California online, retail sports betting measures defeated despite record spending

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California voters rejected two sports betting legalization ballot measures, leaving no legal wagering options in the nation’s most populated state for the foreseeable future.

The two failed ballot measures come despite more than $600m in spending both in support and opposition to each measure. Most of that money went to advertisements, both for and against, Proposition 27, which would have permitted statewide mobile wagering. Proposition 26, which would have permitted in-person betting at tribal casinos and certain horse tracks, was also defeated.

With a little more than one-third of the state’s precincts at least partially reporting, Proposition 27 was down, 16% – 84%, per the California Secretary of State’s office. Proposition 26 was down 29.6% – 70.4%.

California is the first of seven states to reject a constitutional amendment that would legalize sports betting on its ballot. Voters in New Jersey, Arkansas, South Dakota, Maryland, Colorado and Nebraska all approved sports betting, either as part of larger casino gaming expansions or as standalone referendums.

Multiple polls in the weeks leading up to Election Day showed both measures were headed for defeat despite the record spending. Officials from DraftKings and FanDuel, the biggest financial backers of Proposition 27, were bearish in public that their measure would pass and the companies suspended advertising with nearly a month to go before the election.

DraftKings and FanDuel each contributed more than $30m to the campaign, while the partner companies of other major sportsbooks including BetMGM, Barstool, WynnBet and the coming Fanatics sportsbook contributed at least $10m.

California tribal gaming leaders likewise predicted the online sports betting measure would be defeated. The state’s major gaming tribes pushed campaign contributions toward defeating Proposition 27 instead of supporting Proposition 26.

Tribal opposition was arguably the critical factor in preventing statewide mobile wagering legalization. Tribal leaders considered the issue a threat to their sovereignty, not only for permissible gaming options but for the long-term well-being of the tribes themselves. Much of the advertising portrayed Proposition 27 as a way for out-of-state companies to take money from California’s pocket at the expense of its residents.

The pro-27 campaign framed their initiative as a way to support homelessness and mental health aid initiatives. Each approved operator would have to pay a $100m initiative license fee, and taxes on the books’ gross gaming revenue would go to these programs.

In a best-case scenario, sports betting revenues would have generated a small fraction of the state’s annual budget of roughly $250bn, a fact  opponents used in their campaigns.

Some Californians have cited the deluge of advertising itself as a factor in their opposition. The placement of two sports betting-related questions on the same ballot has also caused confusion for voters.

With 2022 legalization efforts over, leading sportsbooks have said they will pursue another initiative for the ballot in 2024. The California legislature could also enact a measure for the 2024 ballot, but political complications make this seem unlikely.

Assuming commercial operators pursue another sports betting effort in 2024, California tribes said they are ready to again spend aggressively to stop it. Tribal leaders have said that sports betting approval could open the door to online casinos, a more lucrative form of gaming Native American groups say threaten the existence of their current casino options.

Without a compromise between the tribes, commercial operators and potentially other stakeholders such as state horse tracks, professional sports teams and card rooms, it seems legalization will be a complex – if not impossible – process. This means the nation’s most populated state could be years from legal sports betting.

Tuesday’s results virtually guarantee, in a best-case scenario, it will be at least two more years from even a chance of legalization.

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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