December 4, 2022
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Casinos emerge on top

Voters soundly reject dueling gaming propositions

By Madeleine Benn

Staff Writer

For advocates of expanded sports betting and gaming in California, the Nov. 8 election was a case of rolling the dice and coming up with snake eyes. 

A bitter disappointment for them, and one that takes possibly billions of dollars a year in revenue off the table in one of the nation’s biggest potential gaming markets.

In the end, the two dueling gambling propositions failed to pass and gaming in the state remains at the current status quo. The propositions were in many ways doomed by the fact that they were competing against each other for voter approval.

Proposition 26 was based around the initiative for an amendment to the state constitution that would allow in-person roulette, dice games and sports wagering on tribal lands. It would have meant a limited opening of the highly lucrative sports gaming business, requiring an in-person presence to place a bet.

Proposition 27 was based around the idea that online and mobile sports wagering outside tribal lands should also be allowed per a state constitutional amendment.  Prop 27 mirrored initiatives passed in other states that have unleashed a torrent of television advertising for competing and increasingly popular apps run by FanDuel, BetMGM and DraftKings, which poured millions of dollars into the fight. 

Ultimately both failed, partly due to the targeted advertising attacks on each other’s effects and viability. 

Prop 26 was billed as a way for California to increase state revenues, some of which would support increased state regulatory and enforcement costs associated with gambling, as well as those struggling with gambling addiction. The nonpartisan state Legislative Analyst’s office estimated the initiative could have raised tens of millions of dollars in tax revenue; those gains could help offset the costs associated with regulating the new gambling initiatives. 

Proposition 27 would have raised, perhaps, hundreds of millions of dollars in tax revenue and it had the backing of Major League Baseball, in addition to popular gaming apps. Gov. Gavin Newsom remained neutral on both propositions, but he did state that although Prop 27 provided some funding for homelessness programs, “it was not a homeless initiative.”

At press time, Proposition 26 was headed to defeat with a 68% no vote and Proposition 27 was headed down with an 82% no vote. 

This was the most expensive gaming ballot initiative in the nation’s history, with over $600 million spent by both sides. The only people who can clearly claim a win are local television stations which benefited from having such a high-profile ballot initiative in a mid-term election without a marquee race for senate or governor to fill the airwaves.

In terms of gaming, the biggest winners were tribal gaming enterprises like the Chumash Resort in the Santa Ynez Valley, which will retain its status as the dominant hub for gaming on the Central Coast. Card clubs and existing licensed gaming operations will retain their status, at least until the sports gaming app providers decide to make another spin of the roulette wheel.