History Of 2022 CA Sports Betting Election Battle: Part 3

Written By Matthew Kredell on December 16, 2022 - Last Updated on January 12, 2023
PlayUSA part 3 of four part series recapping 2022 CA sports betting ballot measures

Continued from Part 2.

Read more about the CA sports betting battle: Part 1 | Part 2 | Part 4

Historically bad finish for Prop 27

With election results finalized today, Prop 27 finished 17.7% of the vote. That is the 11th-worst finish in more than a century of California ballot measures.

And a shocking result for a campaign that spent about $160 million. Its 1,906,339 votes were less than the valid signatures it required to make the ballot. That’s about $85 spent per vote. Per dollar spent, it’s the lowest turnout in state history.

Tribes spent $220 million to defeat Prop 27, with San Manuel alone contributing more than $100 million. They obviously didn’t need to spend that much to send Prop 27 to a convincing defeat.

After the first independent polling from UC Berkeley showed Prop 27 had support from only 27% of voters, operators waived the white flag and pulled their media spending.

But the tribal coalitions kept pounding nails into the coffin up until election day to send operators a message. The San Manuel coalition continued running commercials even after Prop 27 failed, thanking voters for standing with tribes.

As Macarro predicted, the second sports betting initiative on the ballot went down in flames.

Prop 26, without a dime spent advertising in its favor, finished at 33% with 3,514,593 votes.

Mejia: “We consistently said that an online measure wasn’t winnable, and I think the 82% rejection speaks for itself. That big a number wasn’t a reflection of who wasn’t in support or it being a flawed campaign. It was self-delusion for operators to think they could roll California tribes in their own state.”

Click: “Our polling showed we had a path to victory entering the summer. As the summer wore on, that path to victory had dried up by mid-August. Once we knew 27 was going to go down, we pulled the plug on our spending and conserved resources for the future. Meanwhile, the ‘No’ side spent $50 million more in ads after we went off the air – even when all the parties knew both gaming measures were going to be defeated. So, it wasn’t a surprise for us to see the final result – simply a reflection of communication and spending imbalance in the final eight weeks of the campaign when voters are tuning in.”

Reeg: “I’ve been around the industry long enough to know we weren’t going to be able to run around the tribes even if that was something we wanted to participate in. So the outcome was not a surprise.”

Sizemore: “San Manuel viewed it as a threat, as a loss to their exclusivity and their sovereignty. So they wanted to put their money where their mouth is and that’s what they did. They felt like this was something they had to defend for tribes.”

Reeg: “You’ve got to get on the same page with Indian Country if anything is going to happen in California. That’s very clear. They got poor advice. Some lobbyist told them you can go this way, do an end-around and go in for football season of next year. They believed what they wanted to believe and you saw the result.”

Sizemore: “San Manuel did want to send them a message, absolutely. We didn’t want to give them any hope. We wanted to signal to them that we’re not going to go away lightly. The tribes will be there again in ’24. The Pechanga group will be back in ’24 and we’ll be back in ’24, hopefully together. We’re not going to roll over and just let them steamroll us like they’ve done in all these other states.”

Tying issue to homelessness didn’t help

If operators file another online sports betting initiative in the future, it’s probably safe to say that it won’t center around funding for homeless services.

The campaign wasn’t able to build a supportive coalition from groups providing services to the homeless. They wanted additional funding, but they didn’t want it from gaming.

Castillo: “Clearly, they tried to piggyback on voters’ biggest concern in California, and that’s homelessness. They almost thought they were going to slide in the question of online gambling, and of course we knew with a well-funded campaign we just weren’t going to let that happen.”

Little: “I don’t think they realized how much damage they did to themselves coming out and saying, ‘Finally, a solution to homelessness!’ California’s going we just spent $11 billion over the past two years and the maybe $100 million you’ll provide, that’s going to move the ball?”

Castillo: “Our polling showed that the homeless issue was never going to get traction for them. Even though voters are very concerned about homelessness, there was a total disconnect between solving homelessness by legalizing online gambling. And voters also didn’t think that money is the problem with homelessness.”

