Two months before Californians decide whether to open the nation’s largest state to legalized sports betting, a new audit finds that the agency charged with treating people with gambling addictions may be ill-prepared for such a significant expansion of the market.

A new 55-page report, released by California Acting State Auditor Michael S. Tilden, found that the California Department of Public Health’s Office of Problem Gambling does not have a clear picture of how many residents are suffering or who have recently suffered from gambling addition. The agency, which has an annual budget of about $9 million, has also failed to demonstrate that it is effectively monitoring its prevention and treatment programs, according to the audit.

“The Office of Problem Gambling cannot show that its evaluation of its programs and services has any direct connection to improvements in those programs and services,” the audit states.

The California Department of Public Health, which houses the Office of Problem Gambling, did not respond to questions on Monday. But the audit states that the agency agreed with the auditor’s findings and indicated that it would implement the recommendations made, such as creating measurable program goals.

On the Nov. 8 ballot, voters will decide the fate of a pair of competing propositions that aim to open up a massive legal sports betting market in California. The outcome will determine whether California will join more than two dozen states that have authorized sports betting in recent years — and who will reap the financial benefits.

Proposition 27, which is led by online gambling companies like DraftKings and FanDuel, would permit online and mobile sports wagering. Meanwhile, Proposition 26, which is backed by Indian tribes that own California’s casinos, would allow Californians to legally bet on sports solely at tribal casinos or the state’s four privately-owned horse tracks.

The competing parties have together raised nearly $370 million for their campaigns, making this the costliest ballot initiative fight in California history.

In the last decade, sports betting has become the fastest growing form of gambling, accelerated by the 2018 U.S. Supreme Court decision striking down a federal law that effectively banned it. But little research has been conducted on the consequences of such a significant expansion to the gambling market.

Oklahoma State University professor John Holden, who studies legal and regulatory issues in the gambling industry, said problem gambling has been an “afterthought” for most elected officials and state agencies.

“Everyone knows that this is a concern but I think dollar signs sort of take over in peoples’ heads and then people just wind up doing the bare minimum,” he said. “It’s really a shame because I think at some point there is going to be a price to pay for that.”

Although Holden added that a legalized gambling market could bring some of those currently dealing with addiction “out of the shadows,” he worries that state officials could be unprepared to deal with the ramifications.

“This could really set up a pretty dangerous situation down the road when you don’t know where you’re starting from,” he said.

The last time the Office of Problem Gambling commissioned a study on the problem was in 2006, when it found that more thanone million Californians had suffered from a gambling disorder at some point in their lives. According to the audit, the agency began participating in a new prevalence study survey in 2020 but does not anticipate receiving preliminary data until 2023 — or 17 years after the last study on the issue.

Dr. Timothy Fong, co-director of the UCLA Gambling Studies Program, said the lack of research is tied to a lack of funding. UCLA partners with the Office of Problem Gambling to provide a range of treatment options for those struggling with gambling addictions.

“Should we spend that money on another study or should we spare it for prevention, treatment and research? We’d rather see that money spend on front line work,” Fong said.

A 2021 survey from the National Association of Administrators for Disordered Gambling Services found that California ranked 27th in the nation for per capita public funds invested in problem gambling services. And, according to Fong, the Office of Problem Gambling’s $9 million budget is “minuscule” when compared to the hundreds of millions of dollars spent on education, treatment and prevention on alcohol, tobacco and cannabis.

As California voters contemplate increasing gambling options in the state, Fong argues that legislators must also prioritize funding to address problem gambling as a significant public health issue that could be exacerbated by such an expansion.

“The bottom line is we don’t know (how this will affect the number of people dealing with problem gambling) but it’d be much better to be prepared ahead of time than have thousands of people suffering and have nowhere to turn,” Fong said.

The state auditor’s report also found that the state is mismanaging a fund meant to cover the costs of regulating tribal casinos and provide services to individuals suffering from problem gambling, allowing the fund balance to reach $127 million — or nearly four years of expenditures.

The state auditor has recommended that the legislature appropriate the excess reserve funding by either increasing the amount of funding for the state’s problem gambling programs or refunding the tribes a portion of the fees that they have paid.

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