Deciding early that she doesn't want to do battle with Xavier Becerra and Katie Porter, Eleni Kounalakis dropped out of the 2026 race for California governor on Friday.

Kounalakis said she has decided not to run for governor, but will instead run for Treasurer of the state, a potential pivot that Politico had reported on months ago when it still looked like Kamala Harris could be in the race as well.

"This decision was not made lightly," Kounalakis said in a statement on Xitter. "At this moment, I believe I can make the greatest impact by focusing on California's financial future."

Kounalakis added, "As State Treasurer, I will bring a deep commitment to fiscal responsibility, economic opportunity and strategic investment in our state's priorities." And she specifically mentioned the high cost of housing in California, and her hope to make housing more affordable here.

Kounalakis, who had just gained a high-profile endorsement from House Speaker Emerita Nancy Pelosi last week, has been in this governor's race longer than anyone, having announced her run way back in 2023. She is the state's first female lieutanenant governor, and had hoped to be its first female governor.

As Politico notes, Kounalakis has many of the same ties to advisors and deep-pocketed donors in the Bay Area as Harris, and her dropping out opens the door for that money and advice to flow instead to former Congresswoman Katie Porter, former Los Angeles Mayor Antonio Villaraigosa, and/or former US Secretary of Health and Human Services, former Congressman, and former Attorney General of California Xavier Becerra.

Also in the 2026 governor's race are former state Senate leader Toni Atkins, former Controller Betty Yee, Superintendent of Public Instruction Tony Thurmond, billionaire Stephen Cloobeck, and our own SF Sheriff's endorsee, Riverside County Sheriff Chad Bianco, who's running on the Republican side.

But the clear frontrunner now that Harris has bowed out is Porter, who has made a name for herself as an outspoken and shrewd Democrat who was able to win over enough Independents Republicans when she successfully ran for Congress three times in a purple district in Orange County. Porter has been well ahead in early polling, and Porter herself suggested she would only run if Harris stayed out of the race.

It may be that Kounalakis and Porter have even struck some sort of back-room deal. And the move also could give Pelosi the opportunity to endorse someone else, like her former colleague in the House, Porter.

Kounalakis, who may not have broad name recognition among voters, is well known in Democratic circles because of her family's fundraising history for the party, and her deep-pocketed Democratic donor father as well, Sacramento developer Angelo Tsakopoulos. As the Chronicle reports, Tsakopoulos gave $5 million to his daughter's first run for office in 2018, and the family's history likely led to Kounalakis being given an ambassadorship by President Barack Obama — she served as US Ambassador to Hungary from 2010 to 2013.

It should be noted that Kounalakis will now be running against former Oakland Mayor Libby Schaaf for the Treasurer's office.

Related: Kamala Harris Says She Won't Run for Governor, Setting Stage For Another Presidential Run