California voters can approve mobile sports betting with the passage of Proposition 27 in November.
The state’s residents face at least two options related to sports betting in the fall. Prop 27 is backed by major sportsbooks such as FanDuel and DraftKings, as well as some non-gaming tribes.
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.
What is Prop 27?
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.
“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 the latest financial disclosure reports available, DraftKings FanDuel, and BetMGM have all donated $16.67 million each to support the measure. Fanatics, Bally’s, Penn National Gaming (Barstool), and WynnBet have pitched in $12.5 million apiece.
Earlier this month, ad watchers noted the group behind Prop 27 has already placed more than $20 million worth of ad buys in the state – with more than four months until Election Day.
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.
Other community leaders and elected officials support the measure because of the monies raised to combat homelessness.
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 and California Democratic Party have both come out in opposition to the measure. While they 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.
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.