California's Push for Legal Sports Betting

After years of political and legal wrangling, the California legal sports betting push is finally showing a measure of clarity. That's right, California, which would rank as the world's fifth-largest economy all by itself seems ready to take the question of sports wagering to the people, in the form of two measures that will be voted on during the November midterm elections.

Voters in California appear poised to vote on two different proposals for the launch of a legal sports betting platform. Proposition 26 is a proposal that benefits the state's Indian tribes, the same ones that have owned virtual control over legalized gambling in the state for decades. The second, Proposition 27 has been backed by the biggest sports betting providers in the country and will bring with it a broad, expansive retail and mobile sports betting platform to the Golden State. It too would benefit the state's Indian tribes in the form of healthy licensing fees and partnership deals.

It has been a long time coming in California but in just a few short months, the state's citizens look likely to have their say on the subject of legal sports betting. Tribal claims that they alone are responsible for any potential platform have muddied the waters in California, but a clearer picture will emerge after the November election.

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What's At Stake

It can't be underestimated the size and scope of a potential California legal sports betting industry. As mentioned, the state is home to the world's fifth largest economy in the world, prompting BetMGM officials to call the state “one of the most important betting markets in the world.”

Eilers and Krejcik Gaming managing director Chris Grove said that California is "easily the largest prize in the U.S. sports betting market.”

California is America's largest state in terms of population with 40 million residents. It also has a thriving tourism sector and 15 professional sports teams — all of which are poised to benefit from revenues generated by a legal sports betting platform, whatever form it takes on.

Proposition 26

The California Sports Wagering Regulation and Unlawful Gambling Enforcement Act or Proposition 26 is an initiative put forth by the state's Indian tribes, the same ones that control legal gambling in the state and technically hold a monopoly over betting in California.

If successful, California's Indian tribes would be cleared to allow “on-site sports wagering at only privately operated horse-racing tracks in four specified counties.” Tribes would be in complete control of sports betting and expanded casino offerings, including table games, roulette, and craps at their facilities.

As of now, there is no mobile legal sports betting platform associated with Proposition 26.

Proposition 27

The “California Solutions to Homelessness and Mental Health Act,” or Proposition 27 is an initiative sponsored by a group of sports betting providers. Industry heavyweights FanDuel Sportsbook, DraftKings Sportsbook, and BetMGM are among the sportsbooks that have already spent a reported $200 million ensuring that they get a piece of the enormous pie.

It would allow for an expansive legal sports betting platform in the state and would give access to legal sports betting throughout the state, not just on Tribal lands.

Under Proposition 27, the tribes would still be a huge factor. Providers would still be compelled to partner with one of California's tribes and pay a huge $100 million licensing fee to that tribal partner.

“Our initiative is the only one that would raise hundreds of millions of dollars [r]each year in solutions to homelessness,” campaign spokesperson Nathan Click said. “Our measure provides a number of benefits to California tribal nations.”

Potential Problems

There are headwinds with each of the two Propositions slated to go before California voters in November. Proposition 26’s lack of a lucrative and popular mobile sports betting platform stands out as the roadblock for the Tribal proposal. The skirting of the 1998 California law that gave the state’s tribes full control of gambling in the state could spell trouble for Proposition 27.

The California Teachers Association has also weighed in with opposition to the betting provider's plan to launch a wide-ranging mobile and retail sports wagering platform for the state. California teachers feel that out-of-state gambling providers would "authorize a massive explosion of online gambling while falsely masquerading as a ‘solution’ for homelessness.

This deceptive measure would escalate the risks of underage and problem gambling, hurt California’s Indian tribes, and drive jobs and business out of state."

The Future

California voters will soon get their say on what type of legal sports betting platform they feel is best for their state. The tribal initiative will bring a retail-only sports betting platform while the one backed by the country’s heavyweight sports betting providers means that a broad, mobile platform could be coming to the state.

Each of the two groups has been busy drumming up support for their plan and battling hard to discredit the other. Expect that to continue right up until election day in November.

Despite the vitriol between the two, there is a silver lining for the Golden State. Californians will likely have a long-awaited and lucrative legal sports betting platform sometime in 2023. Jobs will be created, “fan enhancement” will result, the state’s sports teams will finally be on a level playing field with many of their competitors, and tax revenue will have an immediate impact on the state.

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