California’s proposition culture tries to shy away from competing resolutions. Too many potential problems. This year could be a case in point. Propositions 26 and 27 both ask for approval of sports betting, but from two different angles.
Prop 26 calls for sports betting to be limited to in-person wagering in tribal casinos and at the four race tracks throughout the state. It also allows tribal casinos to offer roulette and craps, just as an aside. According to Cal Matters, Prop 26 levies a 10 percent tax on sports bets placed at race tracks, and requires tribes to reimburse the state for the cost of regulating sports betting. After covering the cost of tax collection, the funds generated would go to the department of public health for problem gaming and mental health research, to the department of justice for enforcement of gaming rules, and to the state’s general fund.
Prop 27 allows mobile betting statewide, tethered to a tribe in some fashion. According to Ballotpedia, a gaming tribe, an online sports betting platform with an operating agreement with a gaming tribe, or a qualified gaming company with a market access agreement with a gaming tribe may operate online sports betting. If a tribe is the applicant, it would pay a one-time $10 million licensing fee to the state and $1 million renewal fee every five years. If sportsbook operators such as FanDuel and DraftKings are applicants, they pay a one-time licensing fee of $100 million plus a $10 million renewal fee every five years.
The amendment would take effect on January 1, 2023.
The proposed law would establish the California Online Sports Betting Trust Fund. The revenue from licensing fees, renewals, and a sports wagering tax would be deposited into the fund. After deducting regulatory costs, 85 percent of the fund’s revenues would be allocated to California Solutions to Homelessness and Mental Health Support Account for permanent and interim housing and 15 percent of revenues to the Tribal Economic Development Account, which would be established by the initiative to provide funds to Indian tribes for expanding tribal government, public health, education, infrastructure and economic development.
Tribal supporters of Prop 26 oppose Prop 27. On the flip side, card rooms and online operators have led the charge in support of Prop 27… and against Prop 26, according to Marketplace. California hosts around 80 card rooms which produce $500 million in tax revenue. Prop 26 could threaten the existence of these rooms, thus threatening those cities that depend on the revenue, like Hawaiian Gardens.
“Talk about all of your eggs being in one basket,” Shavon Moore-Cage, assistant to the mayor of Hawaiian Gardens told Marketplace. “The card room is the economic engine that makes our city run.”
Another factor that has the card rooms upset refers to a stipulation in Prop 26 that permits anyone to file suit over how table games are played.
Propositions require 50 percent of the vote plus at least a single vote to be approved, said Steven Bliss, director of digital strategy for the Public Policy Institute Of California.
Both sides have spent a total of more than $452 million in an effort to cross midfield in percentage of the vote, according to SFist. Various polls say neither will pass, but Prop 27 will not pass by a larger margin. Prop 26 had only 31 percent support in one poll. Prop 27 did even worse at a mere 27 percent support.
“These results suggest that the sports wagering initiatives are foundering in the face of the opposition advertising campaigns,” Berkeley Institute of Governmental Studies co-director Eric Schickler, whose agency conducted polls, said in a statement. “The lack of support among key demographic groups makes passage of each an uphill climb, at best.”
But what if not only one, but both pass?
“If they both pass, the one with the highest vote tally wins,” said Victor Rocha, conference chairman for the Indian Gaming Association.
That is certainly one avenue.
“It is my understanding that if both propositions pass, which is incredibly unlikely, they could both potentially go into effect if there is no conflict between the two propositions,” said Josh Swissman, founding partner of the Strategy Organization in Las Vegas.
That is certainly another possibility.
However if there is a conflict, the one with the higher vote count goes into effect, as pointed out by Rocha.
“So with specific reference to Props 26 and 27, if 27 gets more votes, both will likely go into effect since it is not likely that the big online operators would argue that there is a conflict between their proposition and Prop 26,” Swissman said.
But if both pass and the tribal measure passes by a higher margin, lawyers for the tribal measure could argue in court that the two measures are in conflict, to try and prevent the measure backed by FanDuel and DraftKings from going into effect, said Ian Imrich, a Southern California attorney whose practice includes gaming law.
What does all this mean to the average sports bettor? Either scenario would result in at least land-based sports betting at tribal casinos. If Prop 27 gets more votes, it also means that there may be online sports betting in addition to land based, Swissman said.
But if the polls prove accurate, then it’s business as usual on the morning of November 9.
