San Francisco Chronicle - (Sunday)
Confusion the safest bet with sports gambling ads
There’s a largely unspoken contradiction going on behind the scenes with Propositions 26 and 27, the ballot measures that ask Californians whether and how they want to legalize sports gambling.
One of the dominant themes in the No on 27 campaign is a concern about the evils of online gambling. If Prop. 27 — which would legalize online sports betting in California — passes, it would transform “every cell phone, laptop tablet and even video game console into a gambling device, opening up online gambling to anyone, anywhere, anytime,” according to a line that often appears in the campaign’s ubiquitous
advertising.
More than 50 of California’s 109 federally recognized Native tribes oppose Proposition 27 — in part because sports gambling would be run through deeppocketed commercial operators like FanDuel and DraftKings. Prop. 27 would require the big gambling corporations to partner with a tribe to be allowed to set up shop in the state.
But some tribes that oppose Prop. 27 don’t necessarily oppose online sports betting because of concerns about gambling. They know it is coming. Thirty-five states have approved sports gambling. They just don’t want commercial operators to be driving that change. They want to maintain, to use a line often heard in ads, “tribal sovereignty.”
As Mark Macarro, chairman of the Pechanga Band of Luiseño Mission Indians, recently told The Chronicle’s editorial board, “It’s inevitable that mobile gaming is going to be upon us some day. Where do we fit in? And the conclusion that many of us have reached is we should, at a minimum, be at the table helping develop the legal framework for when mobile gaming arrives.” Macarro is a Prop. 27 opponent who emphasized that some of his fellow tribal chairs “aren’t as far down the road in terms of the inevitability of mobile gaming.”
If online gambling were to be legalized through Prop. 27, Macarro said, there is a concern that it could damage “the brick-andmortar casinos” that are what he called “our lifeblood, fundamentally.” Tribal gambling has created over 150,000 jobs in California and $27 billion in economic impact, according to the tribes.
Prop. 26, which Macarro and other tribes back, would only allow sports gambling to be done in-person at tribal casinos or at four horse racetracks in California.
“Prop. 26 is about an incremental step in the direction, I suppose, ultimately of mobile gaming,” Macarro said. Some Prop. 27 opponents — including the San Manuel Mission Band of Mission Indians — which has contributed $78 million toward defeating Prop. 27 — are supporting a proposed 2024 ballot measure that would legalize online gambling in California. The difference: It would be controlled by native tribes, not commercial gambling companies.
That makes warning about the dangers of online sports gambling sound hollow and self-serving if tribes are going to be asking voters to support it in two years.
Brandt Iden, a former Michigan state legislator who is now a gambling industry analyst, said, “What this really comes down to tribes wanting exclusivity.”
“It’s not so much about mobile sports betting as it is the tribes have said, ‘Look, for years we’ve had exclusivity in California. We’ve earned that, right? We don’t want the commercial operators coming into the market. We will do mobile sports betting on our terms later,’ ” said Iden, who is now head of government affairs at Sportradar, a sports technology company that provides data to the betting industry.
That is but one of many often confusing messages filling our screens in California as the parties warring over Props. 26 and 27 have combined to spend $424 million in their quest to legalize or quash various forms of sports betting.
The prize: an industry that could be worth $3 billion to $4 billion in California, according to gambling analysts.
One of Prop. 27’s key selling points is that 85% of the money it generates through a 10% tax on gross online sports betting revenue would go toward homeless
A customer makes a sports bet at the Ocean Casino Resort in Atlantic City, N.J. California voters will decide on two competing ballot measures to allow sports betting in the state.
services. The rest would go toward tribes that are not involved in sports gambling. A report from the nonpartisan Legislative Analyst’s Office said new tax revenue from the proposal “could reach the mid-hundreds of millions of dollars annually.”
Opponents say the ballot measure is overstating how much it would help homelessness. Many of those same opponents back Prop. 26, which would allow only in-person sports betting to occur at the state’s 66 tribal casinos and four qualified horse racetracks. The legislative analyst said that the state could see “tens of millions of dollars annually” in new revenue if it passes.
So while we’re stuck watching these ads for the next two months, let’s examine how they square with reality. Here are a few that illustrate some of the common themes in the campaigns.
The campaign: Pro- Prop. 27 The claim: “Tribal leaders urge you to vote YES on Prop 27.” Reality check: Technically, yes, some tribal leaders do support Prop 27. And by “some,” that means three of California’s tribes support the ballot measure. The No on 27 campaign counts more than 50 tribes that oppose it.
The campaign: Pro-Prop. 27 The claim: “Prop. 26: nothing for disadvantaged tribes.” Reality check: The claim is technically accurate in this ad comparing Props. 26 and 27, but doesn’t capture the complete picture.
Prop. 26 does not contain any specific language that directs money to disadvantaged tribes. But Prop. 26 supporters say that’s because a revenue-sharing program is already in place in California. Currently, “tribes operating larger casinos pay nearly $150 million each year to tribes that either do not operate casinos or have less than 350 slot machines,” according to the nonpartisan Legislative Analyst’s Office report.
Also — some tribes supporting Prop. 26 have promised to share 15% of net sports gambling revenue with non-gambling tribes, according to a memo signed by tribal leaders.
The campaign: Anti-Prop. 27 The claim: Prop. 27 would transform “every cell phone, laptop, tablet and even video game console into a gambling device, opening up online gambling to anyone, anywhere, anytime.” The ad says that “could lead to more addiction, financial
ruin and homelessness while exposing millions of children to online gambling.” Reality check: Every cell phone and laptop already potential gambling device. They’re just not placing legal bets. As industry analyst Chris Grove told me last year, “millions of Californians are betting billions a year on sports, and by definition, that activity is flowing exclusively to unlicensed unregulated operators.”
Iden said anybody under 21 can find an illegal gambling site now. Just search for “‘sports betting in California’ and it would take you to an offshore site and there’d be no protections for anything.”
Ultimately, analysts said, the end result of these confusing messages is grim for both sides: “The odds of one or both measures passing (is) less than 50%,” according to an August analysis by Eilers & Krejcik Gaming, an Irvine research firm.
“Come November,” Iden said, “we’re going to see both of these fail. We’re going to be right back to the drawing board.”
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