Will Prop 26 And In-Person Sports Betting Benefit California Horse Racing?

Written By Andrew Champagne on September 26, 2022 - Last Updated on November 3, 2022

Proposition 26 would bring in-person sports betting to California. In addition to sportsbooks appearing at tribal casinos, they’d also pop up at select horse racing venues around the Golden State.

Conventional wisdom says California horse racing would benefit immensely if Prop 26 passes on Election Day. But is that actually the case?

Stronach Group executives endorse Prop 26

The Stronach Group certainly thinks so. The company runs Santa Anita Park and Golden Gate Fields, two of the tracks that would be eligible to build on-site sportsbooks.

In an interview with USA TodayAidan Butler, COO of the Stronach Group’s 1/ST Racing division, said:

“An extra revenue stream, the revitalization of the building, the upsides of increased employment and stimulating these beautiful, old venues with more energy and fun is going to have a massive impact, I’m sure of it.”

More recently, Scott Daruty, president of Monarch Content Management (which distributes simulcast signals for Stronach-owned tracks), endorsed Prop 26 while also vehemently opposing Proposition 27.

“If Prop 26 passes, that would be very positive for California horse racing. Our belief is Prop 27 would be very bad for California racing.”

Daruty added that attracting sports bettors to horse racing could provide the industry with a shot in the arm.

“That in and of itself is a big upside,” Daruty said. “Once people are in our facilities … we could obviously expose them to horse racing and hope they begin to bet on the horses as well.”

But is Prop 26 likely to grow horse racing?

As Election Day approaches, however, several voices within horse racing have shown skepticism. Earlier this year, Larry Swartzlander, head of the California Authority of Racing Fairs, doubted the revenue on-site sportsbooks could bring.

“If the tribal initiative passes, Santa Anita can build a sportsbook,” he said. “Who just closed down their sports wagering? Churchill Downs. It doesn’t work at a single, brick-and-mortar facility. Eighty-five to 90% of wagers are on the internet. You’re not going to make any money.”

Even Daruty, an enthusiastic Prop 26 backer, admitted expectations should be tempered.

“What we have seen from sports wagering in other markets, it’s not tremendously profitable,” he said. “I’m not saying it is unprofitable, but it is not a huge windfall. It’s not a game changer as far as changing the economics of racing facilities.”

Furthermore, sports and horse racing have vastly different betting models. Figuring out how to successfully bet on horses can seem daunting to novices and newcomers.

Pat Cummings, the Executive Director of the Thoroughbred Idea Foundation, specifically mentioned horse racing’s pari-mutuel model as a potential problem:

“Those wishing to get pari-mutuel racing to a single-wallet platform that reaches sports bettors wrongly assume those customers won’t care that a horse they bet at 10-1 when loading goes to 5-1 ten seconds after the start of the race, once all betting is reflected. That is the everyday reality in North American racing’s pari-mutuel landscape.

“Sports bettors know what price they are going to get when they bet. That experience is practically non-existent in U.S. racing today.”

Prop 26 looks unlikely to pass

While more than $420 million has been spent on campaigns for and against each California sports betting initiative, very little advertising supporting Prop 26 has been seen around the Golden State. A Prop 26 ad campaign did launch last week, but it was against the measure, not for it.

That’s because the tribes behind Prop 26 are more concerned with defeating Prop 27. The measure backed by DraftKings and FanDuel, among others, would bring online sports betting to California.

Recent polling suggests both measures are far behind with less than two months until Election Day. The Public Policy Institute of California has Prop 27 20 points behind, and an Eilers & Krejcik report estimates the likelihood of either measure passing at less than 50 percent.

Daruty admitted the sports betting measures face uphill battles.

“To be honest, I think it’s going to be a struggle for both,” he said. “There is a lot of money being spent in opposition to Prop 27, and it’s sort of hard to figure the potential spillover to Prop 26 as well.”

Photo by AP Photo / Mark J. Terrill
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Andrew Champagne

Andrew Champagne is a Content Manager at Catena Media, as well as an award-winning writer and producer. A passionate storyteller, Andrew boasts a career that has included stints at The Daily Racing Form, TVG Network, and HRTV. Born and raised in upstate New York, Andrew now resides in Northern California's Bay Area. You can often find him handicapping horse races, planning his next trip to Las Vegas, bowling reasonably well, and golfing incredibly poorly.

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