Hoornstra: MLB bets on its future in the form of Proposition 27

If the World Series extends to seven games, this year’s champion will be crowned on the relatively late date of Nov. 5.

Three days later, a key element of baseball’s future in California will be decided at the ballot box.

Propositions 26 and 27 offer competing visions for the future of sports gambling in the state. Each would make wagering on games legal in California. The main difference, in short, is whether the state would be open in whole (Prop 27) or in part (Prop 26).

If Prop 27 is enacted, California would adopt a constitutional amendment and statute to authorize “a gaming tribe, an online sports betting platform with an operating agreement with a gaming tribe, or a qualified gaming company with a market access agreement with a gaming tribe” to operate online sports betting anywhere in the state.

This vision already mirrors the reality in many states where sports gambling has been legal for years. In California, where Las Vegas casinos and offshore sports books have been the method of choice for fans looking to make a buck by beating the odds, it would represent a significant change.

What might that change look like for the Dodgers’ or Angels’ home ballparks?

It might look something like “Caesars Sportsbook at Chase Field,” the Diamondbacks’ home park in Phoenix. The two-story space opened in June, featuring enough TV screens and adult beverages to entertain a person with or without an itch to wager.

It might mean the manifestation of a vision Commissioner Rob Manfred has been articulating for years: fans whipping out their smartphones between innings, placing live prop bets on what will happen next in a baseball game as it unfolds.

It’s important to note that these are probably not mere hypotheticals. MLB last Friday became the first major pro sports league to officially endorse Prop 27. The endorsement itself is not surprising; the sponsors of the proposed legislation include league partners like BetMGM, DraftKings and FanDuel.

DraftKings CEO Jason Robins said in a recent interview that if Prop 27 passes, the gaming operator could launch its California product in time for the 2023 NFL season. That might mean it would launch in time for the 2024 MLB season.

If Prop 27 were the only avenue for legal sports gambling on the next state ballot, this story might end here. The presence of Prop 26, which would allow only in-person sports betting, only at California’s racetracks and tribal casinos, offers a different vision for the future.

Because the text of the proposed law doesn’t include an online wagering component, Prop 26 would dash Manfred’s dream for the future of smartphone usage.

“Even that level of friction to place a bet would be detrimental to the overall amount of wagering you get on the sport,” said Geoff Zochodne, a betting industry analyst with the website Covers.com. “It’s easier to place a bet on your phone. There’s that hurdle that would act as a natural damper on the amount of wagering.”

Zochodne cited the example of New Jersey, where sports gambling is legal on smartphones and at in-person sports books. Of the roughly half-billion dollars in wagers handled by the state, 93% were placed online rather than in person. That offers a possible preview for California if both ballot measures happen to pass.

Ballotpedia recently reported that the committees supporting and opposing Propositions 26 and 27 have raised more than $256 million, making them the most expensive ballot measures in state history. MLB’s endorsement is not the largest drop in that bucket, but it comes with an interesting twist.

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Four of the five major league teams in California have business partnerships with tribal casinos: the Dodgers with Ya’amava, the Angels with Pechanga, the San Diego Padres with Sycuan, and the San Francisco Giants with Cache Creek. Their ads are displayed inside their respective stadiums. Their business relationships are transparent. At Sycuan – about 30 minutes east of Petco Park, in El Cajon – guests can even rent the “Padres Suite.”

Yet, in the battle to define the future of sports gambling in California, the tribal casinos and MLB find themselves at odds. The three Southern California tribal casinos did not respond to an email request for comment on the league’s endorsement of Prop 27.

The future could also look like the present. It’s possible neither ballot measure passes. Zochodne notes that, for all the money currently being wagered on baseball in the U.S., the house only wins about 3.6% of the time. The financial windfall to the state and the tribes is not akin to other forms of gambling.

“People take it very seriously,” Zochodne said. “They research stats. The revenue take for actual sports betting, it’s not like 100% of wagers placed goes to the operator’s bottom line. A lot goes back to bettors.”