Of the two sports betting initiatives on the California ballot this November, the supporters of one typically dislike the other.
However, it appears there is one group that hates both California sports betting initiatives: the editorial boards at major newspapers in the Golden State.
Over the past few months, some of the state’s largest print outlets released a litany of negative opinion pieces on the issue.
Not only did these pieces denigrate Proposition 27, which would legalize online sports betting in California. These papers also attacked Proposition 26, the initiative allowing in-person betting at California tribal casinos and select horse tracks.
The problem is that these pieces aren’t making fact-based arguments against the initiatives. In other words, they aren’t making good arguments at all.
These articles are reaching millions of California voters. Yet, when I read these pieces, my general reaction is “Well, actually…” before mentally rebutting some of their main points.
PlayCA staff writer Steve Friess already responded to the Los Angeles Times’ recent hit piece on the initiatives. So, let’s go back a little further in time and break down the flawed arguments other publications printed.
Santa Rosa Press Democrat
Santa Rosa is a mid-size city in California’s wine country, about an hour north of San Francisco. It has a population just north of 178,000 and its most popular paper reaches about a third of its residents daily.
Five days ago, the paper’s editorial board published an opinion piece urging voters to say ‘no’ to both Prop 26 and 27.
Bad argument #1: Ballot initiatives shouldn’t be written by those involved
The piece starts out by claiming that the tribes and online sportsbooks shouldn’t be involved in the ballot initiatives. Since they stand to benefit from the initiatives’ passage, their involvement is immoral.
“But if we’re going to add wagers on professional and college sports to the lottery and casino gambling, the people who profit from booking those bets should not be writing the rules to enrich themselves or punish the competition.”
Well, actually…
First, let’s tackle the idea that operators shouldn’t be involved in the wording of these initiatives.
To get in front of voters in November, organizers must obtain nearly 1 million signatures from California voters. Aside from these entities, who else has the capital and the motivation to organize an effort of that magnitude?
Regarding ballot initiatives, those who stand to gain something are usually at the forefront. For example, Florida’s failed sports betting initiative was backed mostly by FanDuel and DraftKings. And a proposal to expand casino gaming in Florida was funded by Las Vegas Sands Corp.
Essentially, the editorial board is making a case against ballot initiatives in general. Not these specific sports betting proposals.
To be fair, there is certainly a coherent argument against the use of this process. According to a survey by the Public Policy Institute of California, over 90% of Californians feel that the wording of these measures is often too confusing for voters.
But the Press Democrat didn’t make that argument. They hint that these measures are corrupt because of who backed and authored them.
No, the operators aren’t creating the entire regulatory framework
Secondly, let’s address the idea that the operators are “writing the rules” for their future market. At best, this is a half-truth.
These initiatives lay out the absolute basics of what a regulatory framework would consist of. Issues like tax rate, distribution of tax revenue, minimum age requirements and certain responsible gaming measures are in the initiatives.
In fact, Prop 27 creates an entirely new regulatory agency within the California Department of Justice to police the new industry. That department would fill in the meat of the regulation and create the rest of the rules needed for launch.
If Prop 26 were to pass, tribes that want to open a sportsbook need to renegotiate their gaming compacts with the state. Therefore, the state would create most of the rules and revenue-sharing payments during that process.
Finally, the piece doesn’t even address the rules they reference. What “rules” are in the initiatives that they don’t agree with? If there is nothing controversial in the proposal, isn’t it more efficient to have it in writing already?
The article claims these are “flawed initiatives” that were “written behind closed doors.”
In all likelihood, the office doors were closed while it was written. But they are publicly available now. I’ve got both proposals on my laptop and read them both. There’s nothing secretive about them.
Continuation of bad argument #1: The legislature should be writing these
This is the obvious flip side of their first flawed argument. If the operators shouldn’t write them, state lawmakers should be.
“The Legislature was – and remains – the proper forum to write the rules, in public, addressing concerns such as gambling addiction, minors’ access to online gambling sites and whether California even needs additional gambling options.”
Well, actually…
While this is an idealist take from the paper, it lacks a bit of practicality.
Regardless of how much faith you have in your legislature, most lawmakers don’t know anything about gambling. This sounds like an insult, but it’s not. It’s just part of life. Most people know nothing about most things.
