After stockpiling nearly half a billion dollars in campaign cash and inundating Californians with ads, the pitched 鈥� and sometimes confusing 鈥� battle over sports betting drew to a close on Tuesday evening.
The upshot? Nothing changes.
Voters rejected two separate measures to legalize sports betting 鈥� and it wasn鈥檛 close. California appears to be the first state to block all sports betting at the ballot box.
, funded by about a dozen Native American tribes, would have allowed in-person sports betting at tribal casinos and four private horse race tracks. Out of the votes counted as of today, about 30% supported the measure while about 70% opposed it.
, which would have allowed online sports betting, appears headed for a historic and crushing defeat. With 83% against and only about 17% in support so far, it is on track to be one of the in the past century of California initiatives.
That measure was bankrolled by a handful of large gaming companies, including FanDuel, DraftKings and BetMGM. It drew the support of three tribes but fierce opposition from more than 50 tribes and tribal organizations.
鈥淓verybody knows this: You don鈥檛 come and try to screw the tribes,鈥� said Victor Rocha, conference chairperson for the national Indian Gaming Association.
鈥淚鈥檝e been in the industry from the jump, and I鈥檝e never seen anything like this,鈥� said Bill Pascrell III, a veteran gambling industry lobbyist. 鈥淭he kind of money they spent and the results they got are just terrible.鈥�
CalMatters reached out to DraftKings, FanDuel and BetMGM for interviews. All three referred CalMatters to a campaign spokesperson.
鈥淥ur coalition knew that passing Prop 27. would be an uphill climb, and we remain committed to California,鈥� Nathan Click, a spokesperson for the campaign, said on election night. 鈥淭his campaign has underscored our resolve to see California follow more than half the country in legalizing safe and responsible online sports betting.鈥�
How did this happen?
Even before the campaigns got started in earnest, Californians weren鈥檛 that enthusiastic about sports betting. When pollsters with UC Berkeley鈥檚 Institute for Governmental Studies if they鈥檇 support a constitutional amendment to legalize sports betting, 45% said they were inclined to vote yes, while 33% said they were inclined to vote no.
As the campaign wore on, support eroded and opposition grew dramatically. By 53% of likely voters said they鈥檇 oppose the in-person betting measure and 64% said they鈥檇 oppose the online betting measure. In general, support for initiatives as an election draws near.
Californians were subjected to a barrage of ads, some of which made confusing claims or . Voters who saw lots of those ads opposed the measures at higher rates than people who saw few or none, .
The propositions, themselves, were complex, and weren鈥檛 singularly focused on sports betting. The in-person measure would have allowed tribes to add roulette and dice games, for example, while arguments for the online measure centered on how it would supply funding for homelessness solutions.
For tribes, whose casinos have long been the only destination in California for certain forms of gambling, defeating the online gambling measure 鈥� which would have allowed national gaming companies to offer betting in the state 鈥� was far more important than winning the in-person measure. That was reflected in how tribes spent their advertising dollars, said Jacob Mejia, vice president of public affairs for the Pechanga Band of Indians, one of the tribes that supported the in-person measure and opposed the online proposition.
鈥淭he reality is, we didn鈥檛 undertake any meaningful advertising for (the in-person measure)鈥� Mejia said. The online sports betting measure, he said, was 鈥渢he biggest threat to Indian gaming in a generation.鈥�
Does anyone come out on top?
When two measures get voted down so decisively, after so much money spent, can anyone be truly called a winner?
Cardrooms 鈥� businesses across the state that offer a limited range of betting card games 鈥� are pleased with the outcome. They opposed the in-person sports betting measure because it contained a provision that allowed private citizens to bring lawsuits to enforce gambling laws 鈥� something they feared tribes would use to bring costly lawsuits against them.
鈥淲e鈥檙e very thankful for the voters for having seen that for what it was and for voting accordingly,鈥� said Keith Sharp, general counsel for Gardens Casino, a card room in Los Angeles county.
Tribes, who invested so much in defeating the online sports betting measure, may also come out ahead. 鈥淚t鈥檚 a huge victory,鈥� said Rocha, with the national Indian Gaming Association.
鈥淚t wasn鈥檛 just 鈥榣et鈥檚 stop this thing,鈥� it was 鈥榣et鈥檚 stomp this thing into the ground,鈥� he said. 鈥淎nd that鈥檚 what they did.鈥�
The defeat of Prop. 27 and the national betting companies also strengthens tribes鈥� hand in any future negotiations by demonstrating their ability to block things they oppose, said Becca Giden, a director of policy at research firm Eilers & Krejcik Gaming. Their attitude, she said, can be, 鈥溾�楴othing gets by that we don鈥檛 approve of. So, come to the table willing to hear us out,鈥� and, most likely, 鈥榗ome to the table willing to accept the terms that we are proposing.鈥欌��
What comes next?
Nothing about what comes next on sports betting in California is certain. Just because voters say 鈥渘o鈥� to an idea one year doesn鈥檛 prevent it from popping up on their ballot the next election 鈥� or the one after that. Case in point: This week Californians voted down an initiative adding regulations for dialysis clinics since 2018.
The gaming companies backing the online betting measure aren鈥檛 going to walk away from California, it appears.
