Hugely expensive ballot fight looms over gambling

Californians, given the chance, would wager hundreds of millions of dollars a year on sporting events, say analysts, and that golden potential is luring gaming tribes, card rooms and online sportsbooks to the November ballot.

Experts predict gaming measures – one is ready for the ballot, one is more than a quarter way there, and two more are cleared to gather signatures – will result in the most expensive campaign season in California history.

“This is going to be the biggest, baddest, greatest, most expensive of all time.” — David McCuan.

California’s electoral arms race continues to reach new heights. A record-setter this time would be the second in as many cycles. The current high-water mark was set just two years ago, when ride-hailing companies and their opponents pushed Proposition 22 to the top of the  spending pack in a $755 million election covering a dozen ballot measures.

This year, thanks in large part to gambling dollars, that record may well fall. 

“This is going to be the biggest, baddest, greatest, most expensive of all time,” said David McCuan, professor and chair of the Political Science department at Sonoma State University, where he specializes in ballot measure politics. 

“When giants decide to go nuclear, they tend to dominate the space and set records,” he said. And gaming interests are indeed giants, generating billions a year, and they stand to rake in much more if gambling laws are expanded. 

“We expect ballot measure expenditures to be galactic,” said McCuan. 

Sports betting is a brass ring for gaming operators. But it long remained out of reach because of the Professional and Amateur Sports Protection Act, which Congress passed in 1992 – eight years before Californians legalized tribal gaming.

Their initiative has the requisite valid signatures and has been eligible for this year’s general election ballot since May of last year.

But a sea change came in 2018, when the U.S. Supreme Court declared the Sports Protection act unconstitutional. In the wake of that ruling, Delaware, Mississippi, New York, New Jersey, Pennsylvania, Rhode Island and West Virginia legalized sports betting. 

In California, Sen. Bill Dodd, D-Napa, and Adam Gray, D-Merced, co-authored a bill to put the issue before voters in 2020. But the effort was not successful. 

So, a group of gaming tribes, led by the Pechanga Band of the Luiseño Mission Indians, opted for the direct democracy route. Their initiative has the requisite valid signatures and has been eligible for this year’s general election ballot since May of last year.

In the meantime, a group of online platforms have written an initiative of their own. Just like the Pechanga initiative, it requires 997,139 valid voter signatures to appear on the ballot. As of January, it had 25 percent of the signatures it needs. It has until May 3 to deliver the rest. 

If it were to pass, Californians could place bets online or by smartphone. This not-yet-qualified measure, too, sets the gambling age at 21. It dedicates some revenue to homelessness efforts and would open the door only to operators that contract with recognized Indian tribes.

“Voters are concerned about underage voting, and mobile gaming opens the door to that.” — Kathy Fairbanks

The Pechanga initiative also would put sovereign tribes into the lucrative world of sports betting, while keeping others out. The measure would allow a handful of racetracks to accept sports wagers, but would shut out card rooms and online operators. It has drawn dedicated opposition. 

The measure requires in-person betting because voters want it that way, said initiative spokeswoman Kathy Fairbanks. 

“Voters are concerned about underage voting, and mobile gaming opens the door to that,” she said.

The initiative also prohibits wagering on high school sports or on California-based college teams, and sets the betting age at 21. It also would allow in-person betting at a handful of racetracks. 

But it more than leaves card rooms out in the cold. By establishing a right for ordinary citizens to sue gaming operators for rule violations, it becomes an existential threat to card rooms.

“These clubs are really, truly the regional economic engines here” with some 10,000 regional employees “most of them from these minority-majority cities.” — Juan Garza.

“This will harm them,” said Warren, the opposition spokeswoman.

Backers of the Pechanga initiative are pointedly unconcerned about the fate of cardrooms. 

“Cardroom casinos have one of the worst if not the worst records of noncompliance in the United States with gambling laws, including those designed to guard against crimes like money laundering,” said Fairbanks, the initiative spokeswoman. “Our measure simply ensures existing laws preventing illegal gambling are being followed. Cardrooms following the law have nothing to worry about. Our measure will not shut down a single cardroom casino that’s operating legitimately.”

Juan Garza couldn’t agree less. Too much about potential rule violations will be “open to interpretation,” he said, and losers won’t only be the cardroom, but also the cities that depend on them. 

Garza is executive director of California Cities for Self Reliance, a joint powers authority of cardroom host cities Bell Gardens, Commerce, Compton, Cudahy and Hawaiian Gardens. The biggest card casinos in the state are in that economically stunted region. 

Garza said corporate America hasn’t exactly beaten a path to the struggling section of southeastern Los Angeles county. The big corporate taxpayers in his area are the card clubs. 

The cities of Commerce and Bell Gardens get half their city budgets from the cardrooms. In Hawaiian Gardens, it’s an eye-popping 70 percent.

“These clubs are really, truly the regional economic engines here” with some 10,000 regional employees “most of them from these minority-majority cities,” said Garza. 

“To the people who live in these cities, this is very real,” he said. 

California is home to 88 card rooms in 32 counties, generating $850 million in revenue after paying out winnings. There are 37 tracks and fares for horse racing in 19 counties, generating $650 million after winnings. And 63 tribal casinos in 27 counties, generating about $8 billion after winnings.