Prop 26 + Prop 27 Would Legalize CALIFORNIA Sports Betting

The most populous state in the Union, California has long hosted many kinds of legal gambling venues from peer-to-peer poker games in cardrooms to tribal casinos with slots and table games as well as pari-mutuel racetrack betting, a state lottery, and charitable bingo. However, regulated sports betting is absent in The Golden State. That may change this November, though, as voters consider two ballot measures that could see properly licensed sportsbooks pop up within the state: Proposition 26 and Proposition 27.

What Would These Ballot Measures Do?

Both betting-related propositions would, if passed, achieve two purposes: amending the state constitution to permit sports wagering and passing statutes into law regulating the activity. Each of the propositions envisions a different overall framework for sportsbooks, though, with the revenues being divided up amongst various entities in distinct ways.

Prop 26 Details

Proposition 26, entitled, “Authorizes New Types of Gambling. Initiative Constitutional and Statutory Amendment,” would allow sportsbooks to open at tribal casinos and racetrack facilities. It would also permit true Vegas-style craps and roulette games at Indian casinos. These games are currently only allowed under convoluted gameplay mechanics whereby the final result is not determined solely by the roll of the dice or position of a ball but also incorporates playing cards.

Racetrack sports betting would be subject to a tax rate of 10% on profits with a certain portion being earmarked for enforcement and problem gambling treatment and the rest sent to the California General Fund. The tax rates for tribal sports betting would have to be worked out in the compacts with the relevant tribes.

Under Proposition 26, bets on high school athletics would be prohibited. So too would wagers involving California college teams.

Prop 27 Details

Proposition 27 has the official title: “Allows Online and Mobile Sports Wagering. Initiative Constitutional Amendment and Statute.” It would permit online gaming firms to partner with local tribes and launch sports betting over the internet. Each license would cost an amazing $100 million for the first five years and then $10 million for renewal every five years subsequently. In addition, there would be a tax of 10% of revenue.

The money generated would be used to offset regulatory costs, and then 85% of the remainder would go toward programs for the homeless while 15% would be redirected toward the tribes that do not run sportsbooks under these provisions.

Proposition 27 would allow bets on collegiate athletics, including California teams. Curiously, no mobile/online wagers would be accepted while the customer is located on Indian land.

Route to Legalization

On Nov. 8, CA voters will head to the polls where they will be selecting a senator, 52 congressional representatives, members of the California Assembly, governor, and other statewide officials. They will also vote yes/no on seven propositions, including the two sports betting-related ones. A simple majority vote is required for any proposition to pass and become law.

Governor Newsom Will Be Seeking Reelection at the Same Time Voters Decide on Sports Betting

There's the possibility of both Proposition 26 and Proposition 27 being approved. In that case, it's likely that both retail and online sportsbooks will be allowed to open.

However, there's a stipulation in California law that if two ballot measures achieve a “yes” vote of more than 50% but are in conflict with each other, then only the one with the highest approval percentage passes. The way these two propositions are written appears to exclude them from being in conflict, but whenever highly technical legal language is involved, there's always the possibility of two texts interacting in ways that were previously unforeseen.

Thus, should 26 and 27 be approved, there's the chance of supporters of the most popular of the two suing to prevent implementation of the other.

Who Stands Where?

The two sports betting proposals up for decision would implement sports wagering in very different ways, and so they have attracted different sets of adherents and detractors.

Proposition 26 is supported by the majority of California's 60+ gaming tribes. Should it pass, they will be able to open sportsbooks at their existing brick-and-mortar gaming facilities. Sweetening the pot for them, they would be able to offer true craps and roulette to patrons as opposed to the ersatz versions of those games that are currently permitted.

Proposition 27, which would legalize online sports betting, looks like it's equally tribally friendly because it mandates that any would-be operator partner with a local tribe. However, the steep cost of licensing means that only a few firms would have the wherewithal to seriously pursue licensure, leaving the majority of the tribes out in the cold. Even the 15% of revenue that would be diverted to those tribes is not enough to buy their support. The main proponents of Proposition 27 are large online sportsbook businesses, like FanDuel, BetMGM, and DraftKings.

Economic Matters

Sports betting in California is potentially a big business. Forecasts call for more than $1 billion in revenue for retail sportsbooks, such as those provided for under Proposition 26. However, if mobile and online sports betting in California, as called-for in Proposition 27, follows national trends, then it could dwarf retail sports betting by a significant margin. Forecasts predict revenue of up to $3 billion for internet sports wagers in the state.

