Newsom Staying Silent On Legalized California Sports Betting

Written By David Danzis on July 26, 2022 - Last Updated on August 17, 2022
Sports betting in California

Legal sports betting is a high-stakes topic on the California ballot this November, but the governor is electing to remain on the sidelines.

Gov. Gavin Newsom is not offering an opinion on either California sports betting ballot initiative. Nor has the first-term Democratic governor said much in respect to legalized sports betting in the Golden State.

One of the ballot measures, Proposition 27, would dedicate a portion of online sports gambling taxes to homelessness and mental health services in California, something Newsom recently identified as the state’s “number one issue.” The second, Proposition 26, is an in-person betting proposal backed by tribal casino operators, a formidable group within California political circles.

The strong relationship between the state and tribal casino operators was displayed earlier this week after the federal government struck down two gambling compacts. The governor responded almost immediately, saying the U.S. Department of Interior’s disapproval of the Class III gaming compacts threatened tribal economies.

Mum is the word on California sports betting

Newsom’s silence on the competing sports betting ballot initiatives is noteworthy given how much money is on the table. Industry experts believe California has the potential to be the largest legal sports betting market in the US.

PlayCA reached out to the governor’s office with questions about sports betting and was directed to his campaign. The campaign’s response to questions contained no mention of sports gambling.

“The Governor has made endorsements in two ballot measure races on the November ballot — first in support of codifying abortion rights in the state constitution and second in support of the state’s ban on flavored tobacco,” the campaign said in an email.

CA sports betting provides a ‘no-lose’ situation

State law prohibits elected officials from making political endorsements using public resources. As such, a formal position from the governor’s office on the two ballot questions is not feasible.

However, whether legalizing sports betting is in the state’s best interests or what could (or should) be done with the potential tax money is not off limits for a sitting governor to speak about.

The reality is this: the governor is in a no-lose political position when it comes to the dueling sports betting initiatives. If either or both pass in November, California’s gaming market will expand, and the state will collect more taxes. If voters reject sports betting this year, California could take another crack at it in 2024.

Politically speaking, it is in Newsom’s best interest to remain noncommittal because the battle landscape is fraught with dangers.

Online option for California gamblers

Prop. 27 is backed by online gambling operators and requires partnerships with CA tribal casinos.

The measure dedicates a portion of online sports gambling taxes to California’s homelessness and mental health services. Newsom said he sees those issues as a top priority for California.

As evident in other legal states, online sports gambling generates significantly more revenue and taxes than retail betting. Ultimately, Prop. 27 would generate millions of dollars for the state to address those two concerns.

But, it’s not that simple for Newsom.

The governor’s political allies, the California Democratic Party, are opposing Prop. 27. So is the California Teachers Association, a union whose membership typically votes Democrat.

Tribal control of CA gambling

The second ballot question, Prop. 26, favors CA tribal casinos and racetracks by only allowing in-person sports gambling. California tribal casinos collectively generate nearly $9 billion in annual revenue, a figure which captures the attention of lawmakers in Sacramento.

Proponents of Prop. 26 do not want out-of-state operators, such as FanDuel, DraftKings or BetMGM (the primary backers of Prop. 27), to profit from online sports gambling in California. Furthermore, they say maintaining tribal control over most of the legal gambling in California is critical to their sovereignty.

Prop. 26 also would allow Native American casinos to offer roulette and dice games, putting them more on par with resort-style gambling parlors in Las Vegas and Atlantic City.

California card rooms oppose Prop 26 because of a clause allowing tribal interests to take legal action over alleged violations of state gambling laws. Card rooms say that would cause economic losses for local communities.

Too hot to touch

The various parties involved and their competing interests make CA sports betting a political hot potato. Combined with the possibility of backing a losing proposal(s) in November, the smart money says Newsom avoids going all-in on sports gambling. For now.

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David Danzis

David Danzis is the managing editor for PlayCA and former lead writer/analyst for PlayNJ. He is a New Jersey native and honors graduate of Rutgers University. As a newspaper reporter for the New Jersey Herald and Press of Atlantic City, David earned statewide awards for his coverage of politics, government, education, sports and business. After years of reporting on Atlantic City casinos, NJ online gambling and sports betting, he is now focusing his attention on California's gaming markets. David lives in Mays Landing, NJ with his wife and two children. When not on the beach, golf course, or snowboarding, David enjoys watching his beloved New York sports teams — Yankees, Jets, Rangers and Knicks.

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