What Is Prop 27, CA’s Legalized Online Sports Betting Measure?

CALIFORNIA — Proposition 27 is one of two rival gambling measures on the Nov. 8 ballot, and proponents of both are spending big money to see them pass. However, neither has been polling well with voters heading down the final stretch of the election.

California does not currently allow sports betting. But since the U.S. Supreme Court opened the door to legalized sports wagering three years ago, the state has become a jackpot for the gambling industry since it has the most professional and college teams in the nation in addition to the largest population and concentration of wealth.

Proposition 26 seeks to allow it in tribal casinos only and racetracks while Proposition 27 is a constitutional amendment that would allow some tribes and gambling companies such as FanDuel and DraftKings to operate online or mobile sports betting outside of tribal lands. The dueling propositions present a political cage match between gambling entities battling for control over the future of the billion-dollar sports betting industry in California. Because both propositions are diametrically opposed, the passage of both would likely trigger legal battles.

If Proposition 27 passes, the tribes and companies would pay 10 percent of revenue from sports betting to the state. That state revenue is estimated to be in the hundreds of millions of dollars but less than $500 million annually, according to the Legislative Analyst’s Office. About 85 percent of those funds would pay for housing, mental health and addiction treatment for homeless people, and 15 percent would go to California tribes not involved in gambling. If it passes, a new justice department unit funded by the industry would be created to regulate the industry.

The amendment expressly prohibits online sports betting for youth sports. It would also make it difficult and expensive to obtain a license to operate an online sports betting operation in California, effectively putting it out of reach for smaller firms.

According to the Legislative Analyst’s Office, a tribe must pay $10 million when its five-year license is approved and $1 million each time its license is renewed. Gambling companies must pay $100 million for a five-year license and $10 million each time its license is renewed.

The measure further limits licensing to larger companies such as those that have online sports betting licenses in at least ten U.S. states or territories, according to the Legislative Analyst’s Office.

Because there are enormous sums to be made in online gambling in the nation’s most populous state, enormous sums are being poured into the campaign for Proposition 27. Through September, the Yes on 27 campaign raised $169.2 million — largely from the corporations behind FanDuel Sportsbook and DraftKings — and spent $160 million, according to Ballotpedia. The No on 27 campaign raised $214.6 million — largely from the San Manuel Band of Mission Indians, the Pechanga Band of Luiseno Indians, and the Yocha Dehe Wintun Nation — and spent $205.3 million.

However, the money appears to have bought a stalemate between the dueling propositions.

According to a poll by the UC Berkeley Institute of Governmental Studies, voters who had seen the ads for or against the measures were more likely to oppose them than those who hadn’t.
The poll found Proposition 27 garnering support from only 27 percent of likely voters compared to 31 percent support for Proposition 26.

Despite the polls, Proposition 27 does have its supporters, namely Major League Baseball, Long Beach Mayor Robert Garcia, and Sacramento Mayor Darrell Steinberg.

Major League Baseball praised it for including plans for a justice department unit to regulate sports gaming.

Advocates for the homeless contend the revenue could make strides in tackling the state’s homelessness crisis.

"I’m joining my fellow mayors in endorsing this important initiative because this is an all-hands-on-deck moment in our fight against homelessness,” Garcia, Long Beach’s mayor said in a news release. “To solve California’s homelessness crisis over the long term, we need sustainable sources of funding to house those experiencing homelessness and provide them the medical and mental health services they need. That’s what this measure provides.”

The measure managed to unite the state’s Republican and Democratic parties in opposition along with the California Teachers Association and the League of California Cities.

"Their measure would authorize the largest expansion of gambling in state history – allowing virtually anyone, anywhere, anytime to gamble. Studies show this unprecedented access would lead to more problem gambling, addiction and crime,” Raymond Welch, chairman of the Barona Band of Mission Indians and Greg Sarris, tribal chairman of the Federated Indians of Graton Rancheria, said in a joint statement. “In fact, the National Council on Problem Gambling reports online sports bettors are up to five times more likely to develop problem gambling than other types of gamblers.”