The battle between rival California sports betting bills continues to intensify as both the sportsbooks and a coalition of native tribes have released new statewide TV ads attacking each other's legislative proposals.
These dueling ads constitute a proxy war between a coalition led by the major sportsbooks (including FanDuel, DraftKings, BetMGM) sponsoring Proposition 27, the bill that would legalize online sports betting in California, and the coalition of 50+ native tribes backing their own separate legislative measure, Proposition 26, which would restrict all wagering to tribal casinos and four horse-racing tracks.
There are only 75 days left to go before California voters go to the ballot box on November 8 to choose between the competing legal sports betting bills. At stake is the most lucrative betting market in the U.S., with a potential annual online wagering revenue stream estimated at $3 billion.
Recognizing the benefit to the five pro baseball franchises operating in California, Major League Baseball threw its support behind the sportbooks and Prop 27 earlier this month, which effectively cancels out the joint opposition from both the Democratic and Republican state parties to the bill.
While the sportsbooks have everything to gain from the passage of Proposition 27, as do the three tribes that have allied themselves with the operators, the majority of native tribes are facing the end of their virtual monopoly over the state gaming industry — which they characterize as a "loss of self-reliance."
Combat Advertising
The NO on 27 Coalition put out a new ad on Monday declaring that more than 50 California Indian tribes oppose Proposition 27.
Reads the spot: "Prop 27 jeopardizes Indian gaming and vital funding that both gaming and non-gaming tribes use to provide housing, healthcare, firefighting services, education, cultural preservation, and other services for our communities. That’s why more than 50 California Indian tribes — both gaming and nongaming alike — strongly oppose Prop 27."
Yesterday, the operators fired back with their own statewide TV spot that featured Rachel Ditmore, co-founder of the Sacramento-based City of Refuge (which provides housing for the homeless), extolling the virtues of Prop 27.
She appears on camera explaining to voters that the sportsbook bill, officially known as the "California Solutions to Homelessness and Mental Health Support Act," will generate urgently needed funding to non-profit groups such as hers that offer housing, mental health support, and addiction treatment to California's growing homeless population.
According to the statement in the press release accompanying the pro-Prop 27 ad, the state's independent fiscal analyst has concluded that "Proposition 27 will provide hundreds of millions of dollars each year to tackle California’s homelessness and mental health crises by licensing, regulating, and taxing safe and responsible online sports betting."
In addition, the sportsbooks counter Coalition claims that Prop 27 would threaten tribal finances: "[Our bill is the only one] that guarantees revenue generated from online sports betting will be shared among non-gaming Tribes. Using fiscal estimates provided by the state of California, this measure would double the amount of revenue currently set aside for non-gaming Tribes from gaming in California."
Battle for hearts and minds of voters
The sportsbooks are clearly betting on voter sympathy for a key provision in their bill, which earmarks 85% of the revenues generated from the projected 10% state tax on online betting revenues towards support for the homeless and mental health care.
The title of the legislation itself was devised to offer an incentive to voters to see an altruistic element to a bill that will generate hundreds of millions of dollars in revenue to sportsbooks in the coming years. Should Prop 27 win approval in November, it would set in motion a frantic race by the major operators to get up and running by the beginning of 2023 — in time for the NFL playoffs and Super Bowl.
Another key provision that the sportsbooks wrote into Prop 27 — which counters the tribal coalition's accusation that the operators are profiting on the backs of Californians by imposing a low 10% tax rate on online betting revenues — stipulates that the books must fork over a hefty $100 million initial licensing fee.
Further, the bill also requires the books to partner with native tribes in order to operate within the state, assuring that many have-not tribes will now reap windfall profits should voters approve Prop 27.
Record advertising war chest of $364 million
Over the last few months, each side has blanketed the airwaves and social media with a series of caustic messages questioning the bona fides of their legislation.
To date, approximately $360 million has been invested by the sportsbooks, and the rival tribal coalition, toward their respective marketing campaigns. This shatters the previous record of $224 million in ad spend, which was set during the lead-up to the November 2020 California ballot that saw Uber and Lyft successfully support a bill exempting their drivers from state labor law.
"You aren’t going to be able to watch the evening news, a football game, or a YouTube video without seeing a message on these initiatives," said Thad Kousser, professor of political science at UC San Diego, in comments made last week to the Mercury News in California.
So far, DraftKings, Fanduel Sportsbook, BetMGM, Penn Interactive Ventures, and FBG Enterprises have each contributed $25 million to support Prop 27, while Bally's Interactive and WSI have chipped in $12.5 million apiece.
