A coalition of gambling companies led by
and FanDuel Group is pulling back on advertising for a ballot measure to legalize online sports betting in California as polls show it is likely to lose.
The online sports-betting industry’s initiative, known as Proposition 27, has drawn about $402 million in fundraising, according to campaign finance records, the most in state history. But the pro-Prop 27 campaign, which has raised $169.2 million, recently canceled about $11 million in broadcast TV and cable ads they had planned to run through Election Day, according to ad-buying data through Oct. 6 reviewed by The Wall Street Journal.
The pullback comes after a poll released Tuesday by the Institute of Governmental Studies at the University of California, Berkeley found 27% of likely voters would support Prop 27, while 53% would oppose it. Another public poll and an internal one released by opponents showed similar results.
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The measure’s defeat would be a loss for DraftKings, FanDuel and BetMGM, which hoped to turn California into the nation’s largest online sports-betting market. Thirty-six states and the District of Columbia have legalized sports betting. California would become the largest market, with $3.1 billion of potential annual sports-betting revenue, according to Eilers & Krejcik Gaming, a gambling-industry research firm.
Opposition to Prop 27 has been led by Native American tribes that operate casinos in the state and see control of gambling as key to their sovereignty and economic health. Two tribe-backed committees fighting Prop 27 have raised a total of $233.1 million, according to state records. Some of the tribes are also backing a competing measure, Proposition 26, that would allow sports betting only in-person at tribal casinos and horse-racing tracks.
That measure is trailing badly in polls as well. Historically in California when voters are confronted with two ballot measures on the same topic, they have often voted against both.
The previous record for fundraising on a California ballot measure was set in 2020 with Proposition 22, which drew $226 million. The measure, in which companies including Uber Technologies Inc., Lyft Inc. and DoorDash Inc. sought to exempt their workers from a California labor law, was opposed by unions and ultimately passed.
Advertising promoting Prop 27 has emphasized that most revenue from a 10% tax on online sports bets would be directed toward mental-health services and homelessness, problems that polls show are top of mind for many California voters.
Some ads say the measure will “fund permanent solutions for homelessness” and don’t mention sports betting.
Nathan Click, a spokesman for the Yes on 27 campaign, said the group is shifting its strategy toward direct mail and digital advertising in the final weeks.
“Clearly the ad war and the congested media landscape is not benefiting either Prop 26 or Prop 27,” he said.
Prop 27 requires online-gambling companies to partner with a tribe and the leaders of three of the state’s 110 federally recognized tribes have endorsed the measure.
Dozens of others oppose it, including the Pechanga, San Manuel and Morongo tribes, which operate some of the biggest casinos in California. Their advertising depicted DraftKings and FanDuel as “out of state corporations” that want to take advantage of the state in pursuit of profits.
“They’ve spent over $100 million in the last three months, attacking tribes and threatening the one industry that has taken tribes out of poverty,” said Jacob Mejia, spokesman for the Pechanga tribe and an anti-Prop 27 coalition.
The online-gambling coalition said it attempted to partner with some tribes as they began work on Prop 27 last year. Mr. Click said the campaign shared draft language with a number of California tribes and incorporated several of their suggestions.
Kathy Fairbanks, a spokeswoman for one of the committees against Prop 27, said she was not aware of any past negotiations.
Since voters first legalized Indian casinos in 2000, California’s gambling tribes have made hundreds of millions of dollars in political contributions and built a bench of allies in the legislature.
“The tribes have a lot of strength, and people have a lot of respect for them,” said Gale Kaufman, a political consultant who wasn’t involved in Prop 26 or Prop 27.
The state Democratic and Republican parties both oppose Prop 27. Democratic Gov. Gavin Newsom, who has made homelessness one of his signature issues, hasn’t taken a position but expressed skepticism about it.
“I’m not supporting or opposing,” he told reporters in Los Angeles in August. “But it is not a homeless initiative, and I know Angelenos can read between the lines and they know better.”
Bill Pascrell III, a lobbyist for the gambling industry, said if Prop 27 fails, online-betting companies should partner more closely with tribes in the future if they want to expand operations to California.
“They would have been far better off not putting it on a ballot this year and try to work harder to respect the culture of the tribes,” he said.
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