Put on! Record Spending on Gambling Demand in California

LOS ANGELES — The campaign that could bring legalized sports betting to California is the costliest battle in U.S. history at about $400 million, pitting wealthy Native American tribes against online gambling companies and less affluent tribes over what is expected to be a multibillion-dollar market. .

A deluge of advertisements has plagued Californians for months, much of it promising much more than a hefty payout from a slot game. Some advertisements from the consortium of gambling companies barely mention online betting.

Instead, the ads tease a plethora of new revenue benefits – helping the homeless, helping the mentally ill, and providing financial security to poorer tribes who haven’t seen any windfall from casino gambling. Further obscuring the issue: There are two sports betting questions on the ballot.

The skeptics include Democratic administration Gavin Newsom, who has not taken a stance on either proposal, but has said Proposition 27 is “not a homeless initiative,” despite claims in advertisements.

Claremont McKenna College political scientist Jack Pitney said “something for nothing” has historically been used to sell state lotteries as a borderless source of education funding. It is political merchant art, ‘not a panacea’, he said.

With the stakes high, more than $400 million has been raised so far — easily a national record for a ballot initiative battle and nearly doubling the previous figure in California in 2020 — with seven weeks left until the vote ends on Nov. 8. . .

“They’re spending hundreds of millions because billions are at stake,” said longtime Democratic adviser Steven Maviglio, referring to possible future profits from extensive gambling in the state of nearly 40 million people.

“Both sides will get really rich in the long run,” said Maviglio, who is not involved in the campaign. It could “become a permanent source of funding for a handful of companies — or a handful of tribes.”

It could all be a bad bet.

With the midterm elections approaching, voters are in a bad mood and cynical about political sales pitches. And with two similar proposals on the ballot, history suggests voters tend to get confused and grab the “no” lever on both.

“When in doubt, people vote no,” Pitney said.

In California, gambling is now allowed on horse racing, in Indian casinos, in card rooms, and at the state lottery. But the state is a bit behind in sports betting, which has spread all over the country.

The two proposals would pave the way for sports betting, but in strikingly different ways.

Proposition 27 is supported by DraftKings, BetMGM, FanDuel — the latter being the official odds provider for The Associated Press — and other national sports betting providers. The proposal would change state law to allow online sports betting for adults over the Internet and on phones or other mobile devices.

Multistate operators would be required to partner with any tribe involved in gambling, or licensed tribes could join alone. However, the tribes claim that they would have to give up some of their independence to make the deal. A tax would cover regulatory costs, with the bulk of the rest going to homeless programs and some going to tribes not involved in online betting.

A rival proposal backed by many tribes, Proposition 26, would allow people to bet personally on sporting events at retail venues — tribal-run casinos and the state’s four licensed horse racing tracks. Part of a 10% tax would help enforce gambling laws and programs to help people with gambling addictions. It could also open the way for roulette and dice games in tribal casinos.

A handful of political committees are at the center of the fray, raising funds and competing for public support.

The Yes on 26, No on 27 committee, sponsored by more than two dozen Native American tribes, raised about $108 million this month, state records show. Major donors include Federated Indians of Graton Rancheria ($30 million), the Pechanga Band of Indians ($25 million) and the Yocha Dehe Wintun Nation ($20 million). They are all enriched with their own casinos.

Another committee looking to cover Proposition 27 is supported by tribes including the San Manuel Band of Mission Indians and has raised about $91 million.

Their main rival, the Yes on 27 commission, backed by sports betting, has generated approximately $169 million in loans and donations.

A committee opposing Proposition 26, backed by card clubs, has raised more than $41 million for the fight. The proposal includes enforcement changes that the clubs see as an attempt to give tribes a virtual monopoly on all gambling in the state.

Despite the high claims of new revenue for the state, it is not clear what the tax benefits of both proposals could be.

With Proposition 27, the unbiased Legislative Analyst’s Office concluded that the effect on revenues and costs is uncertain, in part because it is unknown how many entities would offer bets or how many people would place bets. It is possible that it could bring in hundreds of millions of dollars each year.

But the office also concluded that some of the revenue wouldn’t be new dollars because people could change their spending habits by placing sports bets instead of buying lottery tickets or shopping at the mall.

The state analysts also found that the tax implications of rival Proposition 26 are unclear, in part because it is unknown how the state’s tribal agreements would be modified to allow for sports betting. They found that the proposal could increase state revenue, potentially by tens of millions of dollars a year, but also increase enforcement and regulatory costs.

A muddle of political support is in the mix. The California Republican Party opposes both proposals. State Democrats are against Proposition 27, but are neutral on Proposition 26. Major League Baseball supports Proposition 27.

Voters are witnessing a deluge of competing claims.

The No on 26 commission says wealthy tribes want to abuse the system to gain unprecedented gambling revenues and political influence.

Rob Stutzman, a spokesperson for the No on 27 committee, warned that up to 90% of the proposal’s profits could go to the gambling companies and “you know a measure is bad news when both the Democratic and Republican parties oppose it.” to postpone.”