A duo of competing ballot amendments in California to legalize sports betting have resulted in billions of dollars of spending and launched a contentious debate in the Golden State.
Propositions 26 and 27 have become the costliest ballot measures in state history, pitting Native American tribes and massive gambling companies against each other. While both measures would legalize some form of sports betting, they differ greatly in scope and in the fine print. Both will appear on the Nov. 8 midterm ballot.
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Proposition 26 would permit in-person sports wagers at horse racing tracks and in casinos on tribal land. Proposition 27 would allow California residents to make bets through approved sportsbooks online anywhere in the state — a much more expansive proposal.
Both sides have taken to the airwaves in what has become the most expensive ballot initiative drive in California history, about double the $226 million dumped into the 2020 fight over independent contractors and app-based companies.
There is a web of campaigns involved as well. One supports Proposition 26 while campaigning against Proposition 27, while another is just focused on defeating Proposition 27. A third works solely against Proposition 26. And a final one, backed by major sportsbooks, is singularly campaigning in favor of Proposition 27, according to KTLA, a Los Angeles news station.
Most major Native American tribes in California support Proposition 26 because it would give casinos on tribal land priority versus Proposition 27. The latter would take away the incentive for prospective sports gamblers to make the journey to casinos to bet in person.
In addition, Proposition 26 would allow the tribal casinos to add dice games and roulette to their facilities. Both of those games are currently illegal under state law.
Other, typically smaller Native American tribes have offered support to Proposition 27 because it would allow not only major sportsbook companies such as DraftKings and FanDuel to offer online and mobile sports betting, but also tribes. Opponents of the broader ballot amendment contend that Proposition 27 favors out-of-state corporations to the detriment of tribes.
If Proposition 27 passes, California would join a growing wave of states that have given the green light to mobile and online sports betting. It would also require major sportsbooks to partner with a California tribe and shell out $100 million to get licensed in the state.
Lisa Delpy Neirotti, professor of sports management at George Washington University, told the Washington Examiner that a big part of why this election has gobbled up so much cash is because of the size of the state’s population.
“California is the biggest marketplace, so of course, there is a lot at stake, and so I think that’s why everybody is spending so much money,” she said.
Neirotti said there might also be gambling interests in neighboring Nevada pushing against the gambling amendments as well. The Silver State’s legal gambling market is a nearby destination for Californians wishing to place wagers on sports.
But how would the money affect the state’s coffers? Each is a bit different.
Proposition 27 would require gaming companies to pay 10% of their profits to a fund to cover state regulatory costs, and 85% of that would go toward helping with gambling addiction and the homelessness problem facing California. The Legislative Analyst’s Office predicted the measure won’t bring in more than $500 million annually, a much smaller number than the billions of dollars already earmarked for homelessness each year.
For Proposition 26, racetracks will be forced to pay a 10% cut to the state, which will be offset by regulatory costs, while tribes with casinos will be able to negotiate with the state over the amount. The remaining money will meet the state’s spending requirement for K-12 schools and community colleges, according to the Sacramento Bee. What is left over would go to the state’s general fund for homelessness.
There have been grandiose claims about how much sports betting revenue will come to states that legalize the practice, said Declan Hill, an associate professor in the University of New Haven’s investigations program and one of the world’s foremost experts on match-fixing and corruption in international sports. But that has not always panned out.
There’s been plenty of “malarkey” on that front, Hill told the Washington Examiner. Such misinformation has flowed across state legislatures, courthouses, and newsrooms.”
Misleading claims about revenue that can be generated, “has been generated by the sports gambling industry, and they’ve danced and sung a rainmaker-type song.”
Hill noted that in some states, sports betting has been tax negative because there is a pool of gamblers who will inherently wager on something. And if they switch to sports wagers over traditional lottery systems, less tax revenue is generated.
The transition toward legal sports betting began in 2018 when the Supreme Court ruled that a 1992 federal law prohibiting the activity was unconstitutional. That landmark decision paved the way for states to legalize sports betting, and each year, more and more states have begun offering residents the opportunity to put some skin in the game.
Hill described the change as a “massive” one for society with implications for addiction and the future of sports. He said the de facto legalization of sports betting by the Supreme Court “was probably the biggest social change in America since the repeal of Prohibition in 1933.”
This year, 31 states plus Washington, D.C., had legalized sports betting by the start of the NFL season. Additionally, five more states have legalized sports betting but haven’t launched it or made it operational, according to data from the American Gaming Association.
California would be a massive addition to the collection of states because it is the most populous state in the country, although polling suggests that either proposition passing might be an uphill battle.
A survey released this month and conducted by the Institute of Governmental Studies at the University of California, Berkeley, found that a mere 31% and 27% of likely voters support Proposition 26 and Proposition 27, respectively. Forty-two percent said they will vote against Proposition 26, and a slight majority expressed opposition to legalizing mobile sports betting.
Mark DiCamillo, the Berkeley IGS poll director, told the Los Angeles Times that the raft of negative ads trashing the competing amendments has had the effect of essentially turning off voters to both proposals given the oversaturation.
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“I think it’s the negative advertisements that have kind of been turning voters away,” DiCamillo said. “People who haven’t seen the ads are about evenly divided, but people who’ve seen a lot of ads are against it. So the advertising is not helping.”
It is worth noting that a sizable chunk of voters is still undecided about each proposal. Opposition and support are largely separated from partisanship, with similar numbers of both Democrats and Republicans offering support. Younger voters and men were more likely to support both proposals.
