California holds some of the most popular and successful teams in the United States. Currently, the state houses 15 professional sports teams. According to the Orange County Register, those 15 teams have a combined worth of $43 billion and generate a yearly revenue of $4.1 billion. The Los Angeles Rams won the most recent Super Bowl. The Golden State Warriors defeated the Boston Celtics to win the most recent NBA Finals Championship. While they are not currently winning too many games, the Los Angeles Lakers are a worldwide phenomenon. The Lakers' history includes former legends such as Kobe, Shaq, and Kareem and current superstar Lebron James being instantly recognizable by name alone. Even in college, USC and UCLA attract huge audiences from all over the country to watch their games.
On November 7th, residents from California will have the chance to vote in the midterm election. This election is important to California sports fans as the ballot includes two different sports betting initiatives looking to be passed by the voters. According to sources, these two initiatives raised just under $600 million in contributions towards or against the respective cause. From political parties to public policy organizations, dozens of contributors have allocated their money toward ad campaigns throughout the state.
Having two different sports betting bills on the ballot can be confusing. This article will summarize each ballot initiative to inform voters of what they are saying yes or no to come election day. After summarizing both ballots, I will break down the potential revenue projections that California could see from sports betting. It is important to note that these initiatives do not conflict. California voters can choose to pass both.
California Proposition 26, Legalize Sports Betting on American Indian Lands Initiative (2022)
Proposition 26 is a combined constitutional amendment and statute implementation. Proposition 26 aims to allow California tribes that have obtained gaming licenses the ability to offer sports betting. Proposition 27 legalizes in-person betting only. The proponents of this proposition make up the Coalition for Safe, Responsible Gaming. This coalition includes 24 California tribes and dozens of other political organizations.
Proposition 26 follows a similar structure as compared to states that have sports betting regimes in place. The proposition has set the tax rate at 10%. The funds from the tax are as follows:
15% to the California Department of Health for researching, developing, and implementing programs for problem gambling prevention and mental health
15% to the Bureau of Gambling Control for enforcing and implementing sports wagering
70% to the General Fund
Residents of California will be able to vote on a variety of sports. Prop 27 will exclude high school sports and any collegiate event that includes a California collegiate team. However, residents will have to visit casinos to place their bets. There will be no shortage of options; many tribes seem eager to get operations started in their own casinos. The ballot also includes provisions that would legalize roulette and dice games.
For access to the full text and more information on Proposition 26, click here.
California Proposition 27, Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative (2022)
Proposition 27 is very similar to 26 except that it focuses on legalizing online sports wagering. This proposition would allow those possessing either an operating agreement or market access agreement with a qualified tribe to offer betting to California residents. Those in favor of Proposition 27 include the usual companies such as DraftKings and FanDuel. There are a few tribes in favor of the proposition as well. They have contributed just under $170 million in campaign contributions.
However, the opposition has contributed around $250 million to ensure voters vote no on Proposition 27. The opposition includes both the Democratic and Republican parties of California. The opposition also includes multiple native tribes and around a dozen other social organizations.
The proposition imposes a 10% tax on any online wagers made by those physically located in California when placing their bet. The funds from the tax are as follows:
85% to California Solutions to Homelessness and Mental Health Support Account (which provides permanent and interim housing)
15% of revenues to the Tribal Economic Development Account
Proposition 27 includes similar betting restrictions to Proposition 26. Proposition 27 has a complete ban on youth sports. Proposition 27 will also create the Division of Online Sports Betting Control that will “implement and enforce this chapter and supervise the offering, conduct, and/or operation of online sports betting in the State of California…” The Division has the power to exclude or approve additional sporting events. The Division will keep a real-time list of approved sporting events, leagues, and the types of bets authorized for sports betting operators.
For access to the full text and more information on Proposition 27, click here.
Sports Betting in California
California residents hold the future of sports betting in the state in their hands. These propositions are also exclusive, meaning one, both, or neither could pass during this election. Preliminary polls show that both propositions are struggling to get the necessary support to pass this November.
Los Angeles is the country’s second-largest market, trailing only New York. New York began offering sports wagering in January 2022. Since then, the state has raised around $400 million in tax revenue. While California will have a lower tax at 10% compared to the 51% New York has set, it is not unreasonable to think that California can hit around $150-200 million in its first year of tax revenue. Given that the date is fast approaching, we will soon learn whether California residents will be able to place their bets on their favorite hometown teams.
Justin Mader is a recent graduate of the University of New Hampshire Franklin Pierce School of Law, earning a J.D. and a Sports and Entertainment Law Certificate. He also serves as a Producer, Editor, and Contributor for Conduct Detrimental. He can be reached via Twitter: @maderlaw and LinkedIn at https://www.linkedin.com/in/justin-mader-15a602119/.