Record spending over California’s legal gambling initiative

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The campaign that could bring legalized sports betting to California is the most expensive ballot-initiated battle in US history at nearly $400 million and counting, pitting wealthy Native American tribes against online gambling companies and less-affluent tribes to be a multi-billion. hopefully. Dollar market.

A torrent of advertising has haunted Californians for months, most of it promising much more than a hefty payout from a game bet. Some advertisements from the Association of Gambling Companies barely mention online betting.

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Instead, the ads tease a cornucopia of profits from the new revenue – helping the homeless, aiding the mentally ill, and providing financial security for poor tribes who haven’t seen unexpected gains from casino gambling. Compounding the issue further: there are two questions about sports betting on the ballot.

Skeptics include Democratic Governor Gavin Newsom, who has not taken a position on either resolution, but called Proposition 27 “not a homelessness initiative” despite claims in the ad.

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Online sports betting has seen a huge jump since last year, indicating a busy year ahead

Claremont McKenna College political scientist Jack Pitney said that “something for nothing” promises have been used in the past to sell state lotteries as an unlimited source for funding education. This is political salesmanship, a “not the cure-all,” he said.

With the high stakes, more than $400 million has been raised so far – easily a national record for a battle for a ballot initiative, and nearly double the previous mark in California in 2020 – and with seven weeks until 8 Voting does not end on November.

“They’re spending millions because billions are on the line,” said longtime Democratic adviser Steven Maviglio, referring to potential future profits from expanded gambling in a state of about 40 million people.

“Both sides really stand to get rich over the long term,” said Maviglio, who is not involved in the campaign. It could become “a sustainable funding source for a handful of companies – or a handful of tribes.”

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All this can be a bad bet.

With the midterm elections approaching, voters are in a bad mood and cynical about political sales pitches. Additionally, with two identical motions on the ballot, history shows that voters are inclined to confuse and grab the “no” lever on both.

“When in doubt, people don’t vote,” Pitney said.

In California, gambling is now permitted in horse racing, Indian casinos, card rooms and state lotteries. However, the state lags behind in sports betting, which is spreading across the country.

The two proposals will open the way for sports betting, but in different ways.

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

DraftKings logo on phone screen
anchor Security The last Change Change %
DKNG DraftKings Inc. 16.72 -0.75 -4.29%
MGM MGM Resorts International 32.77 -1.79 -5.18%
PDYPY Flutter Entertainment PLC 56.35 -2.39 -4.07%

Multistate operators will need to partner with a tribe involved in gambling, or licensed tribes can enter themselves. However, the tribes argue that they must surrender some of their liberties in order to enter into the deal. A tax would cover the regulatory costs, the remainder is earmarked for homeless programs, and a piece is not going to go to tribes involved in online betting.

Proposition 26, a rival proposal backed by several tribes, will let people bet on sporting events in person at retail locations — casinos run by tribes and the state’s four licensed horse racing tracks. A portion of the 10% tax will help pay for implementing gambling laws and programs to help people who are addicted to gambling. It could also open the way for roulette and dice games at tribal casinos.

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

The Yes on 26, Know on 27 committee, sponsored by more than two dozen Indian tribes, has raised nearly $108 million through this month, state records show. Major donors include: Federation of Indians of Grattan Rancheria ($30 million), Pechanga Band of Indians ($25 million) and Yocha Dehe Wintun Nation ($20 million). All have prospered from their respective casinos.

Another committee that tried to defeat Proposition 27 has the support of tribes including the San Manuel Band of the Mission Indians and has raised about $91 million.

His main rival, the Yes on 27 committee backed by sports betting companies, has made approximately $169 million in loans and donations.

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

Despite the high claims of new income for the state, it is not clear what the financial benefits could be from any of the proposals.

With Proposition 27, the Office of the Nonpartisan Legislative Analyst concluded that its effects on revenue and costs are uncertain, partly because it is not known how many entities will offer betting or how many people will bet. It is possible that it could bring in hundreds of millions of dollars each year.

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However, the office also concluded that some income would not be new dollars because people may change their spending habits to buy lottery tickets or place sports bets instead of shopping at the mall.

State analysts also found that the financial implications of rival Proposition 26 are unclear, as it is not known how the state-tribal compact will be modified to allow sports betting. They found that the proposal could increase state revenue, potentially by tens of millions of dollars each year, but would also increase costs for enforcement and regulation.

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A jumble 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 is backing Proposition 27.

Voters are seeing a flood of competing claims.

The number 26 committee says that wealthy tribes are trying to operate this system to gain unprecedented gambling income and political influence.

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

Record spending over California’s legal gambling initiative

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