Stakeholders Speak To Crushing Defeat Of CA Sports Betting Propositions

Written By Matthew Kredell on November 9, 2022
Prop 26 and Prop 27 fall by huge margins

Two California sports betting propositions suffered overwhelming defeats at the ballot Tuesday.

Following a nearly half-billion dollar battle, the most expensive initiative contest in US history, California tribes are celebrating keeping out-of-state operators out of California and maintaining their control of gaming in the state.

With more than 90% of precincts partially reporting, only 16% of voters marked yes on Prop 27. Prop 26 had just less than 30%.

Despite the disappointing defeat, online sportsbook operators remain undeterred from fighting to enter the California sports betting market.

Nathan Click, spokesman for the Prop 27 campaign, said:

“Our coalition knew that passing Prop 27 would be an uphill climb, and we remain committed to California. This campaign has underscored our resolve to see California follow more than half the country in legalizing safe and responsible online sports betting. … Californians are currently placing billions in bets each year on illicit offshore sports betting websites — unsafe and unregulated enterprises that offer no protections for minors or consumers and generate no support for state priorities. Californians deserve the benefits of a safe, responsible, regulated and taxed online sports betting market, and we are resolved to bringing it to fruition here.”

It’s the first time that sports betting has lost when put in front of voters on a state election ballot. But in the other five states, there was only one sports betting proposition and limited opposition.

No proposition has ever won in California when faced with a $100 million opposition campaign.

Tribal campaigns nip Prop 27 in the bud

Prop 27 would have amended the state constitution to legalize online sports betting. Online sportsbook operators would have needed to partner with a California Indian tribe and pay a $100 million upfront licensing fee.

Eighty-five percent of that fee and a 10% tax rate would go toward programs to combat homelessness.

Seven companies interested in operating sportsbooks in California backed Prop 27 with $170 million in funding. FanDuel and DraftKings led the charge with $35 million each.

Tribes sunk Prop 27 by starting their negative campaign very, very early. By the time Prop 27 even qualified for the ballot and began its campaign, it was hopelessly behind.

From the get-go, tribes framed the sportsbook operators as greedy out-of-state corporations that would take 90% of sports betting revenue out of state. Prop 27 never recovered.

“All we did was highlight the truth of what Prop 27 actually is,” Agua Caliente tribal chairman Reid Milanovich told PlayCA. “When the truth got out there and it was clear what Prop 27 is about, it was easy for Californians to make up their minds.”

Two tribal campaigns celebrate victory

The Coalition for Safe, Responsible Gaming originally formed to back Prop 26. But it ended up focusing entirely on defeating Prop 27, putting $132 million toward the cause.

“The corporate operators thought they could waltz into California, throw their money around, mislead voters and score a victory. Big mistake,” said Beth Glasco, vice-chairwoman of the Barona Band of Mission Indians. “Voters are smart. They saw through the false promises in Prop 27. The corporations completely misjudged California voters and the resolve of our tribal nations.”

The campaign highlighted three reasons why Prop 27 was defeated by a large margin:

  • Intense voter opposition to online and mobile sports betting.
  • Early framing of Prop 27 as a “massive expansion of online gambling.”
  • That voters value California Indian tribes.

“We are grateful to California voters who rejected out-of-state gambling corporations’ deceptive measure and once again stood with California Indian tribes,” said Greg Sarris, tribal chairman of the Federated Indians of Graton Rancheria. “Today’s vote is a show of support for tribal self-reliance and a total rejection of corporate greed.”

The Californians for Tribal Sovereignty and Safe Gaming put $116 million toward defeating Prop 27. The San Manuel Band of Mission Indians spent by far the most of any tribe at $104 million.

Dan Little, chief intergovernmental affairs officer for San Manuel, explained:

“California Tribes are thankful that voters have defeated Prop. 27 and affirmed the mutually beneficial relationship enjoyed by Tribes with the State of California. The sovereign right of Tribes to exclusively operate casino-style gaming in California, as originally confirmed by the State’s voters over two decades ago, has been preserved from the incursion of out-of-state corporations. Those corporations should be aware that California Tribes will always protect their people and their sovereignty.”

Cardrooms happy with Prop 26 defeat

Prop 26 would have legalized in-person sports betting at California tribal casinos and four California horse racing venues. It also attempted to extend tribal gaming exclusivity to roulette and dice games such as craps.

Prop 26’s chances essentially ended when it didn’t qualify for the ballot in 2020 or 2021. The pandemic delayed signature gathering past the 2020 election deadline. And the Secretary of State didn’t allow initiatives on the following gubernatorial recall ballot.

That opened the door for operators to file a competing initiative. Knowing they couldn’t pass one sports betting initiative while opposing another, tribes shifted their focus entirely to defeating Prop 27. The campaign spent no money on traditional advertising in support of Prop 26.

California cardrooms celebrated the defeat of Prop 26. The initiative also would have allowed tribes to sue cardrooms directly over the way they offer a typically house-banked game like blackjack when state law gives tribes exclusivity over house-banked games.

Juan Garza, speaking for a coalition representing the cities of Bell Gardens, Commerce, Compton, Cudahy and Hawaiian Gardens, said:

“As the representative of five cities that rely on cardrooms to fund vital city services, we are thrilled California voters agreed with us and 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. We are thankful to voters for rejecting Prop 26 that would have significantly harmed so many California communities.”

What’s next for California sports betting

This clearly won’t be the last California voters will see of sports betting.

But Californians wanting legal sports betting must wait at least two years. Even if a compromise is made through the legislature, sports betting requires a constitutional amendment. That means going back in front of voters.

At least one sports betting measure surely will be on the ballot in 2024. The only question is if tribes and operators can agree to support one initiative, knowing the alternative is a lot of money spent for nothing.

Now that the election is over, the first step is for tribes to come together and decide how they want to move forward on sports betting.

“It’s clear voters don’t want a massive expansion of online sports betting, and they trust Indian tribes when it comes to responsible gaming,” said Mark Macarro, tribal chairman of the Pechanga Band of Indians. “As tribes, we will analyze these results, and collectively have discussions about what the future of sports wagering might look like in California.”

Photo by Shutterstock
Matthew Kredell Avatar
Written by
Matthew Kredell

View all posts by Matthew Kredell
Privacy Policy