Aftermath of the 2022 CA election battle

When the 2022 election cycle began, it seems there were many cordial conversations between sportsbook operators and tribal leaders.

Coming out of the election, there’s certainly some repairing of relationships needed to even hold those conversations.

Operators may be wondering if they would be in a better position had they waited and let tribes start sports betting at their brick-and-mortar casinos. Mejia believes Prop 26 would have passed if not for the operators filing Prop 27, even though the initiative drew opposition from CA cardrooms for including a clause that could have allowed tribes to sue cardrooms directly over the way they offer blackjack as a non-house-banked game.

And although operators made it clear in defeat that they remain committed to bringing legal online sports betting to California, the beatdown they took has to make them think twice about fighting with tribes in the future. But they also don’t want to cede a state as important as California.

At the Global Gaming Expo in Las Vegas last October, DraftKings CEO Jason Robins and FanDuel CEO Amy Howe spoke of trying again in 2024.

Mejia: “You hear the FanDuel CEO say they ‘live to fight another day.’ Nowhere have they said we’re sorry. They viciously attacked tribal leaders. Certainly, their conduct confirmed a lot of suspicions for many tribal leaders about their real intentions. They owe a sincere apology to a lot of tribes and are overdue for a big slice of humble pie.”

Reeg: “I think the effort was set back by what happened in this cycle. If something is going to happen, it’s going to be that much harder because of what everyone went through. And it would be understandable if there’s a lack of trust in regards for those who pushed Prop 27.”

Mejia: “If Prop 27 never came to be, we would be talking about implementing brick-and-mortar sports betting in California today. We would be picking out the color of the carpets for the sportsbooks. I’m 100% confident Prop 26 would have passed without Prop 27.”

Tribes need to figure out sports betting framework

If sports betting legalization comes to California, the 2022 election battle showed it must start with the tribes.

But with 110 federally recognized Indian tribes in California, it’s difficult for tribal leaders to agree on one direction that’s best for them all.

That’s the task for the first half of 2023. This month, tribal leaders began discussing how to move forward with sports betting through meetings of the Tribal Alliance of Sovereign Nations (TASIN) and California Nations Indian Gaming Association (CNIGA). They hope to make real progress by an all-tribes meeting in late February.

Many tribes are content with their current position with gaming in California. They don’t need sports betting or online gaming.

But some tribes do feel that if they are going to do sports betting, they need to go all the way with online to cut off any threat in the future.

And other tribes see online gaming as an opportunity to move beyond the limitations of their reservation’s location.

Sizemore: “That’s what we plan to do for the rest of this year and early into Q1, to figure out an approach that is in the best interest of tribes and try to get tribal unity wrapped around an approach for ’23 and ’24. We’ll continue to do polling and focus groups and, once this election turmoil dies down, we’ll start figuring out what are voters’ true appetites, what’s important to voters, what’s important to tribes. That’s all going to start very, very soon. We’re starting those discussions now with other tribes.”

Macarro: “Tribes need to be the ones to decide what the framework for legalization looks like. I suppose there can be others in the car. But if the tribes aren’t in the driver’s seat, we’re going to be taken for a ride.”

Siva: “I really think these two propositions have had the whole of Indian Country in California refocus themselves and have that tribe-to-tribe communication improve.”

Little: “I think this initiative has done more to create tribal unity than anything in the past 20 years. The all-tribes meeting in September was one of the largest gathering of tribes in the past couple decades. Tribes are closer than they look, and I think moving forward in the next year you’re going to see tribes working very closely together. We’re all talking and we’ll come up with something that I think for the most part folks can live with and move forward. If not, maybe we’ll say no. If we want to file something, we have to do it in the summer.”

Enrico Drago (IGT CEO of digital & betting): “Obviously, sports betting being legalized, we’re all for that because our sports betting solution fits their needs. But when it comes to more political or legislative discussions, that’s not our role.”

Macarro: “If tribes don’t align, I don’t know if anything happens. Or any number of things could happen, all of them not good.”

Continue reading Part 4 of the four-part series.

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Matthew Kredell

Matthew's reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. After graduating from the USC Annenberg School for Communication and Journalism, Matt started his career as a sportswriter at the Los Angeles Daily News. He has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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