Prop 26: California’s In-Person Sports Betting Ballot Initiative Explained

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California Prop 26 would keep sports betting to horse tracks and tribal properties like Viejas Casino and Resort (AP Photo/Gregory Bull)

Prop 26 would allow in-person-only sports betting at tribal casinos and four horse racing tracks in California. The 2022 ballot initiative is backed by at least 80 tribal and non-tribal organizations through the Coalition for Safe, Responsible Gaming.

The proposed initiative will appear on the California statewide ballot on November 8 alongside Prop 27 — a rival initiative that would allow mobile sports betting.

California tribal casinos argue in-person sportsbooks are the better bet, both for tribal nations and the state. But in California – where tribal nations control 82 casinos, with no commercial casino competitors, according to the American Gaming Association – tribal profit from casino sportsbooks could be substantial.

Prop 26: What It Would Do

Prop 26 is a proposed state statute and proposed state constitutional amendment. It would allow tribal casinos to offer in-person sports betting, pending state and federal approval of amended tribal gaming compacts between California tribal nations and the state. It would also allow retail sportsbooks at four privately-owned racetracks — Santa Anita Park, Del Mar Race Track, Los Alamitos Race Course, and Golden Gate Fields.

Prop 26 would trigger two major legal changes that could potentially bring sports betting to California:

  • It would mean passage of the In-Person Tribal Sports Wagering Act, which would allow sports betting on tribal land and at the four horse racing tracks.
  • It would amend the California state constitution to permit California’s governor and federally-recognized tribes to negotiate gaming compacts that would allow expanded gaming – including sports betting – at tribal casinos, with state and federal approval.

Added table games like craps, now off-limits to the casinos, could also be written into the amended tribal-state gaming compacts required to offer sports betting.

Quick Guide

  • Betting on professional, college*, or amateur* sports and athletic events
  • Betting on in-state or out-of-state games played by California college teams would remain illegal, except during tournament play. Betting on high school sports and events would remain illegal*
  • A 10% tax on sports betting profits at nontribal horse racing tracks only
  • No sports betting by persons under the age of 21
  • 15% of state revenues earmarked for problem gambling prevention and mental health
  • 15% earmarked for gambling enforcement and control
  • 70%  earmarked for the state’s General Fund

Prop 26: Who Is Behind The Initiative

Prop 26 has the support of at least 80 tribal and non-tribal organizations, according to a June 22 press release from the Yes on 26 – Stand With Indian Tribes campaign behind Prop 26.

American Indian Chamber of Commerce of California President Tracy Stanhoff called Prop 26 “the responsible approach to authorizing sports wagering because it’s modeled off the successful model that Indian tribes have used to operate gaming for more than 20 years,” according to the release.

“The revenue generated by this measure will bring tens of millions of dollars each year to our state budget and local governments alike. It will also support tens of thousands of jobs. It’s a win for tribes and all Californians,” Stanhoff was reported as saying.

Click Here To Learn More About California’s Sports Betting Legislation

Among dozens of other organizations named as supporters of Prop 26 in the June 22 press release are the California District Attorneys Association, Los Angeles Urban League, local chambers of commerce, public safety agencies, several tribal groups, and the California Young Democrats.

The California Democratic Party voted to remain neutral on Prop 26 at its Executive Board meeting earlier this month.

Prop 26: What Tribal Control Would Mean

Tribal nations would have almost complete control over what is potentially the largest legal sports betting market in the US. It would do that by limiting sports betting to in-person sportsbooks only.

So how would that impact overall revenue in a state with a potential estimated sports betting handle of $20 billion to $30 billion per year? That’s uncertain, for now. But retail-only betting is expected to put top online sportsbooks like FanDuel, DraftKings, and BetMGM at a significant disadvantage, with little room for negotiation.

Online sportsbooks took notice and filed a $100 million counter initiative in Aug. 2021 that would allow online and mobile sports betting by operators tied to tribal partners. That initiative is now qualified for the November 8 ballot as Prop 27. Voters will be able to select Prop 26 or Prop 27 at the polls this fall.

The winner will be decided by which proposal receives the most “yes” votes, according to local news reports early this year —  unless a court battle gets in the way.

The Possible Upside

Tribal casinos and licensed horse tracks are skilled operators in what is largely a non-gambling state.( Card rooms, bingo, and the state lottery are the only other legal options in California.)  That primacy was made clear in 2019 when the initiative was filed with the Office of the California Attorney General by four tribes — the Pechanga Indian Reservation, Barona Band of Mission Indians, Yocha Dehe Wintun Nation, and Agua Caliente Band of Cahuilla Indians.

According to the initiative itself, “The best entities to safely operate sports wagering are Indian gaming casinos and Approved Racetrack Operators.”

The Possible Downside

Retail-only betting would likely reduce state sports betting revenues by denying Californians access to lucrative mobile sportsbook options. Additionally, only track-based sportsbook revenue would be subject to a proposed 10% tax on operators.

Betting revenue generated on tribal lands would be exempt from state taxation.

Prop 26: What It Would Mean For State Revenues

Prop 26 could still potentially generate millions of public dollars for the State of California. Direct tax dollars would come from the tribes and the four tracks.

  • State revenue generated by sports betting operators at the four horse racing tracks would come from a 10% tax on sports betting operations. An estimated dollar amount is not yet available.
  • Tribal casinos compensate the state differently. Although not subject to the same types of taxation and nontribal entities, tribes do makes payments to the state. Those payments have exceeded $300 million in past years, according to the California Legislature’s fiscal policy office.
  • Payments made by tribes to the state could potentially grow under renegotiated compacts triggered by Prop 26.

Also read: An Apolitical Guide to Operation Sports Betting California

About the Author
Rebecca Hanchett

Rebecca Hanchett

Writer and Contributor
Rebecca Hanchett is a political writer based in Kentucky's Bluegrass region who covers legislative developments at Gaming Today. She worked as a public affairs specialist for 23 years at the Kentucky State Capitol. A University of Kentucky grad, she has been known to watch UK basketball from time to time.

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