California Initiatives Get Title And Summary, Can Start Circulating

California’s attorney general’s office late Monday issued titles and summaries for a pair of commercial sports betting initiative proposals, clearing the way for backers to begin gathering the 874,641 signatures needed to get on the November ballot. Proponent Kasey Thompson and his group will need to collect 1 million or more signatures by June in order to ensure that enough are valid or qualified.

Thompson, of Eagle 1 Corp., said his group will only move forward with one of the proposals, the more detailed 23-0030-A1, which includes a comprehensive framework for what California sports betting will look like. The second proposal, 23-0031, is far more vague, and would put at least some of the power into the hands of the state legislature. Thompson said his group filed 23-0031 as a “backup” but will not gather signatures for it at this time.

“It could be used later in legislative process,” Thompson said, “meaning the legislature could put it on the ballot itself.”

Thompson also said that his group has enlisted “the best signature gathering company” in California, but declined to name the company. His group plans to augment the traditional petition gatherers with Hall of Fame professional athletes stationed at professional venues around the state collecting signatures on behalf of Eagle 1.

Thompson’s group began printing petitions Wednesday, the first day it was possible to do so, and he said it will print 1.2 million. Californians will likely see signature gatherers outside local grocery stores, department stores, and the like beginning later this month.

Should 23-0030-A1 get on the ballot, it will be the second time a commercial group has run an initiative in two years, but California tribes have vowed to kill whatever Thompson’s group puts forward. In 2022, the tribes banded together to spend about $250 million that resulted in a resounding defeat of a proposal backed by seven major operators.

Petition language ‘clear as mud’

Here’s a look at the language the AG’s office approved for the petitions:

LEGALIZES ONLINE AND IN-PERSON SPORTS WAGERING AND OTHER NEW TYPES OF GAMBLING. INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE. Legalizes online sports wagering statewide, and in-person sports wagering, roulette, and dice games on tribal lands, all of which currently are prohibited, if operated by federally recognized Indian tribes under gaming compacts approved by Legislature, the model compact approved by this measure, or state law enacted by this measure. Prohibits sports wagering by persons under 21. Requires participating tribes to pay up to 25% of sports-wagering profits to nonparticipating tribes and up to 1% to the state for regulatory costs. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Increased state revenues that could reach into the tens of millions of dollars annually, depending on how the measure is implemented and legally interpreted. Some portion of these revenues would reflect a shift from other existing state and local revenues. Increased state regulatory costs, potentially in the low- to mid-tens of millions of dollars annually. Some or all of these costs would be offset by the increased revenue or reimbursements to the state.

“The description is as clear as mud,” Las Vegas-based consultant Brendan Bussmann of B Global Advisors said. “And if you think voters are going to read that and understand what it does, then good luck with that.”

Some version of the title and summary will land on ballots, if Thompson’s group gathers the required amount of signatures. The language could give voters pause to even back the proposals, given that the description at least implies that sports betting revenue in the nation’s biggest state may not support itself. 

Will Betting Be Legal In California In Time For 2027 Super Bowl?https://t.co/005BIwFCgB @sports_handle @bbussmann @_cniga_ “Hell no. Unless there is a #Festivus miracle and sports betting gets passed in 2024, there is zero chance that sports betting will get passed before 2027.”

— B Global (@BGlobalAdvisors) December 21, 2023

It’s curious that the fiscal note and petition language on Proposition 27, which was defeated in 2022, differs significantly from the language in the fiscal note for the 2024 proposal. From the Proposition 27 petition language: “Increased state revenues, potentially reaching the mid-hundreds of millions of dollars annually, from online sports wagering-related taxes, licensing fees, and penalties. … Increased state regulatory costs, potentially reaching the mid-tens of millions of dollars annually, that would be fully or partially offset by the increased revenues.”

Stakeholders view California as the golden egg of sports betting, and if the New York sports betting market, in a state with half the population of the Golden State, is any indication, California’s 40 million residents should wager multiple billions of dollars in most months. Despite that, the attorney general’s 2022 fiscal note suggested the state could stand to take in “hundreds of millions of dollars” a year, but the 2024 fiscal note puts that number at “tens of millions.”

Signature gathering won’t be easy

Thompson has verbally committed to spending $25 million to gather signatures on a short runway. Operators in 2021 filed their proposal in August and were collecting signatures well before Christmas. The group filed its signatures with the state May 3, 2022, ahead of the June deadline. Thompson’s group is just now organizing is petition drive and has six months to submit.

A similar effort by commercial operators in 2021-22 in Florida failed to collect signatures as the Seminole Tribe fought back, buying out signature gatherers before the operators could hire them and, in some cases, reportedly setting up its own signature tables even though the tribe didn’t have a proposal headed to the ballot.

Still at issue as Thompson’s group moves forward is the temperature in Indian Country.

Thompson had promised not to move forward unless he had the support of a majority of California’s 100-plus tribes, but to date, only a handful of smaller, more rural tribes are publicly backing his proposal, and California’s biggest tribal group, the California Nations Indian Gaming Association, last month asked him not to move forward without support.

“We are hereby notifying you of the strong opposition from more than half of California tribal nations to these offensive proposals that masquerade as tribal initiatives,” the tribes wrote in a December letter to Thompson’s group. “Again, we expect you will keep your word and urge you to abandon these proposals without delay.”

The tribes, which have controlled gambling in California for about 30 years, have said they will fight this initiative just as hard, because they don’t need a “savior.” The biggest tribes had planned to bring a retail-only initiative for the 2026 ballot, and now fear that the effort by Thompson’s group will only “muddy the waters” and push a meaningful vote on wagering even further out.

Bussmann said Thompson and his group are taking a risk by moving forward without clear support from the tribes.

“That’s never a way to start an initiative,” Bussmann said. “Do you have consensus and support? If not,  you’re wasting your money.”