An analysis of California’s sports betting ballot measures puts the odds at less than 50% that either pass.
However, if both do, the California sports betting market projects to be the largest of any state in the nation.
Independent research firm Eilers & Krejcik produced the report titled “Battle at the Ballot Box: Analyzing California’s Pending Sports Betting Ballot Measures.” The firm provided PlayCA with a copy of the report to review.
Becca Giden, Chris Krafcik and Adam Krejcik authored the report. Eilers & Krejcik has a branch in Orange County, CA, in addition to Las Vegas.
Voters will find two competing initiatives on the November ballot. Proposition 26 legalizes in-person sports betting at California tribal casinos and California horse racing venues. Prop 27 legalizes online sports betting and requires sportsbooks to partner with California tribes.
Why neither proposition is likely to pass
Eilers & Krejcik noted the difficulty in predicting the outcome of the ballot measure.
While both campaigns have released their own polling, there’s a lack of non-partisan polling data.
Also, there are no relevant ballot precedents. Sports betting propositions are six-for-six in other states. But neither state had competing sports betting measures waging a $370 million battle.
The report explained:
“We preliminarily put the odds of one or both measures passing at less than 50%. The political power and deep pockets of interests with dogs in this hunt (e.g., tribal casinos, OSB operators, sports leagues)—together with competing sports betting measures whose back-to-back presentation on the ballot is likely to confuse voters—have us leaning negative on California’s sports betting legalization prospects this fall.”
California sports betting market potential tops all
If both initiatives pass, the analysis projects California sports betting could bring in $3.1 billion in gross gaming revenue at maturity.
Its next highest market projection is $2.3 billion for Texas. The existing legal market of Illinois is next at $1.3 billion.
Breaking down the initiative proposals, E&K projects Prop 27 to generate $2.8 billion in GGR. If only Prop 26 passes, it predicts the retail-only CA sports betting market to reach $1.3 billion.
Projected operators in California online sports betting market
If Prop 27 passes, the E&K analysis only has “high confidence” in nine operators joining the California market.
And the report projects the top three — FanDuel, DraftKings and BetMGM — to control greater than 70% of online sports betting in the California sports betting market’s early days.
The initiative includes two limiting factors. It has a high initial fee of $100 million for a license. It requires online platforms be licensed to operate sportsbooks in at least 10 US states or territories, or five states along with operating/managing 12 physical casinos in the US.
E&K includes Fanatics, a backer of the initiative campaign, under “TBD” because it is a forthcoming sportsbook that doesn’t yet meet that criteria.
Here are the nine operators E&K predicts to get a qualified gaming entity license:
- Bally Bet
- Barstool Sports
- BetMGM
- BetRivers
- Caesars
- DraftKings
- FanDuel
- Hard Rock
- WynnBet
Prop 27 includes additional licensure possibilities for a tribe to partner with a platform provider or develop its own online sportsbook. However, E&K wasn’t confident enough that any commercial operators or tribes will apply for those license types.
