California sports betting headed for defeat despite record spending

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The most expensive ballot measure campaign in California history appears headed toward defeat, meaning Californians could go at least two more years without a legal betting option.

SAN FRANCISCO- Despite several hundred million dollars in spending – and a deluge of ensuing advertisements – it appears two separate measures that would allow legal online sports betting in California will be defeated by the state’s voters.

Proposition 26, a ballot measure backed by most of the state’s major gaming tribes that would allow retail sportsbooks at tribal casinos and certain horse tracks, as well as Proposition 27, a statewide mobile sports betting initiative backed by many the nation’s leading commercial operators, both appear headed for defeat, according to recent polls. This comes despite more than $600m combined on the two initiatives, the vast majority of which has gone toward the “yes” and “no” camps for Proposition 27.

A major Los Angeles Times and University of California Berkley poll released earlier this month showed only 31% support from likely voters for Proposition 26, compared with 42% opposed and the rest undecided. Proposition 27 polled at 27% support and 53% opposition.

“The reality is that both of them are not going to pass. That’s just the reality,” said Jacob Mejia, executive director of the California-based Tribal Alliance of Sovereign Indian Nations, during a gaming industry conference last week.

Assuming defeat, California will be the first state where voters rejected a ballot measure that would allow sports betting. Voters in New Jersey, Maryland, Colorado and South Dakota have all approved stand-alone sports betting ballot measures while voters in Arkansas and Nebraska also approved measures that permitted sportsbooks as part of larger casino legalization initatives.

FanDuel CEO Amy Howe and DraftKings CEO Jason Robins, whose companies have been the biggest financial backers of Proposition 27, were not as blunt during a panel at last week’s Global Gaming Expo but indicated they were already shifting focus toward future initiatives in California, the nation’s most populated state. The two sportsbook operators, as well as the respective parent companies of BetMGM, BetFanatics, WynnBet, Bally Bet and Barstool Sportsbook, have combined to spend more than $100m supporting the campaign.

Much of the sportsbooks’ advertising centered on raising funds for homelessness as well as mental health issues. Though online sports betting legalization would likely raise several hundred million dollars annually in taxes – along with a $100m initial licensing fee for each operator – this money raised would be a small fraction of California’s nearly $300bn annual budget and not nearly enough to fully tackle these major crises the state has dealt with for decades.

Opponents pointed this out in their campaigns, phrasing the effort as misleading, at best. Some industry stakeholders noted the sportsbooks may have been more successful in focusing efforts on bringing mobile sports betting, which has majority support nationwide.

The sportsbooks’ massive campaign also ran up against tribal-backed opposition. A group of the state’s largest gaming tribes combined to contribute more than $100m solely to defeat Proposition 27.

These tribes prioritized defeating Proposition 27 even over backing Proposition 26, fearing that the spread of online sports betting could lead to more commercial gaming operations in the future, jeopardizing the tribes’ major revenue source. Ultimately, Proposition 27 posed a threat to their sovereignty and livelihood, Native American leaders said.

“I split my time between the coasts and it is just amazing to watch an NFL game in California versus anywhere else because all you see the whole day are the ballot propositions,” said Paul Martino, managing general partner at Bullpen Capital, in an interview with iGaming NEXT. “And I’m like, ‘Oh my God, how much money are they spending on this?”

The advertising itself seems to have turned off many Californians who otherwise would have supported sports betting. Many voters have said they were confused by the messaging, as well as the fact there were two separate measures that both would legalize sports betting, albeit in very different forms.

After months of seemingly relentless advertising on television, the internet, radio and billboards, the campaigns’ marketing has largely disappeared. In California, which conducts elections through the mail, voters received their ballots earlier this month, seemingly when the advertising would be most effective.

Instead, the eerie absence of advertising seems to reaffirm that sports betting legalization efforts are headed for defeat.

“The polling is so bad right now. Conventional wisdom is it’s over because it’s so one-sided. But conventional wisdom can be wrong. Polls can be gamed. Polls are sometimes aspirational instead of accurate, make no mistake about that,” Martino said. “Still, I think it’s so one-sided right now that it has to be demoralizing.”

About the author

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Ryan Butler

Ryan is a veteran sports betting and iGaming regulation and breaking news journalist based in the US. A two-time Associated Press Sports Editors award winner, he has reported on sports and politics since 2012. He has covered the gaming industry since 2018. Ryan graduated from the University of Florida with a major in Journalism and a minor in Sport Management.

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