A friend of mine and me played coop. We were both lizardmen. He were Gor-Rok and me was Hexoatl.
We were both in military alliance with Cult of Sotek and my friend tried everything to confederate them, but with no success.
And myself had bad chances either.
But then I populated empty city "Shrine of Sotek" and I thought to myself: Is this not a city the Cult of Sotek would like to have?
So i went to diplomacy and talked with Cult of Sotek and voila, join confederation was green.
My friend and me we both had no strong armies or much money and we occupied maybe 3 or 4 provinces each.
It seems that there is a hidden mechanic to confederate with them.
I spent not too much time in searching around this topic, so maybe my information is not new for old veterans. In that case please ignore my post.
Hope it helps.