Editor’s Note: Seven propositions will be on the November ballot. The July 14 edition of the Idyllwild Town Crier had an article describing all seven propositions. Between now and the election on Nov. 8, the Town Crier will report on each proposition individually.
In this edition is the fifth and sixth of these articles, Propositions 26 and 27, both making sports betting legal in California, but how individuals could bet on sports games would be different. This story compares both propositions. There are separate stories about each individual measure.
In May 2018, the U.S. Supreme Court ruled 7-2 that the federal government could not require states to prohibit sports betting, thereby overturning the federal ban on sports betting and allowing states to legalize sports betting. Thus, states are the arbitrator of whether sports betting may be permitted within their bounds. Already, more than 30 states permit sports betting. California is not one.
Both Propositions 26 and 27 will make sports betting legal in California. Bettors would need to be at least age 21 under both propositions. No betting on high school or college games would be legal.
Therefore, the defeat of both measures would continue to mean that betting on sports in California remains illegal. The state’s gambling laws would remain unchanged. And tribal casinos would not be permitted to offer roulette or dice games.
However, this summer, state Sen. Bill Dodd (D-Napa) made the argument for choosing one at a legislative informational hearing on the two ballot initiatives. “The hearing underscored that illegal sports wagering is happening now without regulation, safeguards or benefits to our state,” Dodd said. “This illegal activity should be taken out of the shadows, generating revenue to improve our state.”
Currently legal gambling or betting
Currently, in California, multiple forms of betting or gambling are legal. Slots, lottery games and card games, such as baccarat and blackjack, and poker are permitted at licensed tribal casinos.
Tribes operate more than 60 casinos, of which 10 are in Riverside County. These casinos offer slot machines, lottery games and card games on tribal lands. Last year, tribes paid around $65 million to support state regulation and gambling addiction programs.
At 84 licensed card rooms in 38 counties, you can play poker and pai-gow. Cardrooms pay state and local fees and taxes. For example, cardrooms pay the state around $24 million annually generally, for regulatory costs and also about another $100 million to the cities in which they are located.
Of course, the state lottery is another form of legal gambling. Lottery tickets and scratch tickets are available in all California counties at locations such as convenience stores and gas stations. And tickets for drawings, such as MegaMillions and PowerBall, also are available and legal. In 2019, total lottery sales generated $7.4 billion, declining to $6.6 billion in 2020, for the state and are earmarked for education.
Horse racing is one form of sports betting California permits. But only at the state’s four private horse racing tracks, one of its five racing fairs or at one of its 23 simulcast locations. For individuals with limited mobility, California permits betting on a horse racing from home with online advance deposit wagering. Last year, the industry paid the state around $18 million in fees primarily for state regulatory costs.
Differences between 26 & 27
The differences between the props 26 and 27 are significant. How sports betting would be permitted if only one were passed is quite different under the language of the two.
Prop 26 would allow the four racetracks — Santa Anita, Del Mar, Los Alamitos and Golden Gate — and tribal casinos to offer in-person sports betting. Racetracks would pay the state a share of sports bets made. Tribal casinos could offer in-person sports betting, roulette and games played with dice (such as craps) if permitted by individual tribal gambling agreements with the state.
Racetracks would pay the state a share of sports bets made. Tribes would be required to support state sports betting regulatory costs at casinos.
Prop 27 would allow licensed tribes or gambling companies to offer sports betting online and on mobile devices. Bettors would have to be aged 21 or older on non-tribal lands in California. Those offering online sports betting would be required to pay the state a share of sports bets made. A new state unit would be created to regulate online sports betting. New ways to reduce illegal online sports betting would be available.
In summary, Prop 26 is primarily paid for by Indian tribes. Betting would be legal at licensed casinos and four horse racing tracks. Prop 27, which would allow online betting, is primarily paid for by national gaming companies.
An accurate estimate of how much new revenue either proposition might generate has not been made. Regarding an estimate of the potential revenue from either proposition, the Legislative Analyst’s Office’s offered the same comment, “[Propositions 26 and 27] would impact both state and local government revenues and costs. The actual size of these effects, however, is uncertain and would depend on how the proposition is interpreted and implemented.”
In the Prop 26 analysis, the specific estimate was “but could reach tens of millions of dollars annually.” For Prop 27, the estimate was “… likely would not be more than $500 million annually.”
Prop 26 supporters have said that the tribes have committed to paying the state 15%of their casino profits. Prop 27 would impose a 10% state tax on profits.
If both pass, who wins?
If both propositions pass, and if the two propositions are in conflict, the one that passed with the highest number of yes votes goes into effect and the other does not.
A Sacramento television station asked Mary-Beth Moylan, associate dean for Academic Affairs at the McGeorge School of Law, what would happen if both propositions pass.
“When there are conflicting measures, the California Constitution [Article II, section 10] actually says very clearly,” she replied. “If there are two measures that conflict, and they both pass, the one that passes by a higher percentage of the vote takes effect and the other one does not.”
Anticipating this possibility, Prop 27, backed by FanDuel, DraftKings and BetMGM, asserts that its online betting mechanism would not conflict with Prop 26, which allows sports betting on tribal lands. Prop 26 does not address whether it conflicts with Prop 27.
“The authors and the proponents of Proposition 27 have written into their measure, a provision that says, ‘We the people of California declare that Proposition 27 does not conflict with proposition 26.’ Now, whether a court would read that and say, ‘OK, it’s not conflicting,’ I don’t know the answer to that,” Moylan said addressing the Prop 27 provision. “… This is nothing new. We’ve had conflicting measures in the past.”
Nevertheless, Grace Gedye wrote in Cal Matters, that Ian Imrich, a Southern California gaming law attorney, noted, “But if both pass and [Prop 27] passes by a higher margin, lawyers for [it] could argue in court that the two measures are in conflict, to try and prevent [Prop 27] backed by FanDuel and DraftKings from going into effect.”
Financing the campaigns
Supporters and opponents of both measures have contributed hundreds of millions of dollars in order to gain passage of their preferred proposition. Details are in the individual stories of each proposition.
However, two recent polls, one from early September conducted by the Public Policy Institute of California, and the second from late September, conducted by the Institute of Governmental Studies (IGS) at the University of California, Berkeley, found voters unlikely to support either proposition. The results showed that a majority (53%) of likely voters opposed Prop 27. In the IGS poll, a plurality (42%) selected no on Prop 26, 10% more than yes voters; however, about a quarter of voters said they were undecided.
Observed IGS Co-director Eric Schickler, “These results suggest that the sports wagering initiatives are foundering in the face of the opposition advertising campaigns. The lack of support among key demographic groups makes passage of each an uphill climb, at best.”