Back to the drawing board

California sports betting is dead in the water after Proposition 26 and Proposition 27 failed to garner the necessary public support during Tuesday’s elections.

major blow to California’s gambling industry

Votes are still being counted in California, but the Associated Press has already called the race. The failure of both propositions is a major blow to California’s gambling industry and interested external corporations. Estimates suggest that interested parties spent around $450m to fund ad campaigns for or against both measures.

Californians now face a potential multi-year wait before they can access online or in-person sportsbooks, with many predicting that the issue will not come up again until 2024 at the earliest. This has once again prevented the US sports betting market from adding what is expected to be its largest contributor as the most populous state.

Two options fail

Proposition 27 was the more contentious of the two measures. While Proposition 26 kept the power in-state and would allow tribal casinos to operate sportsbooks, Proposition 27 would have opened the door to mega-corporations such as FanDuel, DraftKings, and BetMGM to take advantage of the newly launched market.

native tribes in California did not want to lose out on a potential source of revenue

A poll released in early October correctly predicted the overall lack of support for Prop 27, with just 27% of likely bettors saying they supported the measure. However, it was not just local citizens that opposed the measure—many native tribes in California did not want to lose out on a potential source of revenue for their community to billionaire corporations.

The California legislature will reconvene on January 4 where they will presumably lay the framework for how to deal with a variety of issues, one being California sports betting. Governor Gavin Newsom, who secured reelection on Tuesday according to another AP race call, has remained neutral on the debate thus far.

What is there to gain?

Industry experts believe California will be one of the most, if not the most, prosperous sports betting market in the US if it went legal. The state is home to almost 40 million residents, including more than 23 million who are currently above the age of 21. As such, betting insiders believe the market could reach up to $3bn in annual revenue.

a horde of professional sports teams

California is also home to a horde of professional sports teams, including the Los Angeles Lakers, Golden State Warriors, San Francisco 49ers, and Los Angeles Dodgers, among others.

Leading up to Super Bowl LVI—which was held in Inglewood, California—the American Gaming Association estimated that Americans bet nearly $8bn on either the Cincinnati Bengals or hometown Los Angeles Rams. Of course, without legal betting, none of this revenue went to operators in the state itself.