When California residents headed to the polls to vote in the 2022 midterm elections, they had the option to vote in favor of two propositions that would advance the legalization of sports betting in the state.[1] Voters in California did not approve either of these propositions, so for now, sports betting will not be legal in California.
California had offered two different, and rival, approaches with different backings that would have legalized sports betting. One of these was heavily backed by Native American tribes, and the other was backed heavily by the online sports betting giants like FanDuel, BetMGM and DraftKings.[2] The proposition that was backed by Native American tribes primarily focused on allowing in-person sports betting at casinos and horse racing tracks (Proposition 26). This proposition would have had a 10% tax to help enforce gambling laws.[3] Then there was the larger proposition that was backed by the online sports betting giants that would have allowed mobile sports betting, as long as the company that would offer the sports betting partnered with a Native American tribe and paid licensing fees (Proposition 27).[4] While technically both of these propositions could have passed, it really came down to the tribe’s proposition versus the sports gambling companies’ proposition, and the tribes were very much against the online sports gambling proposition.
Why Did They Say No?
Apparently neither of these options resonated with the California voters, as neither was close to passing. So, the question is why were voters so quick to decline these things that would be sure to bring in 100s of millions of dollars in taxes, fees, and revenues to California? The main reason was that there was a large war waged against the online sports gambling proposition by the Native American tribes, leading to a massive advertisement campaign against (and for) this proposition.[5] Additionally, a lot of people were confused by the propositions, which tends to lead to voters rejecting something they do not understand.[6]
Neither the Republican nor the Democratic parties in California backed the proposition that would have legalized mobile sports betting; however, the MLB was a strong supporter of it.[7] In August, the MLB became the first sports league to support the proposition for online sports gambling in California.[8] The MLB was vocal in support of the proposition because they believe that it fits with their mission of promoting integrity and safety in the sports gambling space that they are already in. The MLB said, “The measure would, for example, (1) require sports book operators to notify leagues of suspicious wagering activity, (2) allow leagues to propose restrictions on betting markets that are particularly susceptible to manipulation, and (3) facilitate other forms of integrity-related cooperation between the state, leagues, and operators. MLB believes that Prop 27 has the safeguards to create a safe and responsible online sports betting market in California – a state with millions of MLB fans looking for alternatives to illegal offshore betting sites.”[9] This shows just how far sports has come around in sports betting in such a short amount of time. Not only are leagues partnering with gambling companies, but they are now even campaigning for sports betting legislation to be passed.
An Interesting Dynamic
Over $600 million was raised by the groups proposing and opposing the legalization, which is more than double the amount that was spent by ride sharing companies and delivery companies (Uber, Lyft, DoorDash, etc) in 2020 to prevent those workers from being considered employees in California, which would make them eligible for state benefits.[10] Sports gambling backers put all of their chips on the table and failed. However, Fernando Guerra (a campaign reform finance advocate) said that it does not seem that actually being against gambling is what led voters to strike down these bills, rather “it was the heavy-handed attempts to actually restrict gaming”, showing that California voters are not totally opposed to it, they just want it to be done the right way.[11]
It seems that in addition to confusion, many voters just did not trust what would be done with this gambling revenue. To start, Proposition 27, the one to legalize online sports betting, was also referred to as “The California Solutions to Homeless and Mental Health Act”, trying to emphasize that the revenue brought in via sports betting would go towards these important social concerns, rather than explain what the actual act would do, however this did not seem apparent to voters.
It seems voters want to understand where their money would go and how California would govern this, and these propositions just did not offer enough information about to get the necessary support.
Then, there is the dynamic between the Native American tribes and sports betting companies, where the tribes essentially believe everything should go through them, which was not the case with this proposition related to online sports betting, so the tribes were very against it.
The negative dynamic between the Native American tribes versus the major sports betting companies resulted in neither of their propositions gaining any steam. While technically there were no winners, the Native American tribes were a big winner here, because they were the driving force behind the anti-online sports betting campaign.[12]
By no means is this a final “no” on sports gambling in California, rather these just weren’t the right propositions. The Political Action Committee in support of the online sport betting proposition said that they “remain committed to California” and are confident that the right proposition will prevail at some point.[13] The negative advertisement campaign led by the Native American tribes worked, so it is only logical to think that the two sides need to come together to come up with a proposition that works for everyone; the tribes, the companies, and California residents. Neither of the propositions were even close to passing, which demonstrates how far apart everyone is on an issue that has been able to be resolved in 30 other states.
Feature Photo: https://betworthy.com/wp-content/uploads/2020/10/sports-betting-in-california.jpg
[1] https://www.law360.com/sports-and-betting/articles/1541561/calif-voters-reject-2-measures-to-legalize-sports-betting
[2] Id.
[3] https://www.espn.com/chalk/story/_/id/34983440/california-overwhelming-votes-no-sports-betting
[4].https://www.law360.com/sports-and-betting/articles/1541561/calif-voters-reject-2-measures-to-legalize-sports-betting
[5] Id.
[6] https://www.law360.com/sports-and-betting/articles/1541561/calif-voters-reject-2-measures-to-legalize-sports-betting
[7] https://www.espn.com/chalk/story/_/id/34983440/california-overwhelming-votes-no-sports-betting
[8] https://www.espn.com/chalk/story/_/id/34389548/major-league-baseball-announces-support-online-sports-betting-initiative-california
[9] Id.
[10] https://www.espn.com/chalk/story/_/id/34983440/california-overwhelming-votes-no-sports-betting
[11] https://www.nbcnews.com/politics/2022-election/midterm-elections-biggest-losing-bets-two-measures-seeking-sports-gamb-rcna56322
[12] https://calmatters.org/commentary/2022/10/whats-next-for-sports-wagering-in-california/
[13] https://finance.yahoo.com/news/sports-betting-failure-california-sportsbook-efforts-220903831.html
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