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As California voters head to the polls today, Tuesday, Nov. 8, they have the choice to approve mobile sports betting with the passage of Proposition 27. Unfortunately for the state’s sports bettors and sportsbook operators that support the measure, Prop 27 appears destined to be voted down.
The state’s residents face two options related to sports betting on Election Day. Prop 27 is backed by major sportsbooks such as FanDuel and DraftKings, as well as some non-gaming tribes. DraftKings, FanDuel, BetMGM, Penn National, Fanatics, and Wynn are among the proponents that spent millions to support the campaign.
Major League Baseball has also thrown its support behind Prop 27.
There is plenty of opposition to the initiative as well. The Los Angeles Times editorial board warns Californians about the addictive dangers of mobile betting, and the San Francisco Chronicle questions the legitimacy of Prop 27’s tie to the state’s homelessness issue. The Chronicle’s editorial board recently wrote under the header, “Props 26 and 27 don’t even belong on California’s ballot. Vote no.”
In a poll conducted by the Public Policy Institute of California, just 26% of eligible voters indicated they would vote yes on Prop 27, and 67% said they would vote no. Similarly, a recent UC-Berkeley/LA Times poll found that just 27% of likely voters support Prop 27 and 53% are opposed to legalizing online sports betting.
Of course, supporters of Prop 26 — which would legalize sports betting in California but only in-person at tribal casinos — are in strong opposition to the mobile sports betting initiative. The tribes contend that mobile wagering threatens their hold over gambling in the state, and thus their economic well-being. This stance was articulated at G2E Las Vegas 2022 on Tuesday, October 11.
“They’re trying to steal our future,” Victor Rocha, editor for Pechanga.net and moderator of a panel on the tribal campaign, said of mobile gambling operators. “This isn’t about sports betting, it’s about online gaming. That’s why we’re fighting like this could be our last fight. Because it could be.”
Supporters, however, have not thrown in the towel.
The Golden State is considered the holy grail of legalized gambling because it has an adult population – those 21 and older – of more than 23 million.
In a special report on the California sports betting market, research firm Eilers & Krejcik Gaming listed the sportsbooks the state is most likely to see should Prop 27 be approved by voters.
What is Prop 27?
While sports betting is illegal in California, gambling is allowed at the state’s casinos on tribal lands, as well as at horse racing tracks and card rooms throughout the state.
Prop 27 would allow major sportsbooks operators to partner with tribes in the state to offer mobile sports betting – regardless of whether the bettor is on tribal lands or not. It would impose a 10% tax on adjusted gross gaming revenue.
Sports betting would be legal for those 21 and older in the state.
Much of the focus on the measure surrounds how the funds raised would be allocated.
California has serious homeless and mental health problems. Under terms of the proposal, 85% of the money generated from the tax would go toward funding the crisis. An analysis by backers of a different sports betting measure, one that did not qualify for the November ballot, estimated sports betting could generate hundreds of millions in additional revenue.
The measure specifies no more than 40% of that money may be used for interim housing. Monies would be distributed to cities and other jurisdictions in accordance with California law.
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“California needs to think big if we are going to be serious about tackling homelessness, and this initiative does just that,” Elise Buik, president and CEO of the United Way of Greater Los Angeles, said in a statement. “It could provide hundreds of millions each year in funding for proven solutions that help people experiencing homelessness come off the streets and into housing with supportive services.”
The remaining 15% of the tax revenue would go toward non-gaming tribes in the state.
“The Solutions Act would be life-changing for our people. For too long, rural and economically disadvantaged Tribes like ours have struggled to provide for our people. This measure would provide us with economic opportunities to fortify our Tribe’s future for generations to come,” said Philip Gomez, chairman of the Big Valley Rancheria Band of Pomo Indians, one of three tribes backing the measure.
Who Supports Prop 27?
Major sportsbook operators are behind Prop 27. According to recent financial disclosure reports, DraftKings FanDuel, and BetMGM have all donated to support the measure. Fanatics, Bally’s, Penn National Gaming (Barstool), and WynnBet have pitched in millions, too.
At least one professional sports league has also come out in support of Prop 27. A statement released by MLB on Aug. 12 pegged the online betting initiative as a safe, responsible way to bring sports betting to the Golden State.
“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 released Aug. 12. “Proposition 27 — the only measure on California’s upcoming ballot that would authorize and regulate online sports betting — includes strong integrity provisions designed to help MLB carry out those commitments.”
Non-gaming tribes also support the measure.
“The Solutions Act protects Tribal sovereignty and will allow every Tribe – not just those with big casinos close to big cities – a chance to directly benefit from online sports betting in California. The measure puts Tribes firmly in control of online sports betting in California,” said Jose “Moke” Simon, chairman of the Middletown Rancheria of Pomo Indians.
How Much Was Spent on Prop 27?
A group of national sports betting operators that includes FanDuel, DraftKings, BetMGM, Penn National, Fanatics, Bally’s, and Wynn, raised around $169 million to support Prop 27.
They were out-raised, however, by supporters of Prop 26’s $214 million, $91 million of which was spent in direct opposition of Prop 27 and online sportsbooks.
Who Opposes Prop 27?
Most of the major Native American tribes in California are behind Prop 26, which would approve retail-only sports betting.
The California Teachers Union, California Democratic Party, and, most recently, the California Republican Party have all come out in opposition to the measure. While the organizations represent collectively millions of voters, their opinions are viewed as guidance and are not necessarily an indication as to how the majority of their members will vote.
What Sports Betting Will Look Like if California Passes Prop 27
Any company that wants to offer mobile sports betting in California would first need to partner with a tribe in the state.
Tribes could also administer their own sports betting apps.
The Eilers & Krejcik report lists nine probable California sports betting operators should Prop 27 pass.
These are the 9 likeliest sportsbooks to enter California if voters approve mobile sports betting measure in Nov, according to new @EilersKrejcik report:
Bally Bet
Barstool
BetMGM
BetRivers
Caesars
DraftKings
FanDuel
Hard Rock
WynnBetEach would pay $100m initial licensing fee
— Ryan Butler (@ButlerBets) August 24, 2022
To apply to offer a sports betting app under the Prop 27 proposal, a company must pay a one-time $100 million application fee, plus a $10 million renewal fee every five years. Additionally, they must be licensed to operate in at least 10 other states.
This last provision has angered smaller sports betting app companies because they argue it effectively shuts them out.
“California is best served by creating a safe and tightly regulated sports betting market, one where customers can know they are working with experienced platforms with a proven track record of safe and responsible operation in other markets,” Nathan Click, a spokesperson for the initiative’s campaign, told CalMatters.org, an online news outlet in the state.
Read more: An Apolitical Guide to Operation Sports Betting California
