It’s been a long time coming, but the inevitable has officially reared its ugly face. After months of confusing advertising and unrealistic promises, the campaigns for Prop 26 and Prop 27 earned an emphatic “No” from California voters Tuesday.
Record-setting fundraising for the two campaigns resulted in a net-zero as both California sports betting propositions fell in a landslide. As of Wednesday afternoon, with 47% of the votes in, 70% rejected Prop 26 and 83.1% rejected Prop 27.
It’s easy to point the finger at a number of different stakeholders for why the two campaigns failed so miserably. But in reality, the propositions simply floundered because very few of the parties involved could work out a deal, said Andrew Busch, a political science professor at Claremont McKenna College.
“In the end, voters just got tired of all the ads and the endless back and forth,” Busch told California Casinos. “Then you had the Los Angeles Times and other media outlets come out against the two props, and they never had much of a chance. As time went on, we all could see the writing on the wall.
“I would say as of September both propositions looked doomed because public opinion had already swayed so far in the negative direction.”
Prop 26 would have allowed for in-person sports betting at tribal casinos and at four licensed horse racetracks: Santa Anita Park, Del Mar Racetrack, Los Alamitos Race Course, and Golden Gate Fields. It figured to benefit the horse racetracks and Indian casino operators by encouraging people to show up in person.
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Prop 27 went in the opposite direction by allowing online and mobile sports betting offered by private sports betting companies partnered with tribes. It would have made California a full-fledged betting state, permitting wagers on non-sports events like awards shows. Not surprisingly, it had the financial backing of just about every big-name sports-betting platform.
The tribes wanted Prop 26 to pass, but they needed Prop 27 to fail. So they — and countless other donors not named DraftKings, FanDuel, and BetMGM — pumped their millions into stopping Prop 27.
Sportsbooks and California Tribes Will Likely Have to Compromise
Looking forward, the effort to stop the big-name apps from taking over California is likely temporary and futile. Analysts place the value of a full-fledged mobile gaming industry in California somewhere between $2.5-$3 billion annually.
And if recent history serves as any indication, DraftKings, FanDuel, BetMGM, and other mobile sports betting apps will soon have their day in what would become the largest sports gaming market in the US. Ask New York, where a law allowing four upstate casinos to begin sports betting quickly turned into a free-for-all with every major online and app-based sportsbook doing business in the state.
Many of the 35 states to legalize sports betting could tell a similar story — a legal gambling program began with a slow rollout and innocent intentions, but quickly opened the floodgates when everyone realized how much money the industry could make.
But the betting platforms would likely need to find common ground with California’s tribes for a measure to pass in California, Busch said. That could mean agreeing to profit-sharing. It could also mean delegating tax dollars to stakeholders in education and other sectors. It means both sides will have to concede something.
“Bottom line is, everyone’s going to want their piece of the pie,” he said. “They just didn’t spread it out well enough this time around.”
The California market would be significantly more lucrative than just about any state in the country. Interviewed analysts expect the sports betting industry to immediately start targeting the next election cycle in 2024.
Can This Get Done in the State Legislature?
Before then, the California legislature will meet twice — in 2023 and 2024. The legislature could pass a proposal that could appear on the 2024 ballot. That would only happen if sportsbooks and tribes reach a compromise, though. Interest groups blocked any such proposal from appearing on the 2022 ballot.
Sacramento-based political consultant Steven Maviglio noted the high stakes make it “a near sure-thing” that both California tribes and out-of-state corporations will make a run at sports gaming on the 2024 ballot.
DraftKings CEO Jason Robbins said at last month’s Global Gaming Expo that sports betting in California will “more than likely pass in 2024.” A coalition of gaming tribes is already working on getting tribal-led online sports betting on the 2024 ballot. Private sports betting companies have no doubt already started plans of their own, too.
Maviglio agreed with Busch that the sports betting platforms and tribes will need to “find a way to make nice.” But voters can almost assuredly count on the issue coming back up for a vote in two years. And on hearing plenty about it before then.
“There’s just way too much money to be made,” Maviglio said.
Meanwhile, that legal sports betting money will be made in new states other than California. Massachusetts, Ohio, and Maryland are all launching online sports betting within the next 6-8 months.
With the next election coming in 2024, Californians will have to wait until 2025 at the earliest.
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