendor, not an operator. A partner. That’s what we’re looking for. Our tribal mindset is generational, not on a three-year perspective. It’s not on a five-year term sheet, it’s on a 50-year lens,” he explained.
Apache Nugget CEO and President Tony Amormino has been on both sides of the table, working for commercial groups like Light & Wonder before taking on his current role last year. He noted that companies don’t see tribes as assets, and that mindset won’t get them very far.
“I think every tribal entity, in every tribal nation, the one word that they all value the most is trust,” observed Amormino. “They want to trust you to get the job done. They want to trust you that you’re going to build a great product. It’s like they want to trust that we’re going to go in and do things legally, rightfully, and put things the way they should be.”
Trust and long-term viability core considerations
Moderator and Rare Mint co-founder Brett Calapp, who has his own past experience with tribal groups through a stint at Desert Diamond, questioned how people can create that trust.
“It’s a little bit of everything. It’s about trusting that they’re going through their own compliance features, they’re closing every loophole, they’re not trying to justify, ‘Hey, I got it to market,’ even though they’re going to have million-dollar regulatory fines every other month. And over time, you’re going to see that they’re giving back to the community and doing things,” Amormino explained.
Vasquez suggested that something to avoid is approaching small tribes in California for one-off deals, the way some sweepstakes operators did earlier this year in California. He said small tribes should be working as a bloc to ensure the best interests of everyone.
Outsiders looking in might argue that the best interests of everyone include gaming expansion, but for tribes, it is a different calculus. Just because they say no to the deals presented to them doesn’t mean they are closed off completely to the idea of online gaming.
“I would say in terms of Pechanga digital assets, it’s not aspirational for us. It’s inevitable. We are going to have digital space and digital technologies, and we are open to technology,” said Vasquez.
“I’m trying, as both the leader of our operation and of our tribal facilities, not to get ahead of our skis strategically. There are emerging technologies that would excite me, and ones I think we could do really well. I’m waiting for the people of California to decide how best we approach that. And once we get there, we’ll go all the way down, ten toes down.”
Tribes have different financial considerations
Calaap also pointed out that, unlike large corporations, the financial considerations have more direct and dire consequences for tribes.
“They think it’s purely transactional. What you have to understand is, if Tribe A is going to invest in digital gaming, they didn’t invest in infrastructure. They took that money from a different project and moved into gaming.”
The lack of new gaming opportunities in California could also be influenced by just how difficult it is to change laws. Both the commercial and the tribal sports betting proposals failed in California in 2022 because they needed to win a voter referendum to move forward.
“I think the biggest hurdle has nothing to do with the fact that the tribes don’t want to innovate,” added World Series of Golf CEO Robert Davidman. “If you’ve got to change the laws, you can change the constitution in California, right? That doesn’t happen overnight. You have to have the majority of people vote to make that change. And then the compacts have spent so much time being negotiated, they don’t want to open them again.”
Tribes aim to be California gaming judge and jury
What is happening in California gaming extends beyond not passing laws to enable new verticals. California tribes are currently fighting a three-pronged battle to crack down on sweepstakes gaming, daily fantasy sports and prediction markets.
In the cases of the former two, tribes have notched victories this year. California Attorney General Rob Bonta intends to enforce his office’s sweeping negative opinion of the vertical. Meanwhile, AB831, a bill that criminalizes both sweepstakes operators and suppliers, hit Gov. Gavin Newsom’s desk on Sept. 25 after sailing through the legislature without a single negative vote.
For Vasquez, the actions represent a changing approach in how tribes consider their role in state gaming, one he feels strongly about.
“We’re not Blockbuster watching Netflix,” he explained. “Tribes are no longer the sheriffs. We’re trying to be the judge and the jury, as we’ve been faithful stewards of gaming for the last 30 years, and we want to continue to be that. So, allowing people to participate in an unregulated, unwarranted way? That’s not going to stand.”
