Spending

Bet! Record gambling spending in California

LOS ANGELES– The campaign that could bring sports betting legalized in California is the most expensive ballot initiative fight in US history at around $400 million and counting, pitting wealthy Native American tribes against online gambling companies and to less wealthy tribes in what should be a multi-billion dollar market.

A torrent of advertising has rocked Californians for months, with most making promises far beyond a plump payoff from a gambling bet. Some ads from the consortium of gambling companies barely mention betting on line.

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

Skeptics include Democratic Gov. Gavin Newsom, who took no position on either proposal but said Proposition 27 “is not a homeless initiative” despite claims in the ad.

Claremont McKenna College political scientist Jack Pitney said “something for nothing” pledges have been used in the past to sell state lotteries as an unlimited source of education funding. It’s political selling, “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 fight, and nearly double the previous mark in California set in 2020 – with still seven weeks before the end of the poll on November 8. .

“They’re spending hundreds of millions because billions are at stake,” longtime Democratic consultant Steven Maviglio said, referring to the potential future benefits of expanding gambling in the state of nearly 40 million people. .

“Both sides are really going to get 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”.

This could all be a bad bet.

As the midterm elections approach, voters are moody and cynical about political sales pitches. And with two similar propositions on the ballot, history suggests voters are prone to be confused and grab the “no” lever on both.

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

In California, gambling is now allowed on horse races, in Indian casinos, in card rooms and in the state lottery. But the state has lagged somewhat in sports betting, which has spread across the country.

Both proposals would pave the way for sports betting, but in surprisingly different ways.

Proposition 27 is backed by DraftKings, BetMGM, FanDuel – the latter is the official odds provider for The Associated Press – and other national sportsbook operators. The proposal would change state law to allow adult online sports betting on the Internet and on phones or other mobile devices.

Multi-state operators would be required to partner with a tribe involved in the game, or authorized tribes could enter on their own. However, the tribes argue that they would have to give up some of their independence to make the deal. A tax would cover regulatory costs, with most of the rest earmarked for programs for the homeless, and a slice going to tribes not involved in online betting.

A rival proposition backed by many tribes, Proposition 26, would allow people to bet on sporting events in person at retail outlets — tribal-operated casinos and the state’s four licensed racetracks. Part of a 10% tax would help pay for gambling law enforcement and programs to help people with gambling addictions. It could also pave the way for roulette and dice games in casinos. tribal.

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

The Yes on the 26th, No on the 27th committee, sponsored by more than two dozen Indian tribes, raised about $108 million that month, according to state records. Among the main donors: the Federated Indians of Graton Rancheria ($30 million), the Pechanga Indian Band ($25 million) and the Yocha Dehe Wintun Nation ($20 million). All have grown rich with their own casinos.

Another committee seeking to defeat Proposition 27 is backed by tribes, including the Mission San Manuel Band of Indians, and has raised an estimated $91 million.

Their main rival, the Yes of 27 committee backed by sports betting companies, has generated around $169 million in loans and donations.

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

Despite the lofty claims about new revenue for the state, it’s unclear what the tax advantages of either proposal might be.

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

But the bureau also concluded that some of the revenue would not be new dollars since people might change their spending habits, placing sports bets rather than buying lottery tickets or shopping at the mall.

State analysts have also found that the tax impacts of rival Proposition 26 are unclear, in part because it is unclear how covenants between the state and the tribes would be changed to allow sports betting. They found that the proposal could increase state revenue, perhaps by tens of millions of dollars each year, but would also increase enforcement and regulatory costs.

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

Voters are witnessing a deluge of competing demands.

The No of 26 committee says wealthy tribes seek to game the system to gain unprecedented gambling revenue and political influence.

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