Forget the Ads. What Are Prop 26 & Prop 27 in California Really About?

Prop 26 and Prop 27 may have sabotaged both their chances of passing. They’ve spent so much ad time attacking each other that they’ve forgotten to tell the voters what they stand for.

That would mean at least a two-year delay until 2024 for another chance to legalize California sports betting.

So, if the campaigns can’t seem to communicate to voters what their ballot measures are about, we will right here.

Prop 26 would allow California Indian casinos and licensed racetracks to offer in-person sports betting. Prop 27 would allow private companies, like DraftKings and FanDuel, to offer online sports betting. There have been some exaggerated claims and counterclaims by attack ads from both sides, but that’s the core offering of each proposition. 

Let’s dive a little deeper.

LOOKING AHEAD: Prop 26 Spokesperson Suggests There’s Room for Compromise With Prop 27

Consequences of Prop 26 and Prop 27 in California

Ever since the Supreme Court struck PASPA down in 2018, each state has been allowed to legalize sports betting. The limits differ from state to state, but there are a few patterns that are consistent across sports betting markets. 

Online sports betting is more profitable for state governments than retail sports betting. Online sports betting handle can be 90% of a state’s total sports betting handle. In some markets, like New York, online sports betting is over 99% of total handle. That’s a larger pool of money that can be taxed than what retail sports betting can offer alone. 

So, Prop 27 would make more tax revenue for California than Prop 26. 

However, easy access to online gambling would also require more greater investment in problem gambling prevention and treatment. California already invests heavily in problem gambling programs. If sports betting is legalized, California will increase those investments. 

CAMPAIGN SPENDING: One CA Tribe Has Donated Nearly 25% of All Campaign Funding for Prop 26, Prop 27

Prop 26 sets 15% of sports betting tax revenue aside for problem gambling programs. Prop 27 sets aside 85% of sports betting tax revenue for homelessness and problem gambling programs. The Prop 27 campaign doesn’t specify how that 85% is split between those programs. But, regardless, Prop 27 would add to California’s problem gambling program funding.  

While both sports betting initiatives would increase problem gambling funding, Prop 26 has a clearer problem gambling funding scheme. But if California voters choose Prop 26, they’ll have to be OK with traveling to an in-person sportsbook. 

Convenience, tax revenue, and problem gambling rates are key issues of substance California voters will have to weigh.       

Debunking Inflated Prop 26 and Prop 27 Claims 

One of the key issues Prop 26 attack ads has raised is tribal sovereignty. There are a few ways this point gets brought up, but it’s consistently exaggerated. 

Tribal sovereignty is an Indian tribe’s right to self-govern. Tribes have the right to conduct their internal affairs how they choose, including having their own laws and law enforcement teams. Some ads have claimed that allowing private sportsbooks to launch in California would undermine tribal economic independence, a key factor in a tribe or nation’s sovereignty and self-sufficiency. 

Sports betting is not a threat to tribal sovereignty in the way these ads claim. Online sports betting is a lucrative market, but the most profitable form of gambling remains casino gambling. 

READ MORE: Potential California Sportsbook Welcome Bonuses

Further, most tribes don’t make most of their money from gambling. They make it from government contracts or other forms of revenue. The tribes that do profit from large casinos will continue to have a monopoly on some of the most lucrative types of in-person gambling, such as slots and table games. 

However, Prop 27 steps over the line when it accuses tribes that have amassed wealth from casinos of leaving poorer tribes behind. A select few tribes do become wealthy from gambling revenue, but that revenue is reinvested into community programs, similar to the way tax revenue is invested in communities off-reservation. 

If Prop 27 backers think that wealthy tribes should lift smaller tribes up but don’t think Los Angeles should invest in Orange Cove, then they’re applying a double standard that voters shouldn’t fall for during the California midterms. 

How to Vote on Prop 26 and Prop 27 in the California Election

At its core, the fight between Prop 26 and Prop 27 is a fight between retail sports betting and online sports betting. This fight will also determine who will predominately control California’s sports betting industry. It’ll either be California Indian casinos under Prop 26 or online sports betting companies under Prop 27.

The ugly battle between these two sports betting initiatives is nearing its end. Having spent so much time attacking the other side rather than building support, both propositions may have shot themselves in the foot. The vote counts in November will reveal as much about the advertising strategies for both propositions as it will about the future of California sports betting.