California sports betting measures go down in flames

One of the most expensive battles in American political history ended with a whimper Tuesday as California voters dealt resounding defeats to competing ballot measures that would have legalized sports betting.

California voters rejected Proposition 26, which would have legalized sports betting on tribal lands, by a 29%-71% margin, according to early returns.

Voters were even more sour on Proposition 27, which would have legalized online sports betting throughout the state. Just 16% of Californians voted to approve the measure that had been largely funded by major national gambling companies.

“It’s a pretty huge loss for the industry,” said John Brennan, a journalist and long-time sports betting industry analyst. “Every company would want in on California and it looks like it’s not going to happen yet.” 

The twin rejections came after a high-stakes battle that cost tribes and the national gaming companies nearly $600 million in campaign spending. It’s likely the most expensive political contest this year. 

Polling last month by the UC Berkeley Institute of Governmental Studies in partnership with the Los Angeles Times showed both measures were deeply unpopular with voters.

Generally, support for ballot measures erodes from the time they qualify for the ballot until Election Day. When competing measures appear on the ballot together, the resulting voter confusion can sound a death knell.

Proposition 26 would have allowed in-person sports betting at tribal casinos and four horse racing tracks in the state. It also would have permitted tribes to offer in-person roulette and dice games, such as craps, if allowed by the tribe’s gambling compact with the state. Backers, including California tribes, poured more than $132 million into a campaign supporting the ballot measure.

Proposition 27 was a much broader measure that would have allowed licensed gambling companies to partner with tribal casinos to offer online and mobile sports wagering to people 21 and older. It was billed as a way to raise revenue to fund housing, mental health and addiction treatment. Gambling interests, including mobile betting apps FanDuel and DraftKings, raised more than $169 million in a bid to get Proposition 27 approved.

Opponents, led by the same tribes that backed Proposition 26, raised more than $249 million to oppose Proposition 27 as of late October.

“We are grateful to California voters who rejected out-of-state gambling corporations’ deceptive measure and once again stood with California Indian tribes,” Greg Sarris, chairman of the Federated Indians of Graton Rancheria, said in a statement issued by the campaign opposing Proposition 27. “Today’s vote is a show of support for tribal self-reliance and a total rejection of corporate greed.”

The drubbings at the ballot box are a setback for the sports betting industry, which views California as a colossal untapped market. It is one of a minority of states that still prohibit people from placing a bet on a sporting event – a form of gambling that expanded rapidly after a 2018 U.S. Supreme Court decision overturned a federal law that blocked most states from allowing sports wagering.

But the issue is likely not dead. 

“We will live to fight another day,” Amy Howe, CEO of FanDuel, said at a gaming conference last month. 

Thad Kousser, a political scientist at the University of California-San Diego, called the demise of the ballots “simply the end of the beginning.”

“The market is simply too large and the interests involved are too well-organized and richly funded to give up on it,” Kousser said.

Brennan, the industry analyst, predicted the issue will be back before California voters in 2024. 

“In the meantime, the great challenge is going to be how do you get the tribes and the sports betting operators to work together for some kind of compromise that they both are satisfied with,” Brennan said.

Brennan noted that while sports betting is now allowed in most states, it is still not legal in high-population states California and Texas.

“California, the biggest fish of all, is up for grabs,” Brennan said. 

Since 2018, legal sports betting revenues across 26 states and Washington, D.C., have totaled more than $11.8 billion and brought in nearly $1.9 billion in taxes, according to tracking by LegalSportsReport.com. 

Even where sports wagering is not legal, Brennan said it still happens because of the prevalence of illegal bookies and offshore operators.  

“Some of the opposition seems to be [that] if we don’t legalize this it won’t happen, but it already happens,” Brennan said. 

In addition to its 66 tribal casinos, California currently allows card rooms, horse race betting and the state lottery.