In the end, it wasn’t even close.
Although the outcome may not have been surprising, voters have now officially rejected two measures that would have allowed two different forms of sports betting in California — and that rejection was by fairly sizable margins.
Results reported by the California Secretary of State's office as of around 7:30 a.m. E.T. on Wednesday showed Proposition 26 and Proposition 27 had been defeated. Just 29.9% of voters supported Prop 26, while only 16.6% approved Prop 27.
The campaigns opposed to Prop 26 and Prop 27 were even quicker to declare the measures were dead, as both published press releases less than two hours after polls closed announcing the initiatives had been defeated.
“We are grateful to California voters who rejected out-of-state gambling corporations’ deceptive measure and once again stood with California Indian tribes,” said Greg Sarris, tribal chairman of the Federated Indians of Graton Rancheria, a member of the “NO on 27” campaign. “Today’s vote is a show of support for tribal self-reliance and a total rejection of corporate greed.”
We're almost halfway through the precincts and California voters look like they haven't been swayed by either sports-betting ballot measure. The numbers haven't moved much: pic.twitter.com/kM26nYL4YD
— Geoff Zochodne (@GeoffZochodne) November 9, 2022
Proposition 26 was backed by a coalition that included more than 50 Native American tribes. The measure would have allowed in-person sports betting at racetracks and tribal casinos, the latter of which would also have the option to add roulette and dice games.
Proposition 27 was supported by major gambling companies. The initiative would have allowed online sports betting sites to be offered in the state via tribes and licensed operators that would have to partner with a tribe for market access.
Both measures helped generate more than $400 million in political fundraising, as tribes, online sportsbook operators, and cardrooms poured huge amounts of cash into their campaigns for and against the two initiatives. More than $383 million went towards supporting and fighting Prop 27, making it the costliest ballot battle in California history, according to Ballotpedia.
DraftKings and FanDuel pumped in more than $30 million apiece into the pro-Prop 27 campaign, while the casino-owning Pechanga Band of Indians and the Federated Indians of Graton Rancheria did the same for the pro-Prop 26 effort.
Tuning out the noise
The record levels of fundraising translated into a ton of advertising in the state, which may have had a role in turning off voters.
Both measures also went beyond just the simple offering of sports betting, such as Prop 26 allowing for expanded tribal casino gambling and private lawsuits to enforce gaming laws. Prop 27 would have tried to put a 15% tax on illegal online sports betting, in addition to being framed as a way to tackle homelessness, which could have rang hollow for some voters.
Ultimately, neither measure won over the electorate. That means there will be no legal sports betting in California for the time being, and perhaps not for years now.
“California voters were not fooled by Proposition 26 and soundly rejected it,” the anti-Prop 26 campaign said in a press release. “Prop 26 was not just a sports betting measure but a massive expansion of gambling by five wealthy tribes that included a poison pill aimed at taking market share away from highly regulated cardrooms that provide millions of dollars in tax revenue to communities and tens of thousands of jobs.”
Try, try again?
Yet the "Coalition for Safe, Responsible Gaming" behind Prop 26 said the top priority of the tribes was always defeating Prop 27, and that their campaign spent no money on traditional advertising in support of Prop 26.
There is, however, a chance that operators such as DraftKings could take another run at opening up the state in 2024. Tribes could do the same as well, or lawmakers could try to pass a bill in the legislature. For now, though, the sports betting-related status quo remains intact in the biggest state-level market in the U.S.
Recent polling had hinted that would be the case, including an October survey by the Public Policy Institute of California that suggested just 34% of likely voters would approve Prop 26 and 26% would approve Prop 27.
The gaming industry sensed defeat and began adjusting commentary and spending accordingly.
DraftKings CEO Jason Robins said last week that the company had discontinued any additional cash investment in the campaign to legalize online sports betting in the state.
Robins also made comments recently that suggest another California ballot initiative intended to legalize online sports betting could happen in the not-too-distant future.
“More than likely this will pass in 2024,” the DraftKings CEO reportedly said last month at the Global Gaming Expo in Las Vegas.
