California voters reject Prop 26 and Prop 27 to deny sports betting

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In an unsurprising election result, the Californian electorate has overwhelmingly rejected the introduction of sports betting as both Prop 26 and Prop 27 were defeated.

 Initially reported by Brian Melley of AP Wednesday morning, voters in California voiced their opposition to both propositions, putting the final nail in the coffin of the most expensive election campaign in US sports betting history. 

At the time of writing, 74.9% of votes have been counted, with 70.3% of voters rejecting Prop 26, whilst a staggering 83.6% of votes have gone against Prop 27, backed by sportsbooks such as FanDuel and DraftKings.

Prop 26 and Prop 27 fail despite astronomical spending

Around $600m was spent on campaigning efforts for the election, with proponents and opponents of either camp attempting to outbid each other in an effort to reach the desired outcome. 

Prop 27 would have allowed online and mobile sports betting in California, with the likes of DraftKings and FanDuel waiting in the wings to enter what was highly touted to be the largest US sports betting market. 

Meanwhile, Prop 26 would have given control of sports betting to the Tribes and racetrack, legalizing retail sports betting and gambling expansion at tribal casinos.

Despite eye-watering campaigning dollars, both bills failed to reach the electorate with an overwhelming rejection. However, the most startling part of this tale is that this defeat comes as no surprise at all. 

A destined defeat

For several weeks and months, polling had suggested that the Californian public was not in favor of sports betting being introduced, with polls in September suggesting that just 34% of voters were in favor of Prop 27. Meanwhile, Prop 26 was polling at just 31% support in early October. 

In fact, in an increasingly polarized political theatre, it was a surprise to see that both Democrats and Republicans were in agreement on one thing: rejecting Prop 27. 

Democratic leaders Sen. Toni Atkins, and Rep. Anthony Rendon, joined Republican Assembly and Senate Minority Leaders Rep. James Gallagher and Sen. Scott Wilk, in rejecting the measure. 

Prop 26 didn’t gain political support either. Whilst the California GOP refused to endorse Prop 26 altogether, the Democrats remained neutral on the bill.

When Gov. Gavin Newsom, who has reportedly held onto the governorship, expressed his opposition to Prop 27, it was another body blow to sports betting’s chances in California, as the LA Times also campaigned against both bills. 

The development will come as a major disappointment for the industry despite the inevitability of the defeat, with over half a billion dollars committed to either side.

“The best analogy that I can make is it’s sort of like a Cold War nuclear arms race,” Brandt Iden, newly-appointed Fanatics VP of Government Relations, explained to SBC Americas

“When you see your opponents put in more money, you put in more money in an attempt to just block whatever they’re doing. So $10m goes in on one side, you typically see $10m coming in on the other side, and that’s just the laws of campaigning.”

What happens next?

For now though, the attention turns to the reaction and how those companies who were reliant on a California launch are going to adapt to the result. 

 David Woodley, President and CRO and Playmaker, told SBC Americas at G2E: “The California news (is) not great, and a lot of people are counting on those who will have to readjust now. That’s part of it, too. We tried to be nimble enough so it doesn’t affect us.”

With the air of inevitability of defeat looming for a while, attention has turned to when the next opportunity could arise for a vote in California on sports betting. 

2024 has been earmarked for the next opportunity but with a lot of legwork to be done in the meantime, Iden believes that “everybody sort of goes back to their corner and takes a little time off.”

He explained: “I’m hopeful and optimistic that the commercials and the tribes will maybe sit down and try to figure it out that this can be done legislatively. 

“But it will take a compromise like we’ve seen in Michigan, Arizona, Connecticut, where tribes and commercials have been able to work together. It would be really disappointing to see us go back to the ballot and 2024 and spend another almost half a billion dollars, if not more, on another fight.”