The defeat of the dueling sports betting propositions 26 and 27 in California came as no surprise—pundits predicted as much. The pundits also predicted that Prop 26 would do less poorly than Prop 27, for what that’s worth. They were right about that one too.
Despite waging the most expensive effort in support of ballot props in the history of any California campaign— almost $600 million, according to the Associated Press—Californians said no deal.
Prop 27, the one which would allow FanDuel and other sportsbooks to offer online betting, drew a measly 16 percent support. Prop 26, which brought in-person sports betting to tribal casinos and race tracks, garnered less than 30 percent of the vote.
The campaigns for each proposition spent the allotted funds claiming the reputed benefits of their cause while attacking the other proposition’s benefit claims.
“Our internal polling has been clear and consistent for years: California voters do not support online sports betting,” said Anthony Roberts, tribal chairman of the Yocha Dehe Wintun Nation, a supporter of Prop 26. “Voters have real and significant concerns about turning every cellphone, laptop and tablet into a gambling device, the resulting addiction and exposure to children.”
On the other hand, those who opposed Prop 26 accused supporters of catering to wealthy tribes with a monopoly on sports betting. Oh, and they would also get to offer roulette and craps.
“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,” the No on Proposition 26 Campaign said in a statement.
Proposition 26 received most of its support from a coalition of tribes who said a 10 percent tax would contribute to enforcing the regulations and financing addiction programs.
The online gambling proposal had the backing of DraftKings, BetMGM, FanDuel and other operators. A handful of tribes too. They agreed to send tax revenues to aid the homeless, the mentally ill and poorer tribes.
The state Republican Party opposed both props. State Democrats opposed Proposition 27 and took no stand on Proposition 26. Major League Baseball favored Proposition 27.
And with that, California is left to ponder, “What’s next?” Will the state find a way to bring sports betting to the biggest market in the U.S.? What is uncertain is whether the California legislature can perform what propositions failed to do: approve sports betting in some manner next year.
Josh Swissman, founding partner of the Las Vegas-based Strategy Organization, said it won’t be an easy road ahead.
“Associated California legislators will have to lick their wounds and reintroduce the sports betting topic during the next legislative session,” Swissman said. “That is the normal process when these types of propositions fail at the ballot box. More importantly, California voters may have been soured on sports betting overall because of all the negative ad campaigns and aggressive spending by both sides. That may have long term effects that will linger beyond the next legislative cycle (or cycles). Proponents of sports betting, both land based and online, will likely need to collectively engage in a public relations campaign that undoes all of the vitriol that was cast over the airwaves earlier this year.”
How much the cardroom issues played into the vote is uncertain, specifically the question of how to end the moratorium on expansion of cardrooms, but the situation could help grind any sports betting to a dead halt.
Pechanga Chairman Mark Macarro told PlayCA that the way the Senate Governmental Organization Committee Chairman Senator Bill Dodd dealt with a proposed moratorium extension has hurt the trust the tribes had in the legislature.
“We didn’t expect him to support the extension of the moratorium. But we didn’t expect him to so brazenly say this thing has to end and I’m going to be the one to do it,” Macarro said.
The Gambling Control Act of 1997 drew up regulations for the cardroom industry, along with a 10-year freeze on new licenses and additional tables per venue.
From time to time the legislature extended the moratorium and 25 years later, it remains in effect. The cardroom industry, which supported the moratorium at first to keep competition down, has pulled its support. The industry wants to be able to add more tables.
In 2018, the Governmental Organization Committee approved a three-year extension so long as everyone worked on a compromise that included more tables. A compromise did evolve that allowed an increase of two tables a year up to 10, and it overwhelmingly passed the Senate.
But opposition from tribes killed the bill in the Assembly.
To stop the expiration of the moratorium at the end of this year, Senator Rosilicie Ochoa Bogh sought a year-long extension. At an August committee hearing, cardrooms split on the proposal.
Ed Manning, who represents the California Cardroom Alliance which includes Commerce Casino in the L.A. area, complained that the propositions overshadowed the table expansion talks.
“We were unable to find a path this year, in part because of the political climate because of the initiatives on the ballot,” Manning said. “Now we can have a better discussion and hopefully a framework.”
Ochoa Bogh had written assurances from the California Nations Indian Gaming Association and Morongo Band of Mission Indians committing them to discussions.
But Dodd wanted a compromise first.
“The point is defeating this bill at this committee here today is the most important thing we can do to get things on track and to get something done. And, frankly, what I’m here to say is this legislature and our committee has been a pawn in this moratorium situation for a long time.”
The vote was 3-3 with nine members failing to cast votes, thus stopping the bill. End of story.
“He ended the moratorium, and some people we thought would be in those seats and be our supporters didn’t vote,” Macarro said. “And as they say in Sacramento, a walk is as good as a no.”
The way it went down left the tribes leery of the legislature on anything, especially sports betting.
“The legislature falls prey to arguments by the card clubs and everyone else,” Macarro said.
Still, Dodd insists he will work with all sides over the break and return in January ready to deal and fast-track legislation. Indeed, if the moratorium is put to bed early in the 2023 session, discussions on sports betting could follow.
“Some tribes have expressed interest in discussions with the legislature on sports betting,” Dodd told PlayCA. “I stand ready to work with all parties to see if we can reach a deal that benefits our state and tribal governments.”
