The most expensive ballot proposition gamble in US history went bust Tuesday as California voters overwhelmingly rejected sports betting, shooting down initiatives to legalize sports gambling at tribal casinos and horse tracks or through mobile and online wagering. Native American tribes and the gaming industry raised nearly $460 million (see the AP's correction on that amount here) in competing efforts to expand gambling and try to capture a piece of a potential billion dollar market in the nation's most populous state, per the AP. The money spent more than doubled the record amount spent in 2020 by Uber, Lyft and other app-based ride-hailing and delivery services to prevent drivers from becoming employees eligible for benefits and job protection. Still, preelection polls showed both ballot measures faced an uphill fight to win a majority.
Gambling in California is limited to Native American casinos, horse tracks, card rooms and the state lottery. Proponents of the two initiatives proposed different ways to offer sports gambling and each touted other benefits they said would come to the state if their measure was approved. Proposition 26 would allow casinos and the state's four horse tracks to offer sports betting in person. The initiative bankrolled by a coalition of tribes would also allow roulette and dice games at casinos. A 10% tax would help pay for enforcement of gambling laws and programs to help gambling addicts. Proposition 27 would allow online and mobile sports betting for adults. Large gaming companies would have to partner with a tribe involved in gambling or tribes could enter the market on their own.
That measure was backed by DraftKings, BetMGM, and FanDuel—the latter is the official odds provider for the AP—as well as other national sports betting operators and a few tribes. The initiative was being promoted for the funding it promised to funnel through tax revenues to help the homeless, the mentally ill, and and poorer tribes that haven't been enriched by casinos. The nonpartisan Legislative Analyst’s Office found both initiatives would increase state revenues but it was unclear by how much. Proposition 26 could bring in tens of millions of dollars while Proposition 27 could bring in hundreds of millions, the office said. However, that revenue could be offset if people spend money on sports gambling instead of shopping or buying lottery tickets.
Democratic Gov. Gavin Newsom didn't take a position on either proposal but said Proposition 27 was "not a homeless initiative." The California Republican Party opposed both proposals. State Democrats opposed Proposition 27, but were neutral on Proposition 26. Major League Baseball backed Proposition 27. The No on Prop 26 campaign, funded largely by card rooms that stand to lose out, said the measure would give a handful of wealthy and powerful tribes "a virtual monopoly on all gaming in California." The No on 27 committee said the proposal was based on deceptive promises and said the gaming companies behind it "didn't write it for the homeless, they wrote it for themselves." (Read more California stories.)