Prop 26 vs. Prop 27: 28 Lingering Questions, 28 Days Before Election

We’re just four weeks from the Nov. 8 election … and Californians still have questions about Prop 26 and Prop 27.

Part of that is because the campaigns behind the two California sports betting ballot initiatives have spent way too much time (and money) attacking each other instead of actually explaining their initiative.

And part of that is because, with two props about sports betting on the same ballot, things can get a bit confusing.

So, if the campaigns can’t help voters sift through the noise and nonsense, we at California Casinos will.

Tomorrow marks 28 days before the election. So, below, we answer 28 lingering questions about Prop 26 and Prop 27, and California sports betting as a whole.

IF PROP 27 PASSES … Potential California Sportsbook Bonuses

Questions You Might Not Be Asking

1. What Companies Might Get Retail Sportsbooks If Prop 26 Passes?

Unibet already has a deal in place with the Quechan Tribe of the Fort Yuma Reservation to run the sportsbooks at their casinos in Arizona (Paradise Casino — already up and running) and California (Quechan Casino Resort).

Caesars Entertainment owns the Harrah’s Resorts brand across the US and it already runs retail sportsbooks at tribal-owned Harrah’s Resorts in Arizona and North Carolina. 

There are two Harrah’s Resorts in California, owned by the Rincon Band of Luiseño Indians and the Buena Vista Rancheria of Me-Wuk Indians. In fact, that’s the main reason Caesars has remained neutral in the Prop 26 vs. Prop 27 debate.

RETAIL OPTIONS: If Prop 26 Passes, These Private Companies Are Poised to Launch Retail Sportsbooks With Tribes

MGM Resorts is partnered with Thunder Valley Casino Resort, north of Sacramento. 

MGM Resorts is also partnered with the Sacramento Kings, whose official casino partner is Red Hawk Casino, east of Sacramento. BetMGM would be a logical candidate for either casino if the tribes want a private company to help run the sportsbook.

PENN Gaming owns Barstool Sportsbook, and it used to be partners with the Jamul Indian Village’s casino, back when it was called Hollywood Casino Jamul. This casino is just outside San Diego.

2. How Can Prop 26 Create State Tax Revenue If Indian Casinos Aren’t Taxed?

Two ways.

First, Prop 26 also legalizes in-person sports betting at California’s four licensed horse racetracks — Santa Anita Park, Del Mar Racetrack, Los Alamitos Race Course, and Golden Gate Fields. And those facilities do pay state revenue taxes.

Second, tribes still make payments to the state government, even though the state can’t tax their casino revenue (because the casinos are on reservation land, which technically isn’t California soil).

Tribal-State Gaming Compacts

In order to run a casino, a tribe must make a tribal-state gaming compact with California. These agreements stipulate how many slot machines and other games a casino can have. They also establish the amount the tribe must pay to the local and state governments, among other entities.

If Prop 26 passes, tribes would have to renegotiate these tribal-state gaming compacts to include sports betting. During these negotiations, the tribes and state government would also likely set forth new payment amounts to be made to the government.

So, when you see discussion about how state revenue will be utilized under Prop 26, it’s talking about tax payments from horse racetracks and these government payments negotiated in tribal-state compacts.

3. Is Sports Betting Already Happening in California?

Yes. Not via regulated sites, however.

According to a California Casinos survey conducted in August 2022, 62% of Californians interested in sports betting say they already place sports bets online. 

While some of that number can be attributed to confusion over what constitutes sports betting, it also reveals the widespread use of offshore sports betting sites that are not regulated.

In the survey, 10.4% of respondents who answered an open-ended question about where they currently place sports bets said popular offshore sites Bovada, Stake.com, Betcha (now Vivid Picks), BetOnline, MyBookie, 1xBet, BetUS, FortuneJack, and Sportybet.

Legal sports betting advocates in California want the revenue from those bets going toward the state, not offshore sites.

4. What’s the Difference Between Legal Sportsbooks and Sites Like Bovada?

Bovada, BetOnline, and BetUS are examples of offshore sports betting sites that are technically not legal or illegal. They are based outside the US (Bovada is based in Costa Rica and BetOnline is based in Panama, for instance) and don’t face any US regulation.

Translation: None of the US sports betting revenue at these sites goes toward the states bettors are wagering from, and these sites can do whatever they want with your money.

Odds at offshore sites are also notoriously unfavorable.

NEW TACTICS: Inside the Prop 27 Campaign’s Reshaped Strategy to Erase 20% Gap By the Election

Wait for Legal Sportsbooks

While you won’t go to jail if you bet on an offshore site like Bovada, you are putting your money at serious risk, and you’re not working with fair odds most of the time.

A regulated US sportsbook, on the other hand, is governed by a US oversight agency, has fair and favorable odds, and boasts high-quality digital security that keeps your personal and financial information much safer than it is at an offshore site. 

States with legal sports betting also get revenue from legal sportsbooks from taxes.

DraftKings, FanDuel, BetMGM, Caesars Sportsbook, BetRivers, and PointsBet are all examples of legal US sportsbooks.

5. Does Prop 27 Legalize Betting on Events Other Than Sports?

Yes.

You hear so much about Prop 27 as an online sports betting initiative, and it is.

But included in the Prop 27 language is a provision that also would legalize betting on “competitive events” and “novelty events.” The list of these types of events includes, but is not limited to, “awards shows, non-athletic competitions and events, popular culture, and current events.”

So, think the Academy Awards and esports. Heck, maybe even reality TV competition shows like The Voice and Survivor.

The provision goes on to say that these events do not include federal, state, local, or foreign elections.

6. Is Sports Betting the Same as DFS?

No.

