Bet on it: Sports gambling effort in California is not over

The effort to legalize sports betting in California ran headlong into a typical challenge for competing ballot measures as each was battered in a torrent of negative advertising that doomed both to spectacular failure in the most expensive ballot race in U.S. history.

Anytime voters face two measures at odds with each other, they tend to reject both, said professor David McCuan, chairman of the political science department at Sonoma State University.

"Whenever we have dueling ballot measures, and the competitors have an arsenal of dollars ... the competitors will go nuclear. And in a nuclear war everybody loses," McCuan said. "The most powerful money in California politics is on the ‘No’ side of ballot measures."

The result was a pasting at the polls for both.

With 5.3 million votes counted Wednesday, more than 80% of voters rejected an effort by the gaming industry that would have allowed online and phone wagers on sports. A measure supported by Native American tribes that would have let gamblers place sports bets at tribal casinos and four horse tracks was opposed by 70% of voters.

But the result of Tuesday’s election is not a doomsday scenario for sports betting in California. With what could be a billion dollar market in the nation’s most populous state, there’s simply too much at stake for supporters to give up.

More than 30 other states now allow sports betting, but Californians are limited to playing slot machines, poker and other games at Native American casinos, and wagering at horse tracks, card rooms and the state lottery.

Supporters of both measures wouldn’t discuss specifics but said they were reevaluating how to move forward to bring sports gambling to the Golden State.

Jacob Mejia, vice president of public affairs for Pechanga, which has one of the biggest casinos, said it’s too soon to say whether tribal gaming interests would try to work with the Legislature or go directly to the voters again.

"First, we all need to respect the will of the voters and the message they sent last night," Mejia said.

The campaign in support of online wagering issued a statement saying it remained committed to expanding sports betting in California.

"This campaign has underscored our resolve to see California follow more than half the country in legalizing safe and responsible online sports betting," the Yes on 27 campaign said. "Californians deserve the benefits of a safe, responsible, regulated, and taxed online sports betting market, and we are resolved to bringing it to fruition here."

Returning to the Legislature for a solution would require powerful tribes to sit down with their smaller peers, off-track betting operations, as well as foes who operate card rooms and those who want to expand betting to mobile devices, McCuan said.

"The tribes have so much money and so many resources that they believe they could take their toys and go home," McCuan said. "That has presented some problems to find a legislative solution."

The origin of what became such a negative campaign with voters inundated with television ads during sporting events, on social media and in campaign mailers, began after several legislative efforts to allow sports betting failed in Sacramento.

California tribes planned to launch a ballot campaign in 2020 but had to shelve that plan when the pandemic prevented collecting signatures needed to get it on the ballot.

Their measure — Proposition 26 — qualified for the ballot this year, but they quickly shifted priorities to defeat Proposition 27 — the competing measure put forward by online gambling proponents.

"Tribes viewed this as the biggest threat to their self sufficiency in a generation," Mejia said. "These out of state operators tried to masquerade Prop. 27 as a tribally supported solution for homelessness, when in fact, it was neither."

Attack ads said Proposition 27 would turn every cell phone, laptop and tablet into a gambling device. They said it couldn’t be adequately monitored to keep children from betting and raised fears of creating a generation of gambling addicts.

Opponents of Proposition 26, led primarily by card rooms that stood to lose out on any kind of sports betting, said the measure would increase the power of wealthy tribes and grant them a virtual monopoly on gambling in the state. The measure would also have allowed casinos to offer roulette and craps.

Both measures promised to bring benefits to the state through tax revenues. Proposition 27 supporters touted funds that would go to help the homeless, the mentally ill and and poorer tribes left out of the casino bonanza. Proposition 26 backers said a 10% tax would fund enforcement of gambling laws and support programs to help gambling addicts.

Of the roughly $460 million raised for and against both measures, about $170 million was in support of the online sports gambling initiative backed by DraftKings, BetMGM, FanDuel — the latter is the official odds provider for The Associated Press — as well as other national sports betting operators and a few tribes.

A coalition of tribes behind the No on 27 committee raised $116 million toward its defeat. Of the $128 million raised by the Yes on 26, No on 27 committee of tribal groups, Mejia said its spending was primarily to defeat the online measure and the group didn’t run a single TV ad in support of its own initiative.

Two groups funded mostly by card rooms raised $44 million to attack Proposition 26.

The massive fundraising more than doubled the previous record in 2020 that helped Uber, Lyft and other app-based ride and delivery services to prevent drivers from becoming employees eligible for benefits and job protection.

With a blowout on political advertising, voters often end up being turned off, McCuan said.

"What California voters object to is the vulgarity of having campaign ads thrown in their face at every turn," he said. "It has that backlash effect."