Let me take a step back here and say that there are obvious issues with having lobbyists or other market participants write laws.
But again, they aren’t designing the entire market. And it’s available for everyone to read, which negates their ‘public’ qualifier of why the legislature should write them.
Look at other states who had legislators create the whole market. Even though New Jersey cracked the sports betting code first, legislators in other states couldn’t just click copy and paste.
From in-state college betting bans to the apprehension of legalizing online betting, mistakes were made all over the country. These hiccups were less likely if the lawmakers didn’t take everything into their own hands.
Additionally, countless gaming entities in California make it tough for anything to get passed legislatively. Between cardrooms, tribal nations, horse tracks and major online sportsbooks, all of which donate massive amounts to their representatives, it would be almost impossible to get a majority to agree on a bill.
This, however, isn’t an issue specific to California. In states with larger populations, this is likely to happen.
Bad argument #2: We don’t know how much tax revenue will be generated
The article’s authors suggest that their readers should temper their expectations about tax revenue.
“To sweeten the pot, Proposition 27 promises a cut for tribes that don’t operate casinos, gambling addiction programs and to combat homelessness. It’s a time-tested strategy that often delivers more votes than money. Case in point: the lottery adds about a penny for every dollar the state spends on schools.”
They double down on the claim a couple of paragraphs later.
“If lawmakers had done their job, voters might not be left to guess whether legalized sports betting will provide the assistance for tribes and homeless people promised in TV ads, or if will prove as illusory as tax windfalls from cannabis.”
Well, actually…
First off, voters don’t need to “guess” about where the tax revenue will go from sports betting. Please, just read the initiative. It’s written plain as day. The money will go to those places. It says so in those rules they were so angry about.
Second, let’s start by dissecting their statement in a literal sense. It’s completely untrue that publicizing these programs will attract more votes than money.
There are north of 39 million people living in California. Only 21.2 million are registered to vote. Since it’s a midterm election, most people won’t even show up. For argument’s sake, let’s call it half.
That translates to 10.6 million voters. Does this board think sports betting wouldn’t generate $10.6 million in tax revenue? But let’s take on their actual argument.
According to Eilers & Krejcik, Prop 26 would generate about $1.3 billion in gross gaming revenue. The firm estimates that Prop 27 would more than double that with $2.8 billion.
As more states legalize sports betting, analysts get sharper with their projections. Thus, these estimates become more reliable. Consequently, lawmakers will have a better idea of how much new tax revenue is up for grabs.
Lastly, I want to point out how dishonest it is to frame the lottery revenue like that. By comparing it to pennies and dollars, the rhetoric makes the reader believe it is a small amount.
What the comparison actually means is that the California Lottery is responsible for 1% of the state’s education budget. During the 2020-2021 fiscal year, the lottery gave $1.8 billion to public schools. It’s a significant sum that means a lot to students and teachers.
Furthermore, the CA Lottery website states that “Lottery funds are meant to supplement public education, not replace state and local funding.”
San Jose Mercury News
San Jose is one of the major cities in Northern California’s Bay Area. It’s smack dab in the center of Silicon Valley, an area known for its high technology and innovation.
At the end of July, the city’s largest paper released an opinion piece on sports betting. While the arguments were slightly different from Santa Rosa’s, it also pleaded for Californians to vote against the proposals, while lacking any semblance of a fact-based argument against them.
Bad argument #1: Starting off with an emotional appeal
The Mercury News editorial board came out of the gates swinging. They made their case, or lack thereof, clear in the first few sentences. Here’s how it started:
“The last thing California needs is more gambling. The state already has 66 tribal casinos, 84 cardrooms, 33 horse racing facilities and 23,000 stores selling lottery tickets.”
Well, actually…
An emotional appeal is a type of logical fallacy. It’s defined as an effort to win an argument without facts, logic or reason, but by manipulating the audience’s emotions.
They technically had a couple of facts by listing how many gambling facilities there are in the state. However, that tactic was designed to get the reader to think, “Wow, we do have a lot of gambling here, don’t we?”
Those numbers lack any sort of context.
California has a population larger than Canada and from a geographic standpoint, it makes up most of America’s Pacific coast. It’s 1,040 miles from the southern border with Mexico to its northern border with Oregon.
Simply put, this place is massive. Since I threw poor Canada under the bus as one of the countries smaller than our largest state, let’s compare those two gambling markets.
The Great White North has 200 licensed gambling facilities. That doesn’t even count the stores that sell lottery tickets. Between casinos, cardrooms and horse tracks, California has 183 licensed facilities.
All of a sudden, it doesn’t seem like the California gambling market is overrun with gambling, does it?
Bad argument #2: They fail to use concrete numbers when critiquing revenue streams
This is very similar to the trick that the Santa Rosa Press Democrat pulled. The board used misleading rhetoric without citing any figures to make it seem like the voters were getting a raw deal.
“Voters are being offered a handout that, after offsetting increased costs, amounts to crumbs. The offer is designed to lure political support as tribes, race track operators and big out-of-state online sports-betting sites jockey for most of the vast fortunes extracted from Californians.”
Well, actually…
I’d like to take a moment and thank my editor. He would never run a story with sports betting as a hyphenated word. That’s more than we can say for the editorial board of a newspaper that reaches 176,400 readers daily, and more than 279,000 on Sunday.
Ok, I took my cheap shot. Let me move on. But seriously, thanks, Andrew. You make my stuff readable.
Look at the verbiage in that quote. “Amounts to crumbs?”
The writers are admitting that after offsetting the increased regulatory costs, there is an excess. How much money are “crumbs?” Is this like when the Press Democrat compared $1.8 billion to pennies on the dollar?
According to the California Legislative Analyst’s Office, they estimate Prop 27 would generate up to $500 million in new annual tax revenue.
Remember those increased costs? LAO estimates them to be in the “mid-tens of millions of dollars per year.” I’d call that difference much more than “crumbs.”
They continue to use inflammatory language at the end of that quote by using the phrase “vast fortunes extracted from Californians.”
It’s yet another example where they appeal to emotion through their rhetoric without any evidence or context. Whenever the market launches, it will almost certainly become the country’s largest market. That means gross gaming revenue will be high, and that number is equal to how much California bettors lost. So they aren’t technically wrong in saying vast fortunes will be extracted.
But how much money does your average Californian lose? More importantly, can they afford it or are they problem gamblers?
As long as Californians bet within their means, it’s another form of entertainment. I doubt the local sports writer would say that the San Jose Sharks extract vast fortunes from California hockey fans.
Double down on rhetoric by citing corporate greed
For whatever reason, the staff decided they would portray both the tribes and online operators like Scrooge McDuck. Or whatever the caricature of an evil capitalist would be.
The article went on to say that these initiatives were “all about greed.” To a certain extent, there’s some truth to it. If these entities didn’t stand to benefit from a California sports betting market, there’s almost no chance these initiatives are on the ballot.
But the gambling industry is just that. An industry. In every market, companies execute their business plan with the hopes of maximizing profit.
It doesn’t matter if it’s DraftKings or the Bay Area News Group. DraftKings tries to gain market share in the gambling world, while the parent company of the San Jose Mercury News tries to get its paper in front of more readers. More eyes on the page translate to more advertising dollars. And that’s not evil or greedy.
These companies are working within the boundaries of the law to gain entry to a large market and serve the sports betting demand.
Bad argument #3: Implying these initiatives will increase gambling addiction
They followed up their greed argument by closing the piece with some subtle fearmongering.
“Backers are not gambling their political money out of some sense of altruism. They’re hoping to hit the jackpot at a great societal cost.”
Well, actually…
They don’t directly come out and say it. But the phrase “great societal cost” clearly alludes to increased problem gambling. Which is a net negative for their local community.
At least that’s what they’re implying. Because there is absolutely no data to back that up.
According to the Reason Foundation, gambling addiction rates in the U.S. stayed relatively flat since the 1970s. In other words, over the last 50 years, while the country has seen the largest gambling expansion in the nation’s history, gambling addiction hasn’t moved.
Furthermore, no data from other states show a correlation between sports betting legalization and increased problem gambling.
The staff sums up the article by finally bluntly stating what they implied over the last several graphs.
“Suddenly, the tribes, race track owners and sports betting sites are offering through their ballot measures to provide more funding for addiction programs – but only if they can make the problem worse by expanding gambling.”
Let me be very clear. There is no evidence to support that claim. Nor do they offer any. They just state it as fact.