鈥淒ozens of states and countless local governments are benefitting from the significant tax revenue that online sports betting provides, and as California faces tax revenue declines and uncertain economic headwinds, online sports betting can provide substantial solutions to fill future budget gaps,鈥� Click, the spokesperson for the supporters of Prop. 27, said in a Tuesday evening statement.
鈥淐alifornians are currently placing billions in bets each year on illicit offshore sport betting websites 鈥� unsafe and unregulated enterprises that offer no protections for minors or consumers and generate no support for state priorities. Californians deserve the benefits of a safe, responsible, regulated, and taxed online sports betting market, and we are resolved to bringing it to fruition here,鈥� he said.
Some tribal leaders also aren鈥檛 foreclosing the possibility that they鈥檒l make another bid in the future. 鈥淎s tribes, we will analyze these results, and collectively have discussions about what the future of sports wagering might look like in California,鈥� Mark Macarro, tribal chairman of the Pechanga Band of Indians, said in an election night statement.
There are two ways either group 鈥� or anyone else 鈥� could try again to legalize sports betting. One is to go through the whole ballot measure process, drafting an initiative, gathering signatures, and, if everything goes well, getting it onto the ballot.
Another option is to work with the state Legislature. It could pass a law allowing the new form of gambling, said I. Nelson Rose, a gambling law expert and professor emeritus at Whittier Law School. Or legislators could pass a constitutional amendment that would then be put on the ballot for voters to decide.
In 2019 and 2020, state legislators considered amendments to legalize sports betting, but complex negotiations between different gambling interests and the effort died. Bill Dodd, a Democratic state senator from Napa who authored the , said in a statement that 鈥渋f stakeholders are interested in addressing this issue again, I stand ready to help broker any agreement that could be reached.鈥�
Did this year鈥檚 blowout pave a smoother path? 鈥淚 don鈥檛 think the dynamics have changed,鈥� said Adam Gray, a Democratic state Assemblymember from Merced who co-authored the 2019 amendment, but is running for Congress and won鈥檛 be returning to the legislature next year.
The only thing that鈥檚 changed, he said, is 鈥渢here鈥檚 $450 million that used to be in somebody鈥檚 bank account. Now it鈥檚 in the pocket of some consultants.鈥�
Will there be another ballot measure?
Votes for this year鈥檚 election are still being counted, so any campaign for the 2024 election may not start for a while.
And it鈥檚 not clear that tribes 鈥� if they were to advance another proposal 鈥� agree on the approach.
鈥淥ur perspective continues to be that whatever proposal might emerge from tribes, it has got to be one that will be supported by the voters,鈥� said Mejia, of the Pechanga Band of Indians, which supported this year鈥檚 in-person tribal sports betting measure.
After Tuesday night鈥檚 result, he said, 鈥渋t should be clear that most California voters are saying 鈥榥o鈥� to legalizing online gaming.鈥�
鈥淭he tribes can wait forever. They don鈥檛 need sports betting. California doesn鈥檛 need sports betting.鈥�VICTOR ROCHA, CONFERENCE CHAIRPERSON FOR THE NATIONAL INDIAN GAMING ASSOCIATION.
But there鈥檚 another group of tribes, including the San Manuel Band of Mission Indians and the Rincon Band of Luise帽o Indians, that had proposed a third . Their measure would have allowed tribes to offer in person and online sports betting exclusively. It didn鈥檛 make it on to the 2022 ballot and recently failed to gather enough signatures to make it onto the 2024 ballot as well 鈥� but that doesn鈥檛 mean the idea is off the table.
鈥淥ur group feels that [measure] is the best path forward for online sports wagering in California,鈥� said Roger Salazar, a spokesperson for a coalition that campaigned against Prop. 27 and includes those tribes.
But the tribes may not be in a rush. 鈥淭he tribes can wait forever. They don鈥檛 need sports betting. California doesn鈥檛 need sports betting,鈥� said Rocha, with the Indian Gaming Association. 鈥淭he industry needs it, but do the people need it?鈥�
Sports betting companies could decide to fund another ballot proposal, too. But in the short term, that may not be the wisest move. 鈥淚f we go through this again in two years, it鈥檚 gonna be the same result,鈥� said Pascrell, the gambling lobbyist.
鈥淢aybe take a step back on California for a moment, allow things to settle, so you can reset,鈥� he added. In the meantime, companies could focus on other states where they might be able to launch online casino poker, which is more profitable than sports betting, he said.
鈥淵ou have to respect the tribes, who have immense resources and immense political support in the state,鈥� said Pascrell.
In the wake of a 2018 U.S. Supreme Court decision that allowed states to legalize sports betting, 31 states plus Washington, D.C., have launched operations, and another five states have legalized the new form of gambling but have yet to start taking bets, according to an . Twenty six states plus D.C. have legalized mobile betting, while other states require people to make their sports bets in person.
In most of the states that have legalized sports betting, it happened in state legislatures, said a gaming association spokesperson. But seven states have legalized sports betting via ballot measures placed by legislatures: Arkansas, Colorado, Louisiana, Maryland, Nebraska, New Jersey and South Dakota. California is the only state where voters said no to any sports betting. In New Jersey 鈥� which has allowed sports betting since 2018 鈥� that would have allowed betting on college sports in the state.
The gaming companies that invested tens of millions in Prop. 27 also have investors to think about. This year鈥檚 measure lost so badly, said Giden, 鈥淚 don鈥檛 know how many investors would be lining up to do that again.鈥�
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