Filed Under: Politics

Competing sports betting propositions break records in California

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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.

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Thirty states and the District of Columbia have legalized sports gambling since the Supreme court’’s 2018 ruling striking down a law which effectively banned commercial sports betting.

Two competing ballot measures could see California join that list.
Kathy Fairbanks:

“We’ve got two initiatives on the ballot, propositions 26, which would allow in person sports betting at tribal casinos, and the four licensed racetracks. And then we’ve got prop 27, which would allow online sports betting”

Brent Jabbour:

Proposition 27 is backed by major sports books DraftKings, Fanduel, and BetMGM. The measure is also supported by a number Native American tribes that don’t operate casinos.

Meanwhile casino operating tribes and racetracks have thrown their weight behind prop 26.

The two sides have broken records for spending on a ballot initiative, raising more than half a billion dollars and inundating Californians with non-stop ads.

One of the main selling points for Proposition 27 has been that revenue generated for the state will help fight the homlessness crisis in California, while opponents believe its impact is overstated.

Kathy Fairbanks:

“more than $100 million in advertising, assaulting voters with this message that prop 27 is a solution to homelessness.“

“voters recognize that you can’t solve homelessness, with a measure that creates more problem gambling.”

Brent Jabbour:

This sentiment was shared by California Governor Gavin Newsom, who said in August that while he isn’t taking a position on either proposition. Prop 27 is QUOTE “not a homeless initiative.”

It’s no surprise big money is flowing over the issue. If California were a sovereign nation, it would boast the world’s fifth largest economy, behind Germany.

Colin Mansfield:

“So sports betting would be a meaningful needle mover, if you will, for the casino operators, if they were able to get in there and start offering initiatives, you know, whether it’s commercial or whether it’s tribal, it’s a very well, well followed state given its potential.”

Brent Jabbour:

With massive growth come concerns. In just the second month of legalized sports betting in Michigan, calls to their gambling hotline doubled. Connecticut saw a similar trend in the months after rolling out their offering. And in New Jersey, calls surged 500% in the four years since legalization.

There are also worries of how it will affect the revenue streams of already established tribal gaming.

Kathy Fairbanks:

“And that is an existential threat to tribes in California that is going to undermine their brick and mortar casinos and their tribal self sufficiency. “

Brent Jabbour:

Polling from the NonPartisan Public Policy Institute of California found Californians oppose proposition 27 by a margin of 54 to 34 percent, prompting the campaign to pull back on their ad buys.

Colin Mansfield:

“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.

Kathy Fairbanks:

“we could see both go down, and we would, you know, be back to where we are right now.”

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.

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