Since the U.S. Supreme Court ruled in 2018 that states could legalize betting on sports, California — with 40 million people and numerous professional teams — has been the great white whale, eluding gambling companies and casino-hosting tribal communities. At stake is $3.1 billion in annual revenue, according to one industry consulting firm.
This year, voters will face not one but two ballot propositions this fall aimed at capturing California’s sports betting market. Although neither appears to have strong public support, gambling addiction experts are worried about one far more than the other.
Proposition 27 — Online sports betting
Proposition 26 would permit sports betting, but only within existing brick-and-mortar establishments that already offer gambling and at horse-racing venues. This proposition is supported by some of the state’s largest tribal casino owners. By contrast, Proposition 27 would legalize online sports betting, opening the door for people to bet on games whether they’re sitting in the bleachers or on a couch. This proposition is designed and funded by such national corporate gambling sites as DraftKings, FanDuel, and BetMGM.
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Each measure would likely increase instances of problem gambling and gambling addiction. But mental health experts say the sheer ease of online betting — on scores, player point totals, the number of penalties in a game, and almost everything else connected to a sporting event — increases the chance for trouble.
“You don’t get addicted to full-season fantasy football. You get addicted to in-game betting,” said Dr. Timothy Fong, a psychiatrist and co-director of the UCLA Gambling Studies Program. “Instead of one bet on the Rams-Chargers game, I now can make an infinite amount right from my phone.”
Gambling on the rise
Sports betting is already legal in some form in 36 states and Washington, D.C. Calls to gambling hotlines spiked in Michigan, Connecticut, New York, and other states after they allowed that form of gambling. The National Problem Gambling Helpline Network reported a 45% increase in year-over-year inquiries in 2021. This is when 11 states went live with some new form of sports betting.
Gambling addiction doesn’t involve the ingestion of drugs or chemicals. But it does involve the stimulation of regions of the brain the same way that other addictive disorders do. The American Psychiatric Association places gambling in the same category as tobacco, alcohol, cocaine, cannabis, and opioids. Research shows that mesolimbic dopamine, which provides the brain feelings of reward and pleasure, is released in larger quantities in pathological gamblers than in people in control groups. Gamblers get hooked on that reward.
Benefits to the state
For many states, the lure is obvious: tax revenue. In 2020, Pennsylvania collected $38.7 million from gambling — three-quarters of it generated by mobile sports betting. California’s nonpartisan Legislative Analyst’s Office estimates the state will collect hundreds of millions in tax dollars each year. But likely not more than $500 million annually, if Proposition 27 passes. The office pegged state revenue from Proposition 26 at tens of millions of dollars a year. Some of that money would come from taxing 10% of sports bets at racetracks. And some could come from tribal casinos, which would need to renegotiate compacts with the state.
For weeks, Californians have been bombarded by competing ads in what’s become the nation’s most expensive ballot-initiative fight. The fight may have turned voters off. A recent poll by the UC-Berkeley Institute of Governmental Studies found 42% of likely voters opposed to Proposition 26, compared with 31% in support. Support for Proposition 27 was even smaller, with 53% of likely voters opposed and only 27% in favor.
The two sides
Both ballot measures offer limited new resources to help people with gambling problems or addictions. And neither requires the state to improve tracking or treatment.
The authors of Proposition 26 included a provision to direct 10% of the sports betting revenue from horse-racing tracks to the state Department of Public Health. Therefore, some of the money will go “to prevent and treat problem gambling,” according to material furnished to KHN by supporters of the initiative. But racetracks have been in decline for decades. And their share of sports betting would be the smallest slice of the pie. Additionally, the amount that could be generated from tribal casinos is uncertain. This is because it would depend on whether new compacts require additional payments and direct money to treatment programs.
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Kathy Fairbanks, a spokesperson for the Vote Yes on Proposition 26 campaign, noted that tribes already contribute roughly $65 million a year to the state Gambling Control Commission. This money which funds the Office of Problem Gambling. “Prior to tribes getting casino gambling in California 20-plus years ago, there was no dedicated funding for problem gambling,” Fairbanks said. California has had racetrack wagering since the 1930s, and the lottery started in 1985.
Proposition 27 would require participating companies to pay 10% of gross gambling revenues to the state. Of that, 85% would be designated for homeless and mental health programs, including those for problem gambling.
Nathan Click, a spokesperson for the Yes on 27 campaign, said the initiative would enact “the strongest problem gaming safeguards for online sports betting in the country” and would require each authorized gambling platform’s employees to be trained on how to spot problem gambling.
The problems with gambling
But psychologists say that online betting is immediate, accessible, and nearly effortless. Anyone with a phone, tablet, or computer can get started with a credit card. And there’s virtually no limit on the bets that can be placed on a single game. Even while the game is being played.
“People don’t become addicted to Mega Millions,” Fong said. “They become addicted to scratchers, with more bets per minute.”
One way the gambling industry entices people to keep playing is through promotional credits. These credits essentially allow them to begin betting without spending their own money. Rick Benson, founder of Algamus Gambling Treatment Services, said “free play” offers are not just common in casinos but are also heavily marketed by websites and on social media, potentially luring new gamblers into thinking they have nothing to lose.
That makes Proposition 27 a bigger concern. Researchers at McGill University and the Oregon Research Institute found that online gaming is a gateway to behavioral disorders. This can include problem gambling, marked by continued gambling despite negative consequences in a person’s life, or full addiction, which is uncontrollable. Gambling can lead to ruinous results, such as bankruptcy, mental health and family issues, and substance use.
Because Proposition 26 restricts betting to casinos and racetracks, it could moderate the activity. “Studies have shown that gambling participation is in some ways tied to access,” said Robert Jacobson, executive director of the California Council on Problem Gambling. “The rates of participation go up once people are within 50 to 60 miles of a casino.”
Still, how Proposition 26 would affect gambling prevalence isn’t clear because the provision also clears the way for tribal casinos to add Las Vegas-style games, such as roulette and craps.
An uncertain future
It’s also not understood how big of a problem gambling addiction is in California, mostly because the state’s Office of Problem Gambling has not updated its data since 2006. In August, a state audit declared that the office, which has an annual budget of roughly $8.5 million, “has not effectively evaluated its programs.” The office doesn’t know how many California residents are experiencing or have recently experienced gambling-related issues.
Addiction researchers, however, believe the problem has remained consistent, with about 4% of residents experiencing either problem gambling or gambling addiction. That equates to about 1.6 million Californians who may have a gambling issue, although the number could be much higher because fewer than 1 in 10 people with gambling disorders seek treatment.
The two initiatives would amend the constitution so the legislature could create new sports betting laws. State agencies would then have to come up with regulations for implementing sports betting, which, the experts say, could be gamed by gambling interests.
“The votes,” Jacobson said, “are only the front end of the activity.”
