History Of 2022 CA Sports Betting Election Battle: Part 4

Written By Matthew Kredell on December 16, 2022 - Last Updated on January 12, 2023
PlayUSA part 4 of four part series recapping 2022 CA sports betting ballot measures

Continued from Part 3.

Read more about the CA sports betting battle: Part 1 | Part 2 | Part 3

How will operators regroup?

Sportsbook operators aren’t going away. But after the beatdown they took on the ballot, they’re ready to exist in the background in California for a while.

They’re likely to wait and see what tribes come up with as a sports betting proposal and go from there.

But all indications are leading tribes such as San Manuel and Pechanga want operators to be vendors. The tribes want to run sports betting platforms while sports betting companies power the back end.

In other words, they want sports betting companies to be like the slot-machine providers to their casinos. Successful collaborators who stay in the background.

There are companies that will jump at that opportunity. IGT, Caesars and Bally’s have expressed interest in working with tribes in a B2B role if that’s what they want. But it doesn’t fit with what leading operators such as DraftKings and FanDuel do in other states.

Tribes are concerned that if they let DraftKings and FanDuel operate sports betting in California as they do in other states that it will further establish their brands and allow them to develop databases of players that could threaten tribal gaming in the future if online casinos come to California.

Sizemore: “We’re not going to let them come in here and be brands in the state. It’s just not going to happen. The San Manuel perspective is they have a role as a software provider, a technology provider. And if they’re willing to accept that, there might be something there. But we can’t even come to the negotiating table unless they accept that.”

Drago: “There’s a lot at stake here. It’s a huge market. It is for gaming, and there’s no reason why it shouldn’t be the same for sports betting. But everything should start from the tribes finding a way to go at this again and then eventually inviting these other stakeholders.”

Reeg: “I think the best thing that can happen is for tribes to get on the same page and then they can bring in a broader audience. I think it’s got to start in the tribal community and then they can make a decision on if they involve the commercial companies.”

Little: “We have a good delivery model here in California, and it’s safe and well-regulated and economically benefits the state and the tribe. You go into San Manuel’s casino, you see all these slot machines from IGT, Aristocrat and Scientific Games. They go through the tribes. They don’t go directly to the consumer. We have the checks and balances, all three regulatory bodies at the tribal, state and federal level that make sure this is safe. We want a very safe delivery model for sports betting in California, and their best role is to be a technology provider.”

Drago: “We all at IGT learned how to first set good relationships with the tribes, build mutual respect, and then eventually start doing business with them. With the tribes, mutual respect is absolutely fundamental to get any type of discussion started in the right way. That requires patience, it requires some common sense, it requires some compromise on certain things.”

Mejia: “If there is any lesson to be learned for the operators from 27, it is this: Don’t file any more initiatives in California. There are enough tribes in California that can write big enough checks to defeat any initiatives they file in the future. It only works if everybody is on the same page.”

Can voters move on from anti-gambling sentiments?

Tribes could come up with a brilliant solution for online sports betting that all parties can accept. And it won’t matter if voters remember the arguments from this cycle that led to Prop 27’s historically bad finish.

The Pechanga-led campaign, particularly, bombarded the electorate with anti-sports betting, anti-online gambling messages.

Two weeks before the election, independent polling from the Public Policy Institute of California showed the damage done. Only 9% of voters polled said they had a personal interest in sports betting. And 48% of those surveyed said that legalizing sports betting in California would be a bad thing.

Tribes blame operators for filing their initiative and turning the 2022 election into a battle. Operators blame tribes for their advertising.

Will voters still be turned off by the 2022 election campaign vitriol when the 2024 election comes along?

Mejia: “The colossal rejection of 27 suggests there is almost zero voter appetite for online sports. And that is the fault of the operators.”

Reeg: “The memories are going to be short because we have a Super Bowl coming up, a college football championship coming up, then March Madness. All of those events focus every sports fan’s attention and they’re all centered around gambling. So people are going to forget and just going to keep being reminded that you’re in a jurisdiction where you can’t bet on sports. And they’ll think, ‘Why can’t I bet on sports yet?’”

Sizemore: “I think the vote on Nov. 8 kind of showed you that there’s no big clamoring for sports wagering in California, whether it’s retail or online. You saw both initiatives fail decisively, so there’s not this huge swell of voter interest in sports wagering. Does that mean in two years that doesn’t change fundamentally because you get another five or six states that have legalized it and Californians look up and say, ‘Why is it just us and Utah that don’t have it?’ We didn’t see it on Nov. 8, but that’s not to say it can’t change.”

Legislative or initiative route?

The 2022 election failure opens the door for the California legislature to get involved in sports betting again.

The legislature is a natural mediator for each side to work out a compromise. That is if each side wants to compromise.

The benefit of going through the legislature is avoiding another costly ballot battle. Ultimately, a legislative referendum altering the state constitution still needs to go in front of voters. But voters would see it has the stamp of approval from the state.

However, key tribal leaders are reluctant to go through the legislature for sports betting. As seen in 2020, gaming issues in the legislature tend to get wrapped up in the beef between tribes and cardrooms.

It came up again at the end of the most recent legislative session in August. Sen. Bill Dodd, who chairs the Governmental Organization Committee that handles gaming issues, maneuvered to end the moratorium on cardroom expansion, angering tribes.

Whether Dodd comes through in establishing a new moratorium early in the 2023 legislative session could factor into tribal willingness to discuss sports betting in the legislature.

Still, the 2022 election battle reasserted that tribes are the dominant political player in the state and have support among legislative leaders. Republican and Democratic leaders in each legislative chamber said they stood with tribes in opposing Prop 27.

Whether it’s through an initiative or the legislature, tribes are in an advantageous position for sports betting discussions following their demonstration of strength in the 2022 election.

Macarro: “After the way Chairman Dodd handled the moratorium bill, I don’t see tribes trusting the legislature to do sports betting. We didn’t expect him to support the extension of the moratorium. But we didn’t expect him to so brazenly say this thing has to end and I’m going to be the one to do it.”

Little: “You go through the legislature, you have to compromise. You write a ballot measure, you can do whatever you want. So there’s a lot more flexibility in doing a ballot initiative. Tribes have concerns with some of the card clubs. I think the concern is you go through the legislative route, that’s going to get mixed in with it. Sen. Dodd’s been very close with the card club industry, so I understand Chairman Macarro’s concern.”

Dodd: “Some tribes have expressed interest in discussions with the legislature on sports betting. I stand ready to work with all parties to see if we can reach a deal that benefits our state and tribal governments.”

2024 setting up to be a stalemate

In the end, the partakers in the 2022 CA election battle over sports betting spent more than $400 million with nothing to show for it.

It’s hard to imagine tribes and sportsbook companies torching that much money again next election cycle.

There seem to be four ways an election could go for sports betting in 2024:

  1. Whether through legislative referendum or initiative, all major tribes and sportsbook operators agree on one online sports betting proposal.
  2. In a repeat of the online poker efforts, sportsbook operators partner with some big tribes, maybe adding some sports teams and leagues, for one initiative, but other tribes back their own initiative and it becomes an all-out war that makes 2022 look like a training exercise.
  3. Tribes mostly unite behind one initiative but the major operators, feeling left out, oppose it. They file their own initiative more as a defensive measure.
  4. Tribes can’t decide on an online sports betting model so they again introduce an in-person-only sports betting option. Operators decide if they want to repeat 2022’s offensive effort, file a defensive measure or let tribes have their incremental step.

The first option likely is the only one that leads to sports betting passage. Multiple stakeholders refer to it as a global solution. But it seems the least likely option coming out of the 2022 election turmoil.

The 2022 election showed that there’s not overwhelming support for sports betting legalization in California. That means tribes can put off making a decision and wait out sportsbook operators if they want.

It also means that it wouldn’t necessarily take $100 million to defeat a sports betting initiative. Whether it’s from the operators or tribes, the thin margins make any gambling proposal easily beatable.

Merely complicating matters by putting a competing measure on the ballot and spending strategically could doom any sports betting effort.

In 2024, it could be the operators going on the defensive to stop a tribal measure. Mejia warns operators against taking this tactic.

Mejia: “Are they looking to make California tribes an enemy for eternity? Tribes have been in California since time immemorial and they aren’t going anywhere.”

Drago: “There’s something that I do not think can be challenged in any way, which is the tribal sovereignty when it comes to gaming. I don’t think that there’s any proposition, any idea, any path forward that can be successful if and when the tribal sovereignty is being challenged. Until there’s a clear recognition of that, I struggle to see anything moving forward.”

Sizemore: “San Manuel operates a revenue-generating business. It doesn’t want to spend another $125 million on maintaining the status quo. But if someone comes and threatens your current operations and also the sustainability of future generations, that’s something tribes aren’t going to take kindly to.”

Castillo: “If down the road you get a measure that everyone agrees to, there’s a kumbaya moment and there’s no opposition … never say never, it’s too hard to tell. But I think we’re all confident in saying a significantly funded opposition campaign, especially one where most or some tribes are opposed, is going to make it very difficult to pass.”

Sizemore: “We need to have some convergence here. That’s what we’re all working on. You have the leagues, the teams, the tribes, the sportsbook operators. With all these different groups involved, it’s complex. There’s no clear-cut path right now.”

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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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