California rejects Props 26 and 27, sports betting to remain illegal

November 3, 2022 California Flag - Casino Genie

We’ve pretty much known it for some time, but Tuesday night brought final confirmation that the measures designed to bring online betting and retail sportsbooks to the state of California have failed. Indeed, with just over 40% of the vote counted in the Golden State, it seems as though the expected thumping defeat has been dwarfed by the reality for both Proposition 26 and 27. Californians will not be betting online, or on sports in any form, for at least the next two years.

Polling before the big day had given reason for broad pessimism, although more recent numbers had given the impression that the gap between No and Yes was narrowing and had suggested the outside possibility that Prop 26, which would have legalized sports betting at tribal casinos and legal racetracks, might pass. In the event, both races have been called for No before even half of the votes have been counted. Prop 26 was trailing by a margin of 71-29 when the Associated Press concluded that they’d seen enough.

Prop 27, which would have brought California into line with New York and a number of other large states by permitting online sports betting through prominent sportsbooks, fared even worse. With 41% of the vote counted, it was behind by 83-17, meaning only one in six voters chose to back it. This is no great shock – leading sportsbooks had briefed in recent months that the measure looked set to fail, but they will be concerned by the weight of the margin of defeat.

This does not mean the end of efforts to bring sports betting to the state. It is still expected that California will embrace betting, including online sportsbooks, at some point in the future. However, it will need to draw up legislation that can carry broad support; both Props 26 and 27 were heavily beset by attack ads early in the campaign. Notably, funding for campaigns in favor of the measures dried up long before polling day, an indication that the groups supporting each proposition had accepted defeat and had no intention of throwing good money after bad.

Supporters of betting in whatever form it might take now have the option to suggest compromise legislation that could be passed by state Congress without the need to be voted on by the public. This would be a risky option to take, given the substantial opposition to the measures on this week’s ballot. More likely, the parties interested in delivering betting to a market where it could make billions a year would be best advised to work on one ballot measure that could address the many issues that voters and lawmakers identified in the two losing tickets here.

This will mean consulting extensively with native tribes in the state – many of which disagreed with each other over which, if any, was the bill to support – and speaking to voters on how best to spend the state’s revenue from betting taxes. With two years until the next elections in the state, they need to use that time wisely.

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