The Legislative Solution to California’s Sports Betting Stalemate

Recent polls have shown shrinking support for the two California sports betting initiatives.

A Public Policy Institute of California poll released in October 2022 found that 36% of likely voters would vote for Prop 26. Only 26% would vote for Prop 27. And those aren’t the only numbers forecasting failure for Prop 26 and Prop 27.

Translation: This is shaping up to be the second time that California has tried and failed to pass sports betting initiatives.   

In 2020, State Senator Bill Dodd pulled his proposed sports betting amendment before its Appropriations Committee hearing. Had it made it through the senate, California voters would’ve voted on sports betting legalization in that election cycle.

CARD ROOMS: CA Card Rooms Making Last Financial Push to Beat Prop 26 on Election Day

The gap left by the failed sports betting legislation was filled by the ballot initiatives that tribal interests and private sportsbook companies sponsored — Prop 26 and Prop 27.

Each initiative was a chance to maximize profit in the new industry. Prop 26 would’ve allowed retail sports betting at tribal casinos and horse racetracks. By keeping online sports betting out of California, the state’s gambling tribes would’ve drawn sports bettors to their casinos. (The horse racetracks were an important part of securing Prop 26’s coalition.)      

Under Prop 27, bettors would’ve flocked to online sportsbooks, which generate over 90% of state betting handle in other markets, and taken advantage of California sportsbook welcome bonuses. That would’ve allowed California bettors to bet at places like home, sports bars, and stadiums. There’d be no need to visit tribal casinos or racetracks, both of which depend on foot traffic for revenue. 

Now that the initiatives seem doomed, a measure originating from the California legislature is the prudent step forward. 

A Legislative Solution to CA Sports Betting Stalemate

In June 2020, Sen. Dodd attributed his decision to pull his sports betting amendment to a rapidly approaching deadline and disruptions from the COVID-19 pandemic. With lockdowns still in place, Sen. Dodd was concerned about voters’ abilities to comment on the sports betting amendment. 

Since California’s 2023-24 legislative session begins on Dec. 5, Sen. Dodd could reattempt his previous effort to craft a compromise that suits private sportsbooks and California gaming tribes. 

Why a Second Legislative Attempt Is Feasible

The key benefit of a legislative solution is that politicians can work compromises out behind closed doors. Media leaks aside, this allows contentious issues to be negotiated without out-of-context details creating public scandals for the press to inflame.

This could be a good forum for private sportsbook companies and tribal gambling interests to find a compromise that allows both parties to profit from sports betting. 

LOOKING AHEAD: If Prop 26 Passes, Horse Racetracks Could Launch Sportsbooks Before Tribes

Such a compromise could allow gambling tribes and private sports betting companies to partner with sportsbook offerings. Private sportsbooks could offer their broad reach to consumers. Tribal casinos could offer their political leverage in California, although they could use it to leverage a deal that favors them more heavily.

Sportsbook companies and tribes aren’t the only stakeholders. They’re just the most powerful.

Horse racetracks are a legacy in many states and must be included in sports betting legalization discussions. California also has card rooms that had concerns about Indian casinos adding sports betting. Balancing each stakeholders’ needs will be easier outside of the public eye where one detail can spiral into an influential story.  

IF PROP 27 PASSES … These 10 Sportsbooks Would Be Eligible for CA Online Sports Betting Licenses

Avoiding Another Failure to Pass Sports Betting 

A successful negotiation that made it through the California legislature and onto the ballot would have another advantage over Prop 26 and Prop 27. Sportsbooks and tribal gambling interests would have a measure to publicly support together.

Instead of tearing opposing initiatives down, two powerful gambling industry players would work to convince the public to vote in favor of sports betting legalization. And even though a compromise may lead to a smaller piece of the pie for both parties, that sports betting pie will be oozing money in a state with 19 pro sports teams and just shy of 40 million people.

Combined, both groups have spent over $450 million campaigning against each other. After that expense, a compromise initiative will look much better than another wasted election cycle.

This second failure to pass sports betting could lead to the one successful attempt that California needs.