The California Nations Indian Gaming Association (CNIGA) is prepared to fight for its tribal sovereignty against controversial sweepstakes gaming companies and daily fantasy sports sites operating in the Golden State.
Indian Gaming Association (IGA) conference chairman Victor Rocha said these businesses are circumventing laws in a state where tribal nations have exclusive gambling rights.
“They’re unregulated. They’re untaxed. They don’t do (Know Your Customer),” Rocha said. “This is gambling on training wheels. It’s a bunch of lawyers who are spitting in our face and looking at gray areas thinking that we’re not going to act.”
Rocha said during Wednesday's IGA webinar that he came to this realization during last week’s Global Gaming Expo in Las Vegas. Sweepstakes gaming was the hot topic during the convention, and Rocha compared being at a mixer with people involved in those businesses to a scene in the vampire movie “Blade.”
“These guys don't pay money into the system,” Rocha said. “When we’re talking about cannibalization, this is what we’re talking about. It’s companies like this that take money out of California.”
CNIGA chairman and webinar panelist James Siva said he’s unsure why the Golden State hasn’t stopped them from operating.
“It’s baffling how far (sweepstakes and DFS operators) have gotten already without any big pushback from the state,” Siva said. “If they want, I hate to use the word, another fight, we’re always ready.”
Taking issue
Sweepstakes, or social, gaming typically allows players to receive free credits, usually coins or tokens, to place sports bets or play in online casinos which offer slots and table games. Customers can then purchase more credits and turn those into virtual currency to receive additional free credits that can be redeemed for cash and prizes.
Rocha said some of the companies only require customers to be 18, not the legal gambling age of 21, and they are “aiming squarely at the next generation” of bettors.
Siva said sweepstakes and DFS companies are also building databases and customer awareness for when sports betting and iGaming become legal.
“The longer they are here, the more entrenched they get,” Siva said. “They don’t care about California. They don’t (care) about protecting underage gaming. All they care about is the revenue. That’s the bottom line for them.”
Taking action
Sweepstakes gaming is legal in more than 40 U.S. states. Companies like the social sportsbook Fliff and VGW, which owns virtual-currency online casino Chumba, have come under fire recently in other states.
In August, the industry trade group American Gaming Association called for state legislators and regulators to examine their laws and crack down on sweepstakes gaming companies that aren’t operating legally.
Michigan, Connecticut, and Delaware have sent cease-and-desist letters to sweepstakes operators. There are class-action lawsuits filed against sweepstakes companies in Florida and Mississippi.
Other states like Washington and Idaho have kept them out with laws that make it difficult for cash-for-coin operators to do business.
In California, Siva plans to inform Google, Apple, and Android of legal issues surrounding companies they allow in their online app stores. The panel also mentioned that the tribal gaming commission could issue a violation against these gaming operators, forcing the Attorney General to get more involved.
“Any new entry of gaming into California begins and ends with tribes,” Siva said. “That’s the reality of how gaming operates in California. You may not like it … but you will respect it in the end.”
Familiar road
The IGA was able to keep FanDuel and DraftKings from getting a California sports betting initiative passed in 2022, arguing that the attempt violated the gambling compact tribes have with the state.
“We’re not saying you can’t come into California eventually,” Rocha said on Wednesday. “We’re saying you have to come in through the tribes. What they’re doing right now is going through gambling and they’re not doing it with tribal partnerships, a violation of the tribal exclusivity. That’s where they’re going to get into trouble. The tribes have been very adamant that this is our territory and we will fight anyone, any time, any place, anywhere.”
They also took issue with DFS operators like PrizePicks and Underdog running sportsbook-like prop games in the Golden State.
“In California, DFS is illegal,” Siva said. “It happens. The state allows it to happen, but it is illegal. There’s no other way around it. This will be a big push for us.”