Daily fantasy sports, or DFS, is not the same as the sports betting of Prop 26 and Prop 27.

This could be confusing to voters, as two of the main sports betting companies, DraftKings and FanDuel, already offer DFS in California as DraftKings DFS and FanDuel DFS.

But DFS is exactly what it sounds like — fantasy sports on a daily level. Players draft a new roster every day or every week for football and can either enter tournaments or play head-to-head matches and win money.

7. Is a Ballot Measure the Only Way to Legalize Sports Betting in California?

Yes. California uses elections to make additions or changes to its Constitution.

There are two ways to get measures on the ballot in California.

• Interest groups must gather a certain number of verified signatures.
• The California State Legislature can put a measure on the ballot if it receives 2/3 the vote in both chambers.

Peeling Back the Layers of Prop 26 and Prop 27

8. Beyond Sports Betting, What Else Is in Prop 26 and Prop 27?

Prop 26

Prop 26 would allow roulette and dice games (such as craps) to be offered at Indian casinos in California.

Prop 26 would also allow people or entities to sue in federal court if they believe other people or entities are illegally offering certain card games. Prop 26 spokesperson Kathy Fairbanks said in a Sept. 7 debate that this provision is meant to address how California card rooms offer blackjack.

California tribes are supposed to be the only entities allowed to offer house-banked card games, such as blackjack. However, card rooms often contract third-party vendors to offer these house-banked games at their establishments.

The Prop 26 provision would allow Indian casinos to directly sue California card rooms.

Prop 27

As we discussed more in detail in question No. 5, Prop 27 would legalize betting on certain non-athletic events, such as awards shows like the Oscars or Emmys, as well as esports, current events, and pop culture.

Prop 27 would also make sports betting revenue exempt from the state’s minimum amount of spending on K-12 schools and community colleges.

In addition, Prop 27 would create a financial penalty for anyone who places a sports bet with an offshore sportsbook. That penalty would be equal to 15% of the amount the person bet.

And, finally, Prop 27 would also create a new unit in the California Department of Justice that would provide oversight and regulation for online sports betting.

9. Which Prop Would Make It Easier to Bet on Sports?

Prop 27.

Since Prop 26 would require bettors to travel to an Indian casino or one of four licensed horse racetracks in the state, Prop 27 — which would allow bets on any computer or mobile device — would make sports betting easier.

10. How Does Prop 27 Support Homelessness?

Prop 27 creates a new fund, called the California Online Sports Betting Trust Fund (COSBTF). After regulatory costs are paid, that fund will receive the 10% tax on online sports betting revenue.

Of that money, 85% will go toward homelessness prevention programs, much in the same way funds from the State Homeless Housing, Assistance, and Prevention Program (HHAPP) are used. 

With the California Legislative Analyst’s Office projecting Prop 27 could generate as much as $500 million in tax revenue, the COSBTF could generate more than $400 million for homelessness programs each year. However, the figure would more likely be closer to $200-$350 million range, because most estimates for California online sports betting revenue are around $2.8-$3 billion annually.

For reference, the HHAPP had about $1 billion in funding this year.

BINGO! California Tribe Will Offer Sports Betting-Themed, Class II-Compliant Bingo App

11. How Much Tax Revenue Would Each Initiative Create?

Prop 26 would create significantly less revenue than Prop 27. 

Online sports betting is by far the more popular option for US bettors. Across the country, the ratio breaks down roughly to 70% online sports betting and 30% in-person. In New York, that ratio is closer to 99/1.

Most estimates project revenue under Prop 26 would reach the mid-hundreds of millions. With a 10% tax rate, that would translate to the mid-tens of millions going toward the state.

Estimates for California online sports betting revenue usually range anywhere from $2.8-$3 billion. With the 10% tax rate, that would translate to $280-$300 million per year for the state. Again, though, the California LAO estimated tax revenue could even surge as high as $500 million under Prop 27.

12. When Would Sports Betting Launch?

Prop 27 stipulates that the state would begin accepting license applications no later than June 10, 2023. And it says online sports betting would launch no later than Aug. 29, 2023.

Prop 26 doesn’t provide a launch timeline. In its analysis, the Legislative Analyst’s Office LAO did not give an estimated start date for in-person sports betting if Prop 26 passes. 

Tribes would have to renegotiate their gaming compacts to include sports betting. Those amended compacts would then need to be approved by the California Legislature, the governor, and the US Department of the Interior before a retail sportsbook could launch.

The DOI has 45 days to approve or reject a gaming compact upon receipt. And, before that step, it usually takes around a month for the legislature to ratify a gaming compact once it’s submitted. 

13. How Would Prop 26 and Prop 27 Prevent Underage Gambling?

Both props have language regarding advertising restrictions to avoid promoting sports gambling to minors.

Preventing underage gambling under Prop 26 would be easier. With in-person betting, gamblers’ IDs will be checked in order to make a bet at the sportsbook. Yes, people can make fake IDs, but this is still a relatively sound method.

Age verification will be a little tougher via the online sports betting Prop 27 would allow. In its language, Prop 27 stipulates that online sports betting providers must use “commercially reasonable efforts” to prevent anyone under 21 from gambling.

Often, this means users must provide their Social Security number and/or their driver’s license number.

14. Why Should I Care About Prop 26 and Prop 27?

If you don’t have any stake in sports betting, casino gambling, card rooms, Native American issues, homelessness prevention, education funding, problem gambling, and a surge in state tax revenue, then maybe you shouldn’t care about California’s two sports betting measures.

STILL FIGHTING: Despite Grim Polling, DraftKings and FanDuel Are Still Funding Prop 27 Campaign in October

However, if you care about any or all of the above, Prop 26 vs. Prop 27 should matter to you.

• Both props would legalