Last month, voters in California dealt a massive blow to legal sports betting in California, or so it seemed. Specifically, they voted down Proposition 26 and 27.
Proposition 26 would have allowed tribal nations in California to allow in-person sports betting at their casinos and permitted four state-licensed thoroughbred racetracks to host sportsbooks. The tally was more than two-thirds against.
Gary Fenton, chairman of the Thoroughbred Owners of California, issued the statement about the defeat, which would have brought much needed revenues to Del Mar Thoroughbred Club, Golden Gate Fields, Los Alamitos Racecourse, and Santa Anita Park. He said:
“We are disappointed but not surprised that Prop 26 did not pass and will do our part to find a positive outcome that can channel sports gaming demand responsibly to return maximum benefit to the State as well as provide a top-quality customer experience at our well-established and regulated racetracks in California in the next election cycle in 2024. The California racing industry remains highly motivated to pursue this initiative, working collaboratively with key partners, to join the list of 35 states that currently offer legal sports wagering.”
While the tribal nations were also disappointed, they were happy that Proposition 27 was defeated, which would have allowed national sports betting operators to offer online sports betting in California. That amendment to the state’s Constitution was reportedly defeated by a 5 to 1 margin.
Californians for Tribal Sovereignty and Safe Gaming and others against the measure raised more than $200 million and effectively lobbied against Proposition 27.
San Manuel Band of Mission Indians Chief Intergovernmental Affairs Officer Dan Little issued the following statement:
“Those corporations should be aware that California Tribes will always protect their people and their sovereignty, as well as work with the people of California to improve our collective well-being, now and into the future.”
Pechanga Band of Indians Chairman Mark Macarro, for the “Coalition for Safe, Responsible Gaming,” also issued a statement:
“It is clear voters don’t want a massive expansion of online sports betting, and they trust Indian tribes when it comes to responsible gaming. As tribes, we will analyze these results and collectively have discussions about what the future of sports wagering might look like in California.”
Meanwhile, several online gambling companies and other entities that lobbied voters to support Proposition 27 were not quite ready to throw in the towel.
“Our coalition knew that passing Prop 27 would be an uphill climb, and we remain committed to California. This campaign has underscored our resolve to see California follow more than half the country in legalizing safe and responsible online sports betting.
“Dozens of states and countless local governments are benefitting from the significant tax revenue that online sports betting provides, and as California faces tax revenue declines and uncertain economic headwinds, online sports betting can provide substantial solutions to fill future budget gaps.
“Our campaign also demonstrated how the safe and legal online sports betting market in California can provide significant revenue and benefits to California Tribes – both gaming and non-gaming alike. Californians are currently placing billions in bets each year on illicit offshore sports betting websites – unsafe and unregulated enterprises that offer no protections for minors or consumers and generate no support for state priorities.
“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.”
Legal Expert Weighs In
We wanted to get more insights on developments in the Golden State, so we reached out to Frank DiGiacomo, of Duane Morris, an expert on the legal side of sports betting.
Question: How does this impact the future of legal sports betting in that state?
Answer: The defeat of both sports betting propositions was significant because of the degree both were defeated – Proposition 26 rejected by more than 70% of voters and Proposition 27 rejected by more than 83% of voters. California is too important, and populous, a state for the sports betting industry to walk away from. I anticipate the industry will certainly learn from the failed tactics and positioning used in this recent go around. Perhaps there is a re-evaluation and an attempt to have the California legislature put forth legislation that is acceptable to the powerful tribal gaming interest in the state and the national sports betting operators. I would not anticipate another attempt at a referendum anytime soon.
As sports betting becomes more accepted throughout the US and perhaps if there is an economic downturn and the state’s budget becomes stressed, there could be an opportunity for California legislators to look for new revenue. In such a scenario sports betting legislation may become more attractive as a way to generate additional state revenues through sports betting license fees and related taxes.
Q: Are there any national ramifications?
A: I anticipate that sports betting expansion through additional states legalizing will continue, albeit at a slower growth rate then we have seen in the previous few years. There remains three populous states – California, Florida and Texas where future sports betting legalization will be considered.
