Props 26 and 27 Both Lose; When Will California Get Legal Sports Betting?

GamingToday.com is an independent sports news and information service. GamingToday.com has partnerships with some of the top legal and licensed sportsbook companies in the US. When you claim a bonus offer or promotion through a link on this site, Gaming Today may receive referral compensation from the sportsbook company. Although the relationships we have with sportsbook companies may influence the order in which we place companies on the site, all reviews, recommendations, and opinions are wholly our own. They are the recommendations from our authors and contributors who are avid sports fans themselves.

For more information, please read How We Rank Sportsbooks, Privacy Policy, or Contact Us with any concerns you may have.

Gaming Today is licensed and regulated to operate in AZ, CO, CT, DC, IA, IL, IN, KS, LA, MD, MI, NV, NJ, NY, PA, TN, VA, WV, & WY.

It’s over. It was a costly and exhausting stalemate.

After about a half-billion dollars were spent on pro and con advertising and intense lobbying from California tribes and national online sports betting companies, the state of legal sports betting in California is the same as it was before: There isn’t any.

And there doesn’t figure to be any in the near future. Why? Ask Californians. They became the first to reject sports betting propositions after voters in Louisiana, Maryland and South Dakota had.

Some gambling industry stakeholders think it could be multitudes of years longer as the magnitude of the defeats of both Proposition 26 and 27 marinate with a public weary of the discussion. Polling suggests the one sector of the electorate that isn’t tepid on legalizing sports betting — younger voters — are less likely to go to the polls. So without a simmering demand among the people, the 73 tribes that offer gambling in the state will have assured themselves a large role in the process, even with their Prop 26 smoldering with Prop 27.

“I think the industry did not fully respect the tribes for who they are,” gambling industry lobbyist Bill Pascrell III of Princeton Public Affairs Group said. “I think many times the industry has not approached the tribes, respectfully as an organization that should be met as co-equal level.

“When you come into the room and you look down your nose at a significantly politically powerful group — at least in the state of California — you do it at your own demise.”

Election Night Losers for California Sports Betting

Proposition 26, would have allowed retail sports betting at 66 tribal casinos and Santa Anita Park, Del Mar Race Track, Los Alamitos Race Course, and Golden Gate Fields. It would have hardened the power of tribes over gaming in the state, particularly with the Pechanga Indian Reservation, Barona Band of Mission Indians, Yocha Dehe Wintun Nation, and Agua Caliente Band of Cahuilla Indians, with card rooms, bingo, and lottery remaining as the only legal gambling options in California.

The plan had the backing of at least 80 tribal and non-tribal groups.

Proposition 27 would have allowed for private sportsbook operators like FanDuel and DraftKings to partner with California tribes to offer state-wide mobile and online sports betting. A 10% tax would have funded, among other things, homeless programs, although skeptics of the veracity of that claim included Gov. Gavin Newsom.

It’s easy to see how anti-27 forces were able to paint 27 as the plan of the interlopers, with national sportsbook companies and Major League Baseball representing the main backers.

Said Morongo Band of Mission Indians Vice Chair James Siva said at the Global Gaming Expo in October:

“Don’t underestimate tribes.”

If anyone did, they shouldn’t anymore. National operators who poured millions into the failed effort — similar to Florida in 2021 — will need a new approach to break into the most populous state of around 22 million residents.

What’s Next for Sports Betting in California?

California legislators could try to handle things in Sacramento, again. State Senator Bill Dodd tried in 2020, but yanked his sports betting amendment proposal before it entered the appropriations phase.

“Given the deadlines for getting a measure on the November ballot and the impact of Covid-19 on the public’s ability to weigh in, we were not able to get the bill across the finish line this year,” Dodd said at the time. “It remains important that we lift this widespread practice [of sports betting] out of the shadows to make it safer and to generate money for the people of California. I will continue to be engaged in the issue as we work toward 2022.”

The District 3 Democrat could try again when 2023-24 legislative session begins on Dec. 5. Forging a legislative version of an amendment would in theory allow tribal, pari-mutuel, and national gaming interests to negotiate in private and beyond the reach of $450 million media spend meant to promote or pummel constitutional amendment proposals like Proposition 26 or 27. This could be a hard slog, facing either opposition or very tough bargaining from empowered tribes.

Chris Grove, a partner at Acies Investments, said the failure of both referendums “might be a necessary precursor to broader cooperation.”

Forging a New Path

There can be no Control-C, Control-V.

The demonstrable fatigue of California voters regarding Props 26 and 27 played out on social media before and after they voted both down this time. Putting forth the same amendment proposals in a year would not be prudent. The breadth of the defeat suggests the ground has not been seeded, but ceded in regard to public opinion on these sports betting proposals.

California law saves sports betting backers from themselves, anyway.

“They can’t come back with what I would say is a similar proposition. It’s got to be significantly altered,” Pascrell III said. “There’s various legal opinions on what you need to do to do that.

“Maybe if you take the homeless component out and drive it a different way and tweak it, you might be able to, but I think it’s a fool’s errand to come right back next year. It’s too quick. You have basically seven, eight months to get another ballot referendum on. What’s going to change?”

And if someone tries, allocate the money better, Pascrell III said.

“If they’re going to spend any more money, they should spend it on educating the voter on some of the positives of bringing regulated legalized sports betting to California,” he said. “Meaning:  dump the homeless issue. People aren’t buying it. Speak about the black market and what it does and what the black market funds, in addition to a legal activity and the importance of legalizing and regulating for the proposition of addressing problem gambling.”

FanDuel Investor ‘Bearish’ on California’s Prospects

California will remain the plum piece of real estate on the national sports betting map, even though the top three most populated states have yet to legalize sports betting. (That’s also you, Texas and Florida)

Estimates on how long it will take until commuters — not the drivers! — are thumbing through FanDuel odds while creeping along I-10 is a source of lively conjecture. California’s tribes will likely dictate the pace and can now play a long game, especially since sports betting is a low-margin amenity and they control casino gambling in the state. The tepid demand at the ballot box would figure to strengthen that position further.

Paul Martino, an early FanDuel investor and managing partner of Bullpen Capital who spent 13 years in the Silicon Valley tech community, expects this game to go very long.

“I’m actually very, very bearish on California,” he said. “I felt all along that if this initiative got the kind of backlash that we anticipated — no one would’ve thought they would’ve spent $400 million on this initiative — but my view was that if this went down this year in 2022, it would be five to 10 years until we get another bite of this apple.

“I know that I’m probably more bearish than most people on California, but look, I lived in San Francisco for 13 years. I did follow politics there when I was there. I just think that this will close the door probably to the end of this decade.”

About the Author
Brant James

Brant James

Brant James is the lead writer for Catena Media Sharp Sites including Gaming Today. He has covered the American sports betting industry in the United States since before professional sports teams even knew what an official gaming partnership entailed.

Get connected with us on Social Media