The Supreme Court struck down a ban on sports betting in 2018, and since then, gambling on games has grown exponentially across the U.S. To date, 30 states and the District of Columbia have some form of legal sportsbooks. Now, California is considering getting in on the action with dueling propositions to legalize sports betting on the ballot in November having generated a record amount of money.
California’s Proposition 26 would legalize in-person sports betting at tribal casinos and the state’s four licensed racetracks. Meanwhile, Proposition 27 would legalize online gambling on sports.
Proposition 26 has gained support from those tribal casinos and racetracks, while Proposition 27 is backed by major sportsbooks like DraftKings, FanDuel and BetMGM. Proposition 27 is also supported by Native American tribes that don’t operate casinos in the state.
Most measures on the ballot in California in 2022 have raised under $10 million but Propositions 26 and 27 have raised more than $500 million. In the case of Proposition 27, the campaign has raised $169.2 million, but the campaign in opposition has spent $200.7 million to defeat the measure. Meanwhile, the campaign in support of Proposition 26 has raised $109.5 million and $41.9 million has been spent in opposition.
The funding of the measures has seen large television buys, which were blanketing the airwaves. One selling point for Proposition 27 has been that revenue generated from gambling will help fight the state’s homelessness crisis.
“Prop 27 — The California Solutions to Homelessness and Mental Health Support Act is the only measure on the 2022 ballot that will guarantee hundreds of millions of dollars each year to fight homelessness and fund mental health treatment in California,” the Yes to Prop 27 website reads.
“State revenue generated by the initiative can only be used to fund homelessness and mental health solutions like permanent shelter and addiction treatment services,” it continues.
Opponents of Proposition 27 claim the impact on homelessness and mental health is overstated.
“Voters don’t think that the homeless situation in California is simply a money situation,” Kathy Fairbanks, a spokesperson for Yes on 26 told Straight Arrow News. “They think it’s a failure of government. They think it’s a bureaucratic problem. It’s a red tape problem.
“Voters recognize that you can’t solve homelessness, with a measure that creates more problem gambling,” Fairbanks added.
The concerns with problem gambling aren’t unwarranted. Calls to Michigan’s gambling hotline were up 258% in the second month after legalizing sports betting. Calls in Connecticut jumped more than 200%, and New Jersey had a 500% increase in the four years since it legalized.
There is a lot of upside for operators if some form of legalization were to pass in California. If it were a sovereign nation, it would be the world’s fifth largest economy behind Germany.
“Sports betting would be a meaningful needle mover for the casino operators, if they were able to get in there and start offering initiatives whether it’s commercial or whether it’s tribal, it’s a very well, well followed state given its potential,” Colin Mansfield, Senior Director at Fitch Ratings said.
Mansfield says sports gambling has expected growth of 40% in 2022 alone, but much of that is due to new states legalizing.
“When you strip out those states that are now new, or relatively new, in terms of offering sports betting, the growth is somewhere more in the low single digits,” Mansfield added. “When we think about the next couple of years, for the states that have already been open for a little while, we actually think you might start to see top line declines,” he continued.
In the end, Mansfield understands the disagreements between the two sides.
“Any type of legalization in this country is going to take a lot of time and effort and making sure that everybody’s on the right page, and everybody who has some skin in the game ultimately gets heard,” he said.
A September survey from the NonPartisan Public Policy Institute of California found Californians oppose Proposition 27 by a margin of 54 to 34%, prompting the campaign to pull back on their ad buys.
In the end, Fairbanks says both measures could be defeated and the state will be exactly where it is right now.
