California sports betting measures fail despite record campaign spending

California voters resolutely rejected dueling ballot measures that would have legalized sports betting on Tuesday, delivering a blow to both online gambling companies and fractured Native American tribes despite record spending on the initiatives.

Campaigns for and against the measures raised more than $570 million, the most spent on any U.S. ballot measure issue. The enormous investment reflects the billions that stand to be reaped from the legalization of sports betting in California’s massive market.

The Associated Press called the race, though official results will take longer to finalize.

Proposition 26 would have legalized in-person sports betting at tribal casinos and horse racing tracks and was voted down by 70.5% of voters in early results. A whopping 83.3% of voters rejected Proposition 27, which would have allowed sports gambling companies to operate mobile betting in partnership with a tribe.

Prop. 27 was placed on the ballot by online sports gambling companies such as FanDuel and DraftKings. The measure, which would have raised up to several hundred million dollars a year in state revenue to fight homelessness, received support from three tribes with small gaming operations that receive little foot traffic.

A larger coalition of 30 tribes put Prop. 26 on the ballot as a step forward on sports betting that would have kept it under the purview of brick-and-mortar tribal casinos. The measure received criticism for inserting provisions that would have put substantial pressure on card rooms, which compete with tribal casinos.

No on 27 campaign spokesperson Kathy Fairbanks said the measure tanked because mobile sports betting remains generally unpopular among voters and tribes are favored as stewards of gaming.

“The corporate operators thought they could waltz into California, throw their money around, mislead voters and score a victory. Big mistake,” said Beth Glasco, vice-chairwoman of the Barona Band of Mission Indians, a tribe in the No on 27 coalition. “Voters are smart. They saw through the false promises in Prop 27.”

Nathan Click, a spokesperson for the Yes on 27 campaign, said the race “has underscored our resolve to see California follow more than half the country in legalizing safe and responsible sports betting” and added that tax revenue can shore state coffers against expected economic headwinds.

“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,” he said.

After voting in Folsom on Tuesday, retiree Jackie Elmendorf weighed in against Prop. 27 despite enjoying gambling and the occasional casino visit with family.

“Having gambling so accessible is rather dangerous for people who have a problem,” she said. “It becomes too attractive for some.”

Meanwhile, 47-year-old Jessica Harmon went against the grain by voting for both measures in East Sacramento. She took issue in tribes’ domination of the state’s gaming industry.

“My son’s a big online sports gambler and my mom also loves a gambling moment. I love it, and I don’t think it should be limited to tribal reservations,” she said. “I do feel bad though because it might take some money away from them.”

Both measures were expected to fail after early polling showed them falling out of public favor. A barrage of advertisements from both campaigns reflected a fractured landscape of stakeholders vying for control over the gambling industry’s future.

Thirty other U.S. states have passed some form of sports betting following a 2018 Supreme Court decision that opened the door to legalization. Morgan Stanley predicted the U.S. sports betting industry will grow to $12.8 billion by 2025.

Over the last two decades in California, gaming Native American tribes have turned casinos into a multi-billion-dollar industry. That wealth has not only gone toward internal tribal government services, local jobs, and philanthropic efforts but also solidified tribal political influence in Sacramento.

Both sports gambling companies and tribes have said they will regroup and try again after this election, whether through legislation or more ballot initiatives in 2024. Some tribal leaders have floated the possibility of renegotiating a revenue sharing agreement between gaming and non-gaming tribes to achieve greater consensus.

“The last big prize in gambling is California sports betting; that’s why every political player is joining in,” said I. Nelson Rose, emeritus gambling law professor at Whittier College. “But once it’s defeated at the polls, it’s not going away. Hundreds of millions of dollars are going to be spent because this is a multi-billion-dollar prize.”

This story was originally published November 8, 2022 at 8:27 PM.