Two California teachers unions and the legislative leaderships of both political parties have announced opposition to Proposition 27, the sports betting operators measure that would legalize online sports betting—the one being opposed by the state’s gaming tribes.
Meanwhile, five of the seven out-of-state operators behind the proposition have put $50 million into their campaign war chest. They include Fanatics, Penn Entertainment, BetMGM, DraftKings and FanDuel. Ads for Proposition 27, especially the one that announces that it is supported by California tribes (it’s actually only three) are ubiquitous on Golden State sports broadcasts, podcasts, radio and online.
Proposition 27 would tax sports betting revenue at 10 percent and take 85 percent of that and earmark it to fund efforts to fight homelessness and mental health crises. Hence its title: the California Solutions to Homelessness and Mental Health Support Act. The controversial part, and the one that opponents’ advertisements are leaning into, is that just 15 percent would go toward economic initiatives for tribes, including non-gaming tribes.
However, it isn’t necessarily an unfair fight. The opponents of Proposition 27, who are, not uncoincidentally, proponents of Proposition 26, include most of the state’s gaming tribes, meaning that they have money to burn. Since June they have added $88.8 million to fight the online sports betting measure. That brought the total to $157.8 million compared to the total of $150 million so far given by the operators. Those donors included the San Manuel Band of Mission Indians, the Federated Indians of Graton Rancheria and 10 others.
Proposition 26 would also legalize sports betting, but only retail, and only at tribal casinos and racetracks. Significantly left out are the Golden State’s cardrooms, which are unofficial allies of the sports betting operators. They not only oppose Proposition 26 for giving a monopoly on sportsbooks to the tribes, but also the provision that would make it easier for tribes to directly sue cardrooms they believe are violating the state constitution.
However, it is possible that both initiatives could pass and become law because legalization of online sports betting doesn’t interfere with legalization of retail sports betting.
The teachers unions that announced opposition to Proposition 27 included the California Federation of Teachers (CFT) and the Association of California School Administrators (ACSA). They joined the California Teachers Association (CTA), which had already announced its opposition. In total, the three unions represent 447,000 educators.
CTA President E. Toby Boyd in May declared, “CTA opposes Prop 27. Online gambling corporations would take 90 percent of the profits out of state. Not a single penny is directed to our students or our state’s public schools.”
Jeff Freitas, president of CFT said last week, “Research shows online and mobile sports betting is highly addictive, especially for youth and other vulnerable communities.”
He added, “Prop 27 will also put California’s students at risk by failing to invest revenue in our state’s education system. This measure is a bad deal for California and for our public schools. We urge voters to reject Prop 27.”
Political leaders in Sacramento lent their voices to the opposition, as well. Including Democratic Senate President Pro Tempore Toni Atkins, Democratic Assembly Speaker Anthony Rendon, Senate Republican Leader Scott Wilk, and Assembly Republican Leader James Gallagher. Their reasons ranged from the money going to out-of-state corporations to hobbling tribes’ abilities to serve their members.
Rendon declared, “I am concerned that Prop. 27 sends sports betting revenues to out-of-state corporations who wrote the measure to maximize their profits.” He added, “Californians should vote No on 27 and support California tribes over out-of-state corporations.”
Wilk said that Proposition 27, “eliminates the sovereign right of California tribes to operate gaming in California.”
“They have proven to be excellent stewards of this responsibility,” Wilk said. “We should protect this tribal right, which has also benefited all Californians. Vote No on 27.”
Meanwhile, Major League Baseball has cast its support for Proposition 27.
“As legalized sports betting continues to expand across the country, Major League Baseball remains committed to protecting the integrity of its games and creating a safe experience for fans who wish to wager on those games,” MLB said in a statement. “Proposition 27 includes strong integrity provisions designed to help MLB carry out those commitments.”
The measure would, for example, require sportsbook operators to notify leagues of suspicious wagering activity; allow leagues to propose restrictions on betting markets that are particularly susceptible to manipulation; and facilitate other forms of integrity-related cooperation between the state, leagues and operators. MLB believes that Prop 27 has the safeguards to create a safe and responsible online sports betting market in California, a state with millions of MLB fans looking for alternatives to illegal offshore betting sites.
Chris Gove, an investor and partner in consulting firm Eilers & Krejcik Gaming, estimates that a mature, online sports betting market in California could generate as much as $3 billion in annual revenue. In comparison, industry trade publication VIXIO Gambling Compliance estimates retail-only sports betting would generate $356 million in annual gross revenue by the fifth year.
