STATESIDE
at tribal casinos. Card room operators statewide opposed Prop. 26, fearing more competition. Prop. 27, whose key sponsors were DraftKings and
FanDuel, allowed online and mobile sports betting. The Indian tribes helped squash that to eliminate additional competition. These bitter campaigns spent an unprecedented $450 million-the most for any ballot measures in U.S. history. After this mutual destruction, voters turned off and tuned out. Recognizing that voters rejected both, most money dried
up by late summer. The Public Policy Institute of California confirmed only 21% of likely voters supported Prop. 26. Less than one third supported Prop. 27. Instead of cooperating on solutions, everyone lost in the end. California desperately needs tax revenues as companies and individual taxpayers continue to flee. The astronomical cost of living has pushed average people to other states with more affordable options and opportunities. To millions of residents, the “Golden State” has become the “gold-plated” state. In a November report, California’s Legislative Analyst’s Office (LAO) projected a $25 billion budget deficit in 2023-2024. They predict tax revenues will actually fall $41 billion below budget projections from fiscal year 2021- 2022 through fiscal year 2023-2024. These estimates are stunning, considering LAO’s 2021
report of California’s $52 billion budget surplus for fiscal year 2022-2023. How is it possible that the swing from prosperous to almost insolvent could total almost $100 million within such a short time? Many national companies have relocated their headquarters and employees since 2020 and now enjoy enormous savings. The Oakland Raiders, now the Las Vegas Raiders, got a gorgeous new stadium and no state income tax when moving to Las Vegas. The Oakland Athletics baseball team may do the same. Consider other giants like Oracle, Tesla, Chevron and
Kaiser Aluminum, among hundreds of corporations. What motivated these exits? Business-friendly states like Texas, Tennessee, Arizona and others offer reasonable taxes rates and affordability. People in California commute for hours or hold multiple jobs to pay their bills. Elon Musk, Tesla Twitter owner, called California the “land of overregulation, over-litigation and over taxation. That, and chronic homelessness and drug use on the streets of Los Angeles and San Francisco, plus business- destroying Covid restrictions and CEOs have had enough. Seeing the mass exit, supporters of both proposals
believed these measures would help stabilize California’s economy and increase its gambling competitiveness with neighboring Nevada. California resident, and longtime legal gaming expert, I. Nelson Rose criticizes both sides for blowing up phenomenal opportunities. For California Indian tribes, Prop. 26 would have meant numerous positives, including a monopoly on in-person sports betting, roulette and craps. This scenario would damage the card clubs throughout California. The defeat maintains the status quo, giving tribes a limited monopoly on casino venues with banking card
games and slot machines. Plus, if they cannot offer legal sports betting, neither can anyone else. By defeating Prop. 27, tribes crushed the major online
sportsbooks, but there is no reason to smile. After spending hundreds of millions, they received only 17% of the vote.
That is par for the course, says Rose, given that California has failed to legalize Internet poker for more than 10 years. This seems ridiculous since California’s population exceeds Canada’s and online and in-person sports betting would generate billions. Rose cites greed and the enormous money at play as being the culprit, making compromise tougher. Battling the tribes is a fool’s errand and Rose states that
multiple election fights have failed for more than 24 years. The State Constitution prohibits “casinos of the type currently operating in Nevada and New Jersey,” but the tribes attempted to circumvent the law in 1998 with Prop. 5. The ballot question would have legalized slot machines and blackjack as “lotteries.” The California Supreme Court ruled that 1986 was their benchmark calendar year for “currently” and it was unconstitutional. Prop. 1A later amended the Constitution to allow true tribal casinos. Questions of the legality for sports betting remain, but a true amendment would cushion everyone politically and legally. Rose describes four major groups that could each kill, but not pass, expanded legal gambling. Gaming tribes have the most power and influence, but often disagree among themselves. Next are the states racetracks, which face the same
decreasing revenues as others nationwide. Card clubs may carry smaller cities economically and help pay for government programs. Politicians round out the list at the bottom. They have no business or social stake in any of the battles, but want the tax dollars derived from sports betting. Another election is coming in 2024. Can they reconcile their differences? Everyone will have to wait and see, but, do not expect success without a political compromise from these four factions.
DECEMBER 2022 9
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