Midterm Elections

California sports betting: Prop 26 and Prop 27 expected to fail despite record-setting campaigns

Reading time 1:50 min

California is expected to vote “no” on online sports betting, according to latest polls. Despite the millions poured into campaign efforts by giants FanDuel and DraftKings, along with other operators, the push seems to plunge toward defeat as election takes place today, Tuesday.

Online sports betting operators touted how their taxable profits would be used for fighting the homeless crisis in the state if Proposition 27 was approved. But the Public Policy Institute of California polled eligible voters last month and found only 26% would vote yes on the initiative, while 67% said they would vote no, reports USA Today.

Charles Gillespie, industry expert and CEO of Gambling.com, told the cited source that ineffective marketing strategies could be part of the problem, despite the millions spent on campaign funding. But the online betting proposal isn’t the only one likely to fail: the other wagering initiative up for vote, Proposition 26, is also polling poorly.

The effort, championed by state tribes, seeks to legalize sports betting on a retail basis at tribal casinos and horse racetracks. According to latest polls, only 34% of California voters would vote yes on Proposition 26, while 57% would vote no on the measure, according to PPIC. The measure has the backing of more than 30 Native American Tribes.

While online gambling operators said tax money from their proposal would be directed to address homelessness, tribes vowed to build homes, schools and public-safety facilities with their gambling revenue to improve citizens’ lives. However, both proposals seem doomed to fail.

According to Politico, the combined $310 million of campaign money spent on ads for and against Prop 27 surpassed the previous record of funding for a single proposition: the $224 million for Proposition 22, which supported ride-share and delivery drivers adopting unique labor and wage policies.

California, the state with the country’s largest population, has long been an attractive target for the sports betting industry, especially after the financial success seen in other markets including New York, which broke handle records since its legalization earlier this year. 

“California is just too big of a market to leave behind,” Joel Simkins, a managing director of investment banking at Houlihan Lokey focusing on gaming, told Yahoo Finance. “It's obviously very critical for the future of the entire industry, especially on the commercial side to make the economic model work. If we get the California domino to fall, then Texas happens and Georgia, and then now we've got some scale to make it work.”

However, that domino isn’t likely to fall this year, with stakeholders already betting on another go in the future. DraftKings CEO Jason Robins has already called for another run at the ballots in 2024, an effort tribes will likely challenge once again.

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