Prop. 26, The Sports Wagering Measure, Appears To Be A Losing Bet

CALIFORNIA — A proposition that would allow online and mobile sports betting was failing by nearly a 3-to-1 margin in early returns along with another measure that would allow sports wagering at Native American casinos and horse tracks was trailing by about 30 percentage points.

The gaming industry and Native American tribes raised nearly $600 million to capture a piece of a potential billion-dollar market in the nation’s most populous state.

But it wasn't enough to ensure the passage of Proposition 26. The measure was one of two rival gambling measures on the Nov. 8 ballot, and proponents of both spent big money to see them passed. However, neither was polling well with voters heading down to the final stretch of the election.

California does not currently allow sports betting, but since the U.S. Supreme Court opened the door to legalized sports wagering three years ago, California has become the jackpot for the gambling industry since it has the most professional and college teams in the nation in addition to the largest population and concentration of wealth.

Proposition 26 is a constitutional amendment that aimed to allow it in tribal casinos and racetracks. Proposition 27 is a constitutional amendment that aimed to allow some tribes and gambling companies such as FanDuel and DraftKings to operate online or mobile sports betting outside of tribal lands. The dueling propositions presented a political cage match between gambling entities battling for control over the future of the billion-dollar sports betting industry in California. Because both propositions were diametrically opposed, the passage of both would likely trigger legal battles.

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Under Proposition 26, roulette, dice games and wagering on professional, college, or amateur sporting events would be allowed at tribal casinos and racetracks. High school sports would be excluded from legalized gambling under both dueling propositions.

The tribes and racetracks would pay 10 percent of profits to the state. Thirty percent would go to prevent and treat gambling addiction and enforce gambling regulations. The remaining 70 percent would go to the state’s general fund.

According to the state’s Legislative Analyst’s Office, revenue from Proposition 26 could reach tens of millions of dollars annually.

“Some of this revenue would be new. For example, the state currently does not receive any share of illegal sports bets. This means the state would receive new revenue when people make sports bets legally rather than illegally,” according to the Legislative Analyst’s Office. “However, some of this revenue would not be new. For example, the state currently receives revenue when people spend money on certain things, such as lottery games or shopping. This means the state might not receive new revenue when people spend less on those things so they could make sports bets.”

Proposition 26 would also establish a novel new approach for enforcing gambling laws.

It would allow people to file a civil lawsuit against entities breaking state gambling laws if the Department of Justice won’t file a criminal case within 90 days or the court rejects the justice department’s case.

“This lawsuit can ask for penalties of up to $10,000 per violation. It can also ask for the court to stop the behavior,” according to the legislative analyst’s office.

Penalties collected would go back to the state.

Not surprisingly, that aspect of the measure has drawn fierce opposition from the casinos that compete with the tribal casinos. Among its opponents are Hawaiian Gardens Casino, Bicycle Casino, Parkwest Casinos, and groups such as the California Animal Welfare Association and the California Republican Party.

Opponents of the measure argued that it gives tribal casinos a monopoly on sports wagering without giving much back to the communities impacted by gambling.

"This initiative does nothing to advance sports wagering, and instead expands the tribal casinos’ tax-free monopoly on gaming and rewards those operators for prioritizing their own wealth over public health and safety,” Kyle Kirkland, president of the California Gaming Association told the Los Angeles Times.

Its supporters contended it would usher in California’s era of sports wagering in a highly regulated and responsible manner.

Supporters included about two dozen tribes including those that operate major casinos such as the Morongo Band of Mission Indians, the Agua Caliente Band of Cahuilla Indians and the Pechanga Band of Luiseño Indians. Other supporters include San Diego police and sheriff’s unions, the Los Angeles Urban League.

"A strong, well-regulated gaming industry is of utmost importance to California’s tribal governments and the public,” said Steve Stallings, chairman of the California Nations Indian Gaming Association. “This initiative allows sports wagering in a responsible manner and provides for transparency and strict regulation."

Both sides have been pouring money into the election.

Supporters have given more than $122.8 million to the campaign. By the end of September, $117 million had been spent to persuade voters to allow sports betting in tribal casinos.

Opponents have raised $43 million and spent more than $39.6 million by the end of September.
The massive amount of money spent on the Proposition 26 and 27 campaigns seemed to have a limited effect on skeptical California voters. According to a poll by the UC Berkeley Institute of Governmental Studies, voters who had seen the ads for or against the measures were more likely to oppose them than those who hadn’t.

The poll found Proposition 27 garnering support from only 27 percent of likely voters compared to 31 percent support for Proposition 26.

The Associated Press contributed to this report.