Igaming Focus: California rejects proposals to legalise sports betting

November 14, 2022 8:00 AM

Igaming Focus: California rejects proposals to legalise sports betting

Photo: Shutterstock
  • Hannah Gannagé-Stewart, CDC Gaming Reports
November 14, 2022 8:00 AM
  • Hannah Gannagé-Stewart, CDC Gaming Reports

Californian voters have delivered a blow to the U.S. gaming industry this week, with initiatives put forward by both the Native American tribes and global gambling operators overwhelmingly voted down. 

The industry had initially held high hopes for California joining the more than 30 states with legalised sports betting and the handful that allow online wagering but, for now at least, the most populous state in the U.S. remains outside the legalised market. 

It is reported that the competing factions spent around $460m trying to convince Californians to legalise sports betting in the Golden State, which is thought to have been a major part of the problem. 

Voters were bombarded with conflicting information and confusing advertising campaigns, leading them to reject both sides’ proposals.  

Californians had expressed a less than positive attitude to gambling in early polling. The Cal Matters website cites research from UC Berkeley’s Institute for Governmental Studies, which spoke to voters in February to see if they’d support a constitutional amendment to legalize sports betting.  

They discovered that just 45% were inclined to vote yes, with 33% inclined to vote no. Perhaps it was this that drove the advertising bombardment, but with hindsight maybe a more subtle approach to convincing a wary public was required. 

There were two competing propositions on the ballot. Proposition 26, led by the state’s tribes, was intended to legalize in-person betting at racetracks and tribal casinos and would have allowed privately-owned tracks and casinos to operate betting, with high school and college games excluded. It would also have allowed roulette and dice games at casinos. 

It called for 10% of the bets made to be paid to the California Sports Wagering Fund, to help pay for enforcement of gambling laws and programs to help gambling addicts. 

Proposition 27 would have legalised online and mobile sports betting. It would have required gaming companies to partner with a tribe, whether they were already active in the market or entering for the first time. The idea was backed by DraftKings, BetMGM and FanDuel, as well as some of the sports leagues. Billed as a way to raise revenue to help the homeless, its critics were unconvinced of its claimed altruism. 

California would have been a gamechanger for the U.S. market had either proposition been voted through, but it now looks as if any plans to legalise will be shelved until elections in 2024. 

That said, with what’s expected to be a billion-dollar market at stake, supporters of legalisation are not likely to stop lobbying for these measures to be passed in future – although, perhaps more will be done behind the scenes to minimise the risk of voters being bamboozled by information overload for a second time. 

The industry is certainly not backing down, with the campaign that attempted to drum up support for Proposition 27 releasing a statement that said it was “resolved” to continue the battle for legalised 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”, it 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.” 

The tribes were less upfront about their next moves, which could include engaging more with the legislature or preparing for another ballot.  

Vice president of public affairs for the Pechanga tribe, Jacob Mejia, was reported as saying: “First, we all need to respect the will of the voters and the message they sent last night.” 

This vote has highlighted the problem that California has always faced in getting sports betting legislation through, which is the conflict not between whether gambling is right or wrong but whether big businesses are going to be allowed in on tribal gaming territory. 

Arguably, for any future campaign to work, there will need to be far greater co-operation between the tribes and the major operators. After all, even if the big operator’s Proposition 27 had been voted through, they would have needed to work with the tribes. 

As it was, the proliferation of negative messaging against each side was what ultimately killed the entire campaign off. It’s a familiar story in modern politics, polarisation of ‘sides’ makes any workable solutions hard to come by, no matter how much money to throw at the issue.