With so much election news flying off the shelves, you might have missed this stunner out of California as voters rejected two propositions that would have brought sports betting to the state.
You can’t watch a sports highlight without tripping over a casino ad, but here is one of the largest states in the nation turning down a potential $4 billion annually in revenue. And despite an estimated $400-$600 million spent trying to get the voters to go for it.
It was confusing, because California has been so open to new ideas and rights in this vein. California has legalized cannabis, and was the first state to pass Name, Image and Likeness legislation for college players. And California hosts 21 professional sports teams, more than any other state.
Thirty-six states either have or will soon have active sports betting markets, but those don’t include California, Texas, or Florida — three huge states with pro teams.
Many states are actively building their own sports betting markets, but Californians rejected both the proposition supported by industry, and another supported by the local Native American tribal nations who run casinos in the state.
“It was not surprising, but I think there’s still some real conflict with what voters want to see in this space,” said Devon Corneal, the assistant dean for gaming, hospitality, and sports law at Seton Hall University’s School of Law. “Big picture, there are still three of the largest markets that are up for grabs.”
(Full disclosure, I also work at Seton Hall University as the executive director of the Center for Sports Media.)
Prop 27 was advanced by national sports betting firms like DraftKings, but faced opposition from Native American tribes who currently operate gaming facilities. Prop 26 was the alternative proposed by those tribes, but it was opposed by other interests. NPR has the official returns, as 70.4 percent voted no for Prop 26, and 83.3 percent voted no for Prop 27.
Attorney Daniel Wallach, the founder of Wallach Legal, a firm that specializes in sports betting issues, noted that this was the first failure for sports betting propositions, which have passed in South Dakota, Maryland, Louisiana, and Colorado. “It had a perfect batting average,” he said, “maybe not enough at-bats.”
In California, the online market was the prize, Wallach noted. Casino operators figured that if they don’t access online sports betting in the state, it could erode revenues from people heading into brick-and-mortar outfits on tribal lands.
Without agreement from tribes and national operators, there isn’t a clear path forward in California at the moment, Wallach said, but if they could find some way, which might include a revenue-sharing framework, then there may be a way to go through the legislature. Voters have been saturated with advertising, and that makes another ballot initiative tough.
“It would be a risky endeavor to go back to the voters in 2024,” said Wallach, whose consistently excellent Conduct Detrimental podcast has discussed even further.
America has a long and fraught history with gambling. Corneal points out that despite George Washington’s misgivings about the practice, the Revolutionary War was funded by a lottery authorized by the Continental Congress in 1776.
The Puritans considered gambling a distraction from more productive pursuits, and the US has been engaged in a tug-of-war between personal liberties and temperance. What is better for the soul, pleasure, or mastery of one’s baser instincts?
Turns out, the answer is money.
American history also plays a role here because the states have been allowed to negotiate with tribes to allow betting on their lands. Now those tribes have an economic interest in what happens in the space. This opinion piece from San Jose State Professor Kerri J. Molloy in the LA Times explains how California’s relationship with different tribal nations, and the relationships between those tribes depending on status, would be affected by allowing outside sports betting firms to operate in the online marketplace.
It is a complicated issue, and Republicans and Democrats in California were united in opposing industry-funded Prop 27.
But maybe not because they all oppose sports betting itself, and there is too much money at stake for the issue to go away. The half a billion estimated spent to promote those propositions was a down payment on a potential sports betting boom.
So back to the drawing board. California, Texas, and Florida are more puzzles to solve than they are abandoned territories. But with all that money on the line, don’t wager against sports betting.