If Prop 26 Passes, Racetracks Could Launch Sportsbooks Before Tribes

When Arizona passed its sports betting law in 2021, stadium and online sportsbooks had to wait for federal approval of sports betting at Indian casinos before they could launch. 

Things would operate a little bit differently with sports betting in California under Prop 26 should the in-person-only sports betting initiative beat the odds and pass in the Nov. 8 election. 

Although it is a tribal initiative, Prop 26 would allow both Indian casinos and California’s four licensed horse racetracks to offer in-person sports betting. And the tracks would be allowed to enter the market first.

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Prop 26 would allow the tracks to offer in-person sports betting as soon as they are licensed and approved for launch by state regulators, perhaps by mid-2023. Tribes could start taking in-person sports bets once the state legislature and federal government approved amended tribal-state gaming compacts (gaming agreements required under state and federal law).

Prop 26 spokesperson Kathy Fairbanks addressed the path to a possible (although improbable) launch of racetrack sportsbooks in a recent call with California Casinos. 

Prop 26 Had Tracks Initially Launching As Soon As Jan. 1, 2022 

“The way everything is now, if Prop 26 were to pass, the tracks would probably be able to get sports betting started sooner than the tribes,” Fairbanks told California Casinos. 

The reason has to do with a Jan. 1, 2022 racetrack launch date included in the initiative when the tribal in-person sports betting initiative was filed originally in December 2019. Part of Prop 26’s proposed amendment to the California Constitution reads:

” … beginning on January 1, 2022, Approved Racetrack Operators … may offer sports wagering, provided that any sports wagers authorized to be made pursuant to this subdivision 5 shall be physically placed by patrons, and accepted by the Approved Racetrack Operator, within a designated building of a race track at which an Approved Racetrack Operator has conducted live horse races in the immediately preceding eighteen (18) months. Sports wagers authorized to be made pursuant to this subdivision shall not be made at betting kiosks or self-service gaming terminals outside of designated buildings of the race track.”

The four tribes that filed the initiative in 2019 (Temecula Band of Luiseño Mission Indians, Barona Band of Mission Indians, Yocha Dehe Wintun Nation, and Agua Caliente Band of Cahuilla Indians) had originally planned for Prop 26 to be on the 2020 ballot.

Approval in 2020 would have given the tribes enough time to amend their compacts, receive federal approval, and launch in early 2022 — and, at that point, they could have started offering their California sports betting welcome promos.

By allowing horse racetracks to launch no earlier than Jan. 1, 2022, the tribes would have potentially been able to launch around the same time as the tracks. But pandemic delays derailed that timeline, pushing a vote on Prop 26 to November 2022. 

So, now the effect is the opposite: Racetracks would be able to launch potentially well ahead of tribes. In fact, since Jan. 1, 2022, has already passed, racetracks could launch as soon as they’re approved.

“Now if it were to pass, the tracks would be able to start sooner than the tribes,” Fairbanks said. “The tribes would still have to negotiate their compact amendments and it would have to be ratified by the state legislature.”

When asked if the track launch date could have been changed after the initiative was filed, Fairbanks said no. 

“Once you file an initiative, it doesn’t change,” she said. “To amend an initiative, you’ve got to start the process all over again.”

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Prop 26 Could Have CA Sports Betting at Racetracks in 2023

Prop 26 is one of two sports betting initiatives on the ballot next month. The other is a sportsbook-led initiative that would allow online sports betting statewide between tribes and private operators like FanDuel and DraftKings.

Fairbanks said she is not optimistic either proposal will pass. 

No sports betting would start the launch process in California under either proposal on the November 2022 ballot until election results are certified by the state. That would likely happen in mid-December, said Fairbanks. 

That could push any launch at racetracks under Prop 26 into 2023 at the earliest. 

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Should Prop 26 somehow make it through, racetracks would be taxed at 10% of their sports betting revenue. Payments from the tracks would go into a state fund for K-12 and community college education, mental health programs, and to reduce the cost of state gambling enforcement. 

Tribal casinos — which would be allowed to offer new table games under Prop 26, in addition to in-person sports betting — would make certain payments to the state to help reduce regulatory enforcement costs. Fairbanks said it would be up to each individual tribe whether or not it pursues an amended compact to offer sports betting next year or beyond.