Cardrooms Claim Victory As California Voters Resoundingly Reject Sports-Betting Initiatives

November 10, 2022
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California cardrooms are breathing easier after voters overwhelmingly defeated Proposition 26, a tribal retail sports betting proposal that also included a provision to allow for civilian enforcement of gambling laws.

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California cardrooms are breathing easier after voters overwhelmingly defeated Proposition 26, a tribal retail sports betting proposal that also included a provision to allow for civilian enforcement of gambling laws.

Proposition 26 would have authorized in-person sports wagering at tribal casinos and four state-licensed racetracks. The ballot initiative was defeated by a 70.1 percent to 29.9 percent margin with all of the 25,554 California precincts reporting, according to unofficial results released on Wednesday (November 9).

The proposition would also have allowed tribal casinos to offer roulette and dice games, including craps.

A further provision within the ballot measure would empower private citizens to launch civil enforcement actions against illegal gambling violations not being pursued by the state attorney general.

Tribes have for years claimed that state officials have not done enough to eradicate allegedly unlawful card games offered by commercial cardrooms.

But the No on Proposition 26 campaign, which was funded largely by cardrooms, led the campaign to defeat the ballot initiative. They said the so-called “poison pill” provision would have allowed tribes to sue cardrooms.

Opponents of Prop. 26 argued it put $5.5bn in total economic impact generated by cardrooms at risk.

“Prop. 26 was not just a sports betting measure but a massive expansion of gambling by five wealthy tribes that included a poison pill aimed at taking market share away from highly regulated cardrooms that provide millions of dollars in tax revenue to communities and tens of thousands of jobs. Voters made it clear; Prop 26 is bad for communities, jobs, and California,” the No on Prop. 26 campaign said in a statement.

Juan Garza, executive director of California Cities for Self-Reliance Joint Powers Authority, said as a representative of the cities of Bell Gardens, Commerce, Compton, Cudahy and Hawaiian Gardens that rely on cardrooms to fund city services, “we are thrilled” voters rejected Prop. 26.

“Prop. 26 had a hidden poison pill that allows for unlimited lawsuits against cardrooms — a highly regulated industry that provides critical tax revenue for cities and jobs across California,” Garza said in a statement released early Wednesday.

Despite the defeat of Prop. 26, James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), said the outcome of the two competing sports-betting ballot measures was “a victory for tribal governments and the people of California.”

“Voters soundly rejected the rhetoric of out-of-state corporations who misjudged the sophistication of our voters,” Siva said of the rival Proposition 27 funded by FanDuel, DraftKings and other online sportsbook operators. “Our priority has always been to offer a well-regulated and trustworthy gaming experience.”

Unfortunately, Siva said, numerous cardrooms in California continue to operate outside of the law.

“We urge the attorney general to enforce the laws that currently exist which would make the need for civil enforcement unnecessary.”

Proposition 27 was also resoundingly rejected by voters in Tuesday’s election by a lopsided margin of 83.3 percent to 16.7 percent.

“We thank the California voters for their thoughtful consideration of complex issues,” Siva said.

“The overwhelming defeat of a blatantly irresponsible initiative like Proposition 27 takes precedence in terms of importance and serves notice to those operating outside the law that the public will not tolerate such recklessness when it comes to responsible gaming in California.”

The defeat of both ballot initiatives had been widely expected for weeks, with both campaigns admitting the onslaught of advertising campaigns left many California voters confused and overwhelmed.

The California Secretary of State’s office announced on its website Wednesday it will certify the election results by December 16.

In a conference call with Truist Securities prior to Tuesday’s election, Brendan Bussmann, managing partner of Las Vegas-based consultancy B Global, said it would take “potentially a significant amount of time for voter sentiment to recover following the extremely negative tome of political advertisements during this campaign.”

“Messaging from anti-Prop. 27 advertisements presented highly damaging rhetoric on mobile gaming’s detrimental effect on consumers,” said Bussmann, who added it would likely require a “coordinated effort between tribes and commercial operators to overcome in a subsequent attempt to get interactive measures passed in the state.”

Bussmann warned that if both initiatives were voted down, as expected, it could take until 2026 before another California sports-betting ballot initiative “would have a shot at succeeding.”

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