Gambling on the ballot: Competing sports betting plans duke it out for California voters' favor

TEMECULA, Calif. — The Super Bowl champion Los Angeles Rams kick off the 2022 NFL season Thursday night by hosting the Buffalo Bills, and not one dollar in legal sports betting will exchange hands here in the country's most populous state.

But by this time next year, that could all change, depending on the outcome of two competing measures on California ballots in November.

For state residents, the next two months are shaping up to be a barrage of ads supporting or opposing Proposition 26, which would allow in-person sports gambling, and Proposition 27, which would legalize online betting for sports.

The gaming industry is eager for one or both of the measures to pass, which would bring California into the fold with New York, New Jersey and the 29 other states that have legalized sports betting.

“It’s a big deal just because of the size of the market,” said Casey Clark, a senior vice president of the American Gaming Association.

“There are big opportunities for the gaming business that are attractive for market size and what those opportunities can mean,” Clark said. “Certainly, everyone is paying attention to what’s happening there.”

But the results of the ballot measures will extend far beyond corporate interests, with profound effects on California’s Indigenous communities and funding for programs to help the homeless.

Proposition 26

Passage of Prop. 26, known as the In-Person Tribal Sports Wagering Act, would make in-person sports bets legal on the grounds of four privately owned horse racing tracks and 66 Native American casinos. It also would legalize roulette and craps at Native American casinos.

Profits on sports wagers at racetracks would come with a 10% tax, with the majority going to a general state fund and the rest divided up between gambling addiction programs and nongaming tribes.

Prop. 26 has the backing of business and law enforcement groups in many rural areas of California, where the bulk of the state’s Native American casinos are located.

“At its core this is about being able to protect what we’re doing as tribes in the state of California,” said Mark Macarro, the chairman of the Pechanga Band of Luiseño Mission Indians.

“It represents a lifeline to our communities that was supposed to be there originally from promises from the federal government. Gaming for tribes in California has been a godsend,” said Macarro, whose Temecula-based tribe is a major backer of Prop. 26 and an opponent of Prop. 27.

Kathy Fairbanks, a spokesperson for the Prop. 26 campaign, argued that approving a new form of gambling while limiting it to a few dozen physical locations is appealing to voters.

“They’re OK with gambling, but they don’t want it on every street corner," Fairbanks said. "Tribes have the exclusive rights to slot machines, blackjack and all sorts of things. [Prop. 26] is in keeping with that same promise that California voters made to tribes.”

Casino-style games in California have traditionally been exclusive to Native American lands.

Proposition 27

Passage of Prop. 27 would allow online sports gaming, similar to the smartphone-based betting already available to residents of New York, New Jersey and Pennsylvania through some of the biggest names in sports gambling — FanDuel, DraftKings and BetMGM.

A digital gambling company seeking to do business in California would have to partner with a Native American tribe to get a license under the tribe’s name, at a cost of $100 million for its first five-year license.

Ten percent of licensing fees and profits would go to the newly formed California Online Sports Betting Trust Fund. After funds were spent to cover “state regulatory costs,” according to the Legislative Analyst’s Office, 85% of the remaining money would go “to address homelessness and for gambling addiction programs,” with 15% going to “tribes that are not involved in online sports betting.”

The potential windfall for homeless initiatives is a primary reason big-city Democratic mayors, such as Oakland’s Libby Schaaf, Long Beach’s Robert Garcia and Sacramento’s Darrell Steinberg, have backed Prop. 27. A handful of homeless advocacy and social service groups have also endorsed the measure.

“It’s widely known there’s never been an ongoing revenue stream for homelessness intervention in our state budget. The homeless crisis has risen over the last decade in California, but the state’s permanent, ongoing money hasn’t kept up,” Prop. 27 spokesman Nathan Click said. “This revenue would fill a real need and real hole in our budget process.”

Prop. 27 backers have put the homelessness issue out front, calling their measure the California Solutions to Homelessness and Mental Health Support Act.

Money pours in both sides

The dueling propositions have raised significant money, according to the latest secretary of state records.

A pro-Prop. 26 effort has raised $107 million, while an anti-Prop. 27 fund has raised $198 million.

Meanwhile, backers of Prop. 27 have collected more than $157 million, with the anti-Prop. 26 effort raking in nearly $42 million.

The huge war chests mean sports fans are likely to be bombarded by political ads during the baseball playoffs and throughout most of the college and pro football seasons. Major League Baseball has come out in support of Prop. 27.

The pro-Prop. 26 and anti-Prop. 27 spots so far have cast their opponents as out-of-state tech companies positioning themselves to take money from Native Americans and Californians.

The pro-Prop. 27 ads have touted the financial benefits for fighting homelessness while attacking Prop. 26 as a windfall only for tribes that run casinos.

The state Democratic Party is neutral on Prop. 26 but opposes Prop. 27. The state GOP opposes both measures.

What if both measures pass?

Prop. 27 states that it is "complementary and supplementary" to Prop. 26 and that it isn’t in conflict with the other measure.

But there's no such conflict-free language in Prop. 26, setting up a potential legal challenge by gaming tribes against Prop. 27 if both measures pass, especially if Prop. 26 gets more votes.

“The worst-case scenario for [Prop. 27 backers] is that they both pass but 26 gets a higher percentage of the vote and that goes to court,” said Mary-Beth Moylan, an associate dean at the University of the Pacific's McGeorge School of Law who specializes in election law.

“The proponents of 26 could say 27 does conflict and cannot take effect and 27 ends up passing and not taking effect — and that can happen,” she said.

Moylan added that a court would "look at the actual wording, and Prop. 26 does make clear there has to be a physical presence requirement."

Prop. 27 backers, like campaign spokesman Click, are confident the courts wouldn’t raise any concerns if both measures pass.

"They’re not in conflict, and we know a court would look at two voter-approved measures, look at intent, look at language, look at the actual substance and say they don’t conflict,” Click said.