These projections might just be a tad bit optimistic as has generally been the case whenever new forms of gambling are being debated. However, it's clear that there will definitely be hundreds of millions of dollars generated under Proposition 26 and well north of a billion for Proposition 27.

Should either of the sports betting propositions pass, then we could see California sportsbooks appear as early as the first half of 2023.

A High-Stakes Fight

With such a big potential prize in play, it's no wonder that the fight between these two propositions and their supporters has been intense. Voters have been subjected to a barrage of advertisements lauding one proposal and/or lambasting the other.

Still Image From a Commercial in Favor of Prop 27, Touting its Ability to Address Homelessness and Mental Health Initiatives

According to data from Ballotpedia.org, more than $43 million has been spent in support of Proposition 26 and $3+ million against it. Meanwhile, close to $29 million has been spent to advance Proposition 27 and a whopping $75 million opposing it. That's $150 million already used, and because there are still a couple of months left till the election, we can expect the final media spend total to come in a fair bit higher.

Background and History

The current mania to legalize sports betting at the state level began in May 2018 when the U.S. Supreme Court, in Murphy v. NCAA, stuck down a longstanding federal prohibition on the expansion of sports betting. The race was on to legalize and license this popular form of wagering.

Supreme Court Justices Around the Time the Murphy Decision Was Handed Down.

Actually, a few states can be said to have “cheated” in this “race” as they had already previously adjusted their laws to be able to regulate sportsbooks the instant the Supreme Court issued its ruling. Others rushed to pass the necessary legislation in the subsequent months.

Constitutional Change Required

Due to California's strict constitutional requirements, any gambling expansion requires the approval of the voters. The November 2018 election was the first in The Golden State after the momentous decision by the Supreme Court, but there simply wasn't enough time to prepare any initiatives for the ballot in the few months available.

That meant that 2020 was the first realistic shot sports betting had for legalization in the state. Indeed, there were a couple of attempts to amend the state constitution to provide for sports betting during this year, but none of them were able to garner enough support to make it on to the ballot in 2020.

Actually, Proposition 26 dates to around this time. The deadline to collect the required signatures for this initiative was originally July 30, 2020. However, it was extended due to concerns of COVID-19 impacting the collection of signatures in a timely way. The needed number of signatures was collected by December 2020, which was verified by the state in May 2021, paving the way for it to appear on 2022's ballot.

Proposition 27 was originally filed on Aug. 31, 2021. Signatures were due in May 2022, a target that was met and verified by the state in June. Thus, the proposition is ready to go for election time.

Passage Unlikely?

Though various stakeholders are likely drooling in anticipation of the big profits to be made from California sports betting, a note of caution is in order. There are solid reasons to believe that neither of the two relevant propositions will succeed.

It's true that several states, like Colorado, have launched sports betting economies as a consequence of favorable ballot initiatives. But in none of those states have the voters had to choose between two separate proposals in the same election.

The presence of multiple sports betting options may split support amongst the voters, leading to the failure of both choices. In addition, many individuals who would vote in favor of a single proposition might be confused into abstaining when faced with the prospect of two competing plans.

Todd Eilers (l) and Adam Krejcik (r) Whose Firm Predicts Failure for California Sports Betting Propositions

Eilers & Krejcik Gaming, a research and consulting firm based in Irvine, CA, expects neither proposition to proceed forward. In a report released in August, Eilers & Krejcik opined, “…competing sports betting measures whose back-to-back presentation on the ballot is likely to confuse voters have us leaning negative on California’s sports betting legalization prospects this fall…We preliminarily put the odds of one or both measures passing at less than 50%.”

Sports Betting Already Available

Regardless of the fate of the two November sports betting propositions, California's residents already have a mechanism for betting on sports. They can frequent offshore bookmakers, which happily accept wagers on football, baseball, soccer, and all kinds of other sports.

It's not illegal to bet with these companies or engage in any other kind of real money wagering online. All of the laws that tackle this subject criminalize those running the sites rather than simple users of these services.

Check out this page about the best sportsbooks for USA citizens to find a good California internet sportsbook. If you prefer to play casino games instead, then read this overview of the top CA online casinos. If poker is what interests you, then we have prepared a thorough guide to online poker in California.