California Sports Betting Measures Heading to the Nov. Ballot Amid Opposition

Come November, Californians will vote on the proposed state constitutional amendment to legalize sports betting statewide. The two initiatives, Proposition 26 and Proposition 27, as they are known, are expected to be numbered back-to-back on the ballot. If the votes for any of the measures by 50% plus 1, California will pass the bill, and hopefully, the market will roll out by January 1, 2023.

A Closer Look at Proposition 26 and Proposition 27

The first ballot measure, Proposition 26, backed by a significant number of Native American tribes, will allow in-person sportsbooks at state-licensed racetracks and tribal casinos. A 10% tax on revenue will be imposed on the sportsbooks at the four thoroughbred racetracks in The Golden State.

Prop. 26 will also allow tribal casinos to offer craps, roulette, and other dice games. Furthermore, there is a provision that allows anyone to file a legal lawsuit against an entity supposedly conducting unlawful gaming activity if the attorney general hasn’t taken any action.

The second ballot measure, Proposition 27, will legalize online sports betting on mobile apps and online sportsbooks across the state of California. This measure is backed by Californians for Solutions to Homelessness and Mental Health Support. The committee receives funds from giant sports betting operators such as WynnBET, BetMGM, Fanatics Sportsbook, DraftKings, BallyBet, and FanDuel.

If legalized, revenue from the business will be taxed at 10%, with 85% of the tax used to fund homelessness and mental health services and the remainder going towards the economic development of the non-gaming tribes. Tamera Kohler, the CEO of the Regional Task Force on Homelessness, voiced her support for Prop. 27 saying:

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“This initiative is a critical step forward, dedicating revenue to the issue of homelessness is a win-win for our state. It would provide an ongoing funding source of hundreds of millions of dollars each year to fight homelessness and provide mental health services to those most in need.”

To get the online sports betting licenses, sports betting operators will part with a one-off fee of $100 million plus an additional $10 million every five years. In addition, they must have licenses from 10 other territories or have licenses from 5 other territories on the condition they own or manage 12 Class III casinos.

On the other hand, tribal nations participating in online betting operations would pay a $10 million fee under Prop. 27, far less than what commercial sports betting operators would be required to pay. However, the tribal casinos can only have an online app using its own name or, in other cases, a trademark linked to the tribe. In addition, both sports betting proposals limit betting to persons aged 21 and older.

Battle For the Holy Grail

The California state government analysis of the two initiatives discovered that Prop. 26 would generate revenues in the tens of millions while Prop. 27 would create revenues in the hundreds of millions annually. Combined with a large population and economic strength, it makes California attractive to the sports betting industry.

However, Proposition 27 has come under heavy fire and created a rift amongst several California gaming tribes. Two tribal-backed groups; Californians for Tribal Sovereignty and Safe Gaming and Stop the Corporate Online Gambling Prop, are strongly objecting to Prop.27. Californians for Tribal Sovereignty consists of nearly 40 tribes, whereas Stop the Corporate Online Gambling Prop boasts backing from almost 50 tribes. On Thursday last week, Californians for Tribal Sovereignty and Safe Gaming Chairperson Daniel Salgado of the Cahuilla Band of Indians highlighted that tribal sovereignty and self-determination would be at risk if the proposal passed.

As the two groups are adamantly fighting Prop. 27 to prevent out-of-state operators from ‘draining’ money out of California, three smaller tribes from northern and central California support the proposal. These central CA tribes are even hoping to land a deal with gaming companies and reap sports betting benefits upon market launch.

More Opposition to the Two Initiatives

Taxpayers Against Special Interest Monopolies, a ballot measure committee funded by cardroom casinos, have opposed Prop 26. The committee, in its press release, stated that Proposition 26 would:

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“Guarantee tribal casinos a near monopoly on all gaming in California — adding exclusivity over roulette, craps, and sports wagering to their current monopoly on slot machines — while weaponizing the Private Attorneys General Act (PAGA) so it can be used against tribal casino operators’ legally operating competition.”

Another hard blow to the proposed state constitutional amendment to legalize online sports betting landed on Sunday from the California Democratic Party. It came a day after the party’s Resolutions Committee reviewed the various ballot measures ahead of the November general election.

Even though the decision was made by party officials and might not show the true reflection of how the voters view the proposition, it is causing some worry to supporters of Prop 27. The Democratic Party is the largest political party in California with nearly 10.2 million voters and holds close to a 2 to 1 advantage over registered Republicans. In their response, tribal leaders welcomed the objection.

Agua Caliente Band of Cahuilla Indians Tribal Chairman Reid Milanovich said in a statement.

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“By opposing Prop 27, California Democrats rejected out-of-state corporations and reaffirmed their commitment to California’s Indian tribes. Prop 27 is not a solution to anything. It would expose children to a massive expansion of gambling and turn every cell phone, gaming console, tablet, and laptop into a gambling device. Prop 27 is a direct attack on tribal gaming and Indian self-reliance.”

Meanwhile, there are 20 states and the District of Columbia that have legalized online sports betting to date. As for California, until voters decide in November, it’s hard to tell whether they will welcome the activity within their stateliness to prevent much-needed revenue from slipping away. Here’s to hoping for a positive outcome to ensure that sports betting fans will no longer be forced to travel out of state just to wager on their favorite sporting events.