Beyond Legalize Sports Betting, What Else Would California Prop 26 Do?
Sports betting is the face of two California ballot initiatives this fall. But there is more to the ballot measures than sports odds and prop bets. High-end casino games and high-dollar private lawsuits are also in the mix.
Prop 26, specifically, has enough sweeteners to give the 60-plus tribes and tribal organizations behind the initiative a rich slice of new gaming and legal options.
All of those provisions could potentially bring both opportunity — and challenges — to the gaming landscape in California.
What Is Prop 26?
Prop 26 is the In-Person Tribal Sports Wagering Act. Backed by the Yes on 26 campaign, the proposition would legalize in-person-only sports betting limited to California Indian casinos and four state-licensed horse racetracks.
That’s what most Californians already know about Prop 26. Here’s what they might not know:
- Prop 26 would also authorize tribal casinos to add Vegas-style table and dice games now off-limits under California law.
- Prop 26 would allow tribes or other entities to file a lawsuit in state court if they suspect California gambling laws have been violated.
Table and Dice Games
Prop 26 would change the California constitution and state statutes to allow high-end table and dice games at Indian casinos under tribal-state gaming compacts approved by the state legislature and the federal government. Craps, roulette, and possibly baccarat could be played legally at the 67 California casinos.
Tribal casino games in California are now limited to slot machines and banked or percentage card games. This is thanks to a constitutional amendment passed in 2000.
Prop 26 would generate new revenue for tribal casinos that already net estimated revenues of $9 billion a year, although the exact revenue amount is undetermined. New casino games and sports betting would also likely generate new revenue-sharing dollars for non-gaming or small gaming tribes. These tribes currently receive $1.1 million per year from gaming tribes via the Revenue Sharing Trust Fund. As of Sept. 13, 2022, there were 71 tribes eligible for RSTF payments.
Prop 26 would also mean more money for the state of California. In 2021, California gaming tribes paid $65 million to support state gambling enforcement and addiction programs, according to the Legislative Analyst’s Office (LAO), the nonpartisan fiscal office of the California State Legislature. Prop 26 could increase that amount by “tens of millions of dollars annually” with the addition of sports betting and new gambling enforcement rules, the office reports.
Gambling Enforcement and Penalties
Prop 26 is drawing fire from California card rooms and dozens of cities statewide for a provision that would allow people or entities to bring a civil lawsuit against someone suspected of breaking state gambling laws “such as laws banning certain types of card games,” according to the LAO.
Card rooms see the provision as a way for Indian casinos to push them out of business. Cities benefiting from card room tax revenue are also crying foul.
Prop 26 would allow these lawsuits to be filed under an existing California law called the Private Attorneys General Act or PAGA, with penalties of up to $10,000 per violation. According to the LAO, the lawsuits could be filed in cases brought first to the California Department of Justice (DOJ) but not successfully brought to court by the DOJ.
Cities opposing Prop 26 are calling the provision “a poison pill for local cardrooms which are a significant source of tax revenue” totaling more than $500 million statewide, according to the website of the California Cities for Self-Reliance Joint Powers Authority.
“The measure expands PAGA into new territory by allowing tribal casinos to sue their competitors — forcing cardrooms out of business with unlimited, meritless lawsuits,” the website says. “Local communities will lose more than 32,000 good-paying jobs that generate $1.6 billion in wages annually.”
Competition Between Tribes and Card Rooms
Card rooms have faced unsuccessful legal challenges from California tribes in the past. In October 2021, a state appellate court ruled that tribal sovereign nation status prevented two tribes from suing card rooms under California’s unfair competition and public nuisance laws.
The lawsuit was dismissed, reported Bloomberg Law. But Prop 26 could potentially give tribes a way around that obstacle through PAGA.
The result could be significant fines levied against card rooms that could be sued by tribal nations under prevailing law. Meanwhile, they wouldn’t be able to countersue.
Card rooms would also be hurt by not being allowed to offer sports betting or additional casino-style games. Only Indian casinos (and the four racetracks for sports betting exclusively) would have that authority should voters approve Prop 26.
NO ON PROP 26: Why California Card Rooms Are So Strongly Opposed to Prop 26
Prop 26 would limit California sports betting to in-person-only sportsbooks at tribal casinos and the state’s four licensed horse racetracks. Approval of new or renegotiated agreements between tribes and the state would be required before sports betting could launch.
Gaming tribes would undoubtedly control what is potentially the largest sports betting market in the US. There are 67 casinos currently operating in California, outnumbering the four tracks about 16 to 1. The four racetracks are Santa Anita Park, Los Alamitos Race Course, Del Mar Racetrack, and Golden Gate Fields.