A ‘tech bro and a poker bro’ have a plan to legalize California sports betting — if they can convince tribes

Two entrepreneurs pushing to legalize online sports betting in California have run into a major obstacle: Native American tribes who would be the main beneficiaries but recoil at the prospect of self-interested outsiders trying to set the agenda for sovereign tribal nations.

The tribal entities with the largest traditional gambling operations in the state say they were not consulted about a proposed ballot initiative, backed by gambling industry veteran Kasey Thompson and blockchain executive Reeve Collins, that would open up the country’s biggest untapped sports betting market.

The high-risk, high-reward wager starts a new chapter in the enormously expensive battle over online sports betting in America’s most populous state. But its sponsors are facing questions about their tactics and funding. The timing, so soon after the spectacularly costly failures of dueling ballot measures last year, has blindsided tribes who could doom the effort by withholding support or funding a counteroffensive.

“The entire approach has been error from the very beginning,” California Nations Indian Gaming Association Chair James Siva said in a webcast this week. “The approach of essentially holding tribes’ feet to the fire — you’re either going to get on board with this, or we’re going to do it — that’s never going to work with us.”

Thompson and Collins are making a huge bet that California’s powerful, entrenched Native American tribes will set aside their anger at being excluded from the start of the process and get on board. With the ballot initiative qualifying cycle well underway, they are forcing a swift decision from tribes that just spent hundreds of millions of dollars repelling out-of-state operators DraftKings and FanDuel and pursuing their own, unsuccessful betting initiative.

Thompson argued the financial upside makes for an irresistible offer. He is vowing to deliver a windfall for tribes by moving assets from illegal offshore sites where many Californians currently place bets into tribal control — transfers that he would manage, giving him a cut of the proceeds. He has promised to bankroll the campaign without seeking a dime from tribes, estimating that signature gathering for the ballot initiative alone could cost $25 million.

“People just think: ‘This is too good to be true,’” Thompson told POLITICO in one of his first extensive media interviews since submitting the ballot measure last month. “We knew we could make this happen and come up with a solution for the tribes.”

The tribes aren’t so sure. Thompson and his team have alienated potential allies by barreling ahead before securing the blessing of tribal leaders. That has fueled suspicion about his motives and criticism about a paternalistic strategy of dictating to tribes, even as he’s promised not to proceed without them.

The wary reaction has reinforced a truism of California politics: Don’t mess with tribes on their turf.

“If you come in and you disrespect tribes, you disrespect tribal leaders, you come in with this sort of air of you know what’s best for Indian country, you’re done before you even started,” Siva said. “Anyone who wants to come into this state, it starts and ends with tribes — period.”

A 2024 sports betting push looked unlikely after 2022’s nearly half-billion-dollar campaign yielded a costly stalemate and soured voters, who rejected both initiatives by more than 30 points. But Thompson upended that logic last month when he filed a pair of initiatives, writing to tribal leaders that “we do not believe that waiting another two years is in the best interests of the California tribes.

That set off a frenzy of unanswered questions: Who was this proponent? What was he getting out of this? And why was he going about it this way?

“Basically what you have is: a tech bro and a poker bro walk into a bar,” said Victor Rocha, a Pechanga member and political consultant who writes about gambling. “Or, walk into the secretary of state’s office.”

Thompson has spent years in the world of high-end gambling. He capitalized on the mid-2000s poker craze by launching a gambling publication called All In Magazine, and his social media abounds with pictures of him flying on private jets, attending charity poker events and hobnobbing with celebrities. He says he played in the high-stakes poker games that inspired the film “Molly’s Game.”

Once he was established in the gaming industry, Thompson worked with the Southern California-based Pala Band of Mission Indians to launch in 2013 a betting platform called Pala Interactive. He collaborated on that project with Collins, whose string of businesses includes a cryptocurrency firm, Tether, that has drawn federal and state scrutiny over its solvency, as market failures like the collapse of FTX have convulsed the crypto industry. Reeves and other Tether representatives have said the company’s finances are sound and noted they regularly post financial information.

A year and a half ago, Thompson said, he began formulating a plan to benefit California tribes and eliminate gray-market wagers. He now says he has a “fully funded” ballot campaign ready, although he was vague about his donors, suggesting they worked on Wall Street and noting how finance giants like Blackstone backed a deal for the PokerStars website.

“It’s top of the industry,” he claimed. “It’s the biggest of the big.”

Thompson said he has spent months laying the groundwork for the measure by talking to tribal leaders and incorporating their feedback. He argued that while no tribe has publicly embraced the proposal, the collective silence “in no way means they are against.” If tribes aren’t proclaiming their enthusiasm, Thompson said, it’s because “nobody wants to come out first” as they study the proposal.

But Thompson would not name anyone he has met with, and no tribe has publicly confirmed having made contact with his team. Four tribal leaders or representatives contacted by POLITICO disavowed the initiative. That included Thompson and Reeves’ former business partners at the Pala Band of Mission Indians.

A spokesperson for the Pechanga tribe, Jacob Mejia, said he did not know of any supportive tribes and dismissed “a couple of rich guys” pursuing a “cynical, ludicrous” project that undermines tribal sovereignty.

“To my knowledge clearly the vast majority of the tribes in California will not support this questionable, secretive effort, ” Rincon Band of Luiseno Indians Chair Bo Mazzetti said in an email.

To some Native officials, the push by Thompson and his team is an echo of DraftKings and FanDuel trying to muscle into California last year only to be thwarted by tribes’ financial resources and long-cultivated political clout. They bristle at the sight of interlopers swooping in.

“It’s interesting to see the kind of narrative about: ‘Oh, we just want to start the conversation,’” Siva said. “You just haven’t been in the room for the conversation.”

That sentiment points to the work Thompson and Collins have ahead. Thompson has been reaching out to cultivate support, including with a letter to Siva telling him “everyone truly likes you.” Collins described ongoing conversations with tribes and said the campaign was feeling “bullish” about its prospects.

“It’s not just two random guys submitting a proposal,” Collins said. “It’s a very well thought-out, well-put-together strategy.”