California Sports-Betting Ballot Measures Facing Heavy Defeats

November 9, 2022
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After the most expensive ballot campaign in U.S. history, two competing initiatives to regulate sports betting in California were both set to be decisively rejected by voters on Tuesday.

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After the most expensive ballot campaign in U.S. history, two competing initiatives to regulate sports betting in California were both set to be decisively rejected by voters on Tuesday (November 8).

Proposition 26 to authorize in-person sports wagering at tribal casinos and state-licensed racetracks was facing defeat by a 70.5 to 29.5 percent margin, with 16,695 of 25,603 California districts having reported election results as of midnight local time.

Meanwhile, Proposition 27 to authorize state-wide online sports betting was trailing by a much wider margin of 83.9 to 16.1 percent, according to the California Secretary of State’s office.

The defeat of both ballot initiatives has been widely expected for weeks, with even proponents of the measures conceding voter approval was unlikely amid poor polling numbers and apparent voter fatigue with a flood of advertising for and against the two competing measures.

A group of seven leading online betting operators led by FanDuel and DraftKings contributed a combined $169.4m to the campaign to pass Prop. 27 as of November 8, according to the California Fair Political Practices Commission.

But those operators were fiercely opposed by two separate coalitions of Indian tribes, which spent a combined $285.8m in campaign contributions related to the two ballot measures.

In a statement, the Coalition for Safe, Responsible Gaming and No on 27 coalition said Prop. 27 failed due to a combination of intense voter opposition to online sports betting, an early and aggressive advertising campaign, and voters’ favorable view of California Indian tribes.

“The corporate operators thought they could waltz into California, throw their money around, mislead voters and score a victory. Big mistake,” said Beth Glasco, vice-chairwoman of the Barona Band of Mission Indians.

“Voters are smart. They saw through the false promises in Prop. 27. The corporations completely misjudged California voters and the resolve of our tribal nations.”

Pechanga tribal chairman Mark Macarro said the heavy defeat of the FanDuel- and DraftKings-backed ballot measure showed that “voters don’t want a massive expansion of online sports betting, and they trust Indian tribes when it comes to responsible gaming.”

“As tribes, we will analyze these results, and collectively have discussions about what the future of sports wagering might look like in California,” Macarro said.

Although California tribes have been able to claim victory in defeating Prop. 27, their own Prop. 26 is also set to be handily defeated.

Tribal supporters had initially hoped to run that referendum without competition from any rival initiative on the November 2020 ballot, before the onset of the pandemic forced them to pause signature-gathering efforts and wait two years for the next election cycle.

In addition to sports betting, Prop. 26 would also have authorized craps and roulette at tribal casinos, with tribes and other California citizens gaining new powers to take civil enforcement actions to prevent illegal gambling operations not being actively targeted by state officials.

The conventional wisdom was that the provision was targeted at potentially illegal games offered by California’s network of commercial card clubs.

Cardroom interests duly raised more than $44m to campaign against Prop. 26, dismissing it as a power grab by tribal gaming interests.

In their statement, California tribes suggested that Prop. 26 would likely have passed were it not on the ballot alongside Prop. 27 on mobile sports wagering, stating that “once Prop. 27 was filed with the California Attorney General in August 2021, tribes’ sole focus shifted to defeating Prop. 27. Our campaign spent no money on traditional advertising in support of Prop. 26.”

In the immediate aftermath of the lopsided ballot defeats on Tuesday, it remains unclear what the next steps could be to bring legal sports betting to the most populous and prosperous state in U.S.

After such a bitter campaign, few seasoned observers would expect any future discussions around a consensus initiative to be in any way straightforward.

Tribes, in turn, have differing views about mobile sports betting. Potential efforts by certain tribes to push a sports-betting measure for the 2024 ballot that includes mobile wagering tied more closely to tribal interests would have to accrue voter approval despite the high-profile campaign to defeat Prop. 27 consistently warning voters of risks of underage gambling and addiction.

Another potential avenue would be for the state legislature to propose its own referendum, but California lawmakers have historically been very reluctant to advance any gambling measures without broad tribal support.

As of Election Day, total spending on the defeated pair of sports-betting ballot measures topped $459.6m, with the San Manuel Band of Mission Indians contributing more than $100m alone.

The previous record for the most expensive ballot measure in U.S. history was a 2020 California referendum that saw Uber, Lyft and various other companies outspend opponents 10-1 on a $220m campaign to enable drivers to be considered contractors rather than employees pursuant to state law.

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