California sports wagering propositions appear headed for defeat

A pair of propositions that would legalize sports wagering in California were defeated, according to unofficial vote counts posted Wednesday by the secretary of state’s office.

The election results provided a short-term reprieve for Nevada sportsbooks concerned about competition from their neighbors to the west.

Gaming analysts expected weeks ago that Propositions 26 and 27, which offered two different plans to bring sports betting to the Golden State, would face a tough road to approval.

Late Wednesday morning, state officials reported Proposition 26 lost by 70.4 percent to 29.6 percent while Proposition 27’s no votes crushed yes votes with 83.3 percent to 16.7 percent. An estimated 5.3 million votes were cast on Proposition 26 and 5.4 million on Prop 27 in 25,554 precincts. Votes are expected to be certified by Dec. 16.

Proposition 26 would have allowed casinos and the state’s four horse tracks to offer sports betting in person. The initiative, bankrolled by a coalition of tribes, would also have allowed roulette and dice games at casinos. A 10 percent tax would have helped pay for enforcement of gambling laws and programs to help compulsive gamblers.

Proposition 27 would have allowed online and mobile sports betting for players. Large gaming companies would have had to partner with a tribe involved in gambling or tribes could enter the market on their own.

Richard Schuetz, a former Southern Nevada gaming executive who has served on the California Gambling Control Commission and worked in the past as a consultant to iGaming in California, said he was amazed at how badly the pro-Proposition 27 group was defeated.

“I predicted this would lose in May when I addressed a conference in New York,” Schuetz said Tuesday. “But how did they miss this so badly? I think this proves again that any gaming initiative has to go through the tribes in California if it’s going to have any chance of passing.”

Schuetz said because proponents of online gaming will have to rebuild trust he said it’s possible any sports wagering proposal might not come to a vote until 2026.

Out-of-state interests backed Prop 27

Proposition 27 was backed by DraftKings, BetMGM, FanDuel — the latter is the official odds provider for The Associated Press — as well as other national sports betting operators and a few tribes.

The initiative was promoted for the funding it promised to funnel through tax revenues to help the homeless, mentally ill and tribes that haven’t been enriched by casinos.

In the unlikely event that both propositions passed, the initiative with the most votes would have taken effect.

It was the most expensive ballot question campaign in U.S. history with proponents of the ballot measures spending nearly $600 million in support of their causes.

Late Tuesday night, tribal representatives were rejoicing that Proposition 27 appeared to fail miserably, even though the measure they backed, Proposition 26, also faced defeat.

The Coalition for Safe, Responsible Gaming, the No on Prop 27 coalition, made up of more than 450 member stakeholders, including California Indian tribes, said they were happy out-of-state gaming interests were soundly defeated.

“We are grateful to California voters who rejected out-of-state gambling corporations’ deceptive measure and once again stood with California Indian tribes,” said Greg Sarris, tribal chairman of the Federated Indians of Graton Rancheria. “(Tuesday’s) vote is a show of support for tribal self-reliance and a total rejection of corporate greed.”

The coalition said it believed voters voiced their opinion that online sports wagering is more addictive than what would have been offered in tribal casinos.

“The corporate operators thought they could waltz into California, throw their money around, mislead voters and score a victory. Big mistake,” said Beth Glasco, vice chairwoman of the Barona Band of Mission Indians. “Voters are smart. They saw through the false promises in Prop 27. The corporations completely misjudged California voters and the resolve of our tribal nations.”

Brendan Bussmann, a gaming industry analyst with Las Vegas-based B Global, said he knew both proposals were in trouble the moment they both qualified for the ballot because dueling propositions frequently breed confusion among voters.

“You saw this train wreck happening months ago with two competing proposals,” Bussmann said. “Now, they have to try to get everybody on the same page, which this race already has demonstrated how difficult that is.”

Last month, most industry observers suspected that neither measure would pass.

Representatives of California tribes discussed the outlook of the two measures in a panel last month, at the four-day Global Gaming Expo at The Venetian.

“It doesn’t look great for either proposition,” James Siva, chairperson of the California Nations Indian Gaming Association, said during the panel.

In a G2E keynote speech featuring FanDuel CEO Amy Howe and DraftKings founder and CEO Jason Robins, both said they’d “live to fight another day” in California, acknowledging that confusion over both initiatives and the tribes’ opposition to their online betting plan would likely result in defeat.

Revenue projections unclear

The nonpartisan Legislative Analyst’s Office found that both initiatives would have increased state revenues but it’s unclear by how much. Proposition 26 could have brought in tens of millions of dollars while Proposition 27 could have generated hundreds of millions, the office said.

However, that revenue could have been offset if people spent their money on sports gambling instead of shopping or buying lottery tickets.

The California Republican Party opposed both proposals. State Democrats opposed Proposition 27, but were neutral on Proposition 26. Major League Baseball backed Proposition 27.

The No on Prop 26 campaign, funded largely by card rooms that stood to lose out with either plan, said the measure would have given a handful of wealthy and powerful tribes “a virtual monopoly on all gaming in California.”

The No on 27 committee said the proposal was based on deceptive promises and said the gaming companies behind it “didn’t write it for the homeless, they wrote it for themselves.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter. The Associated Press contributed to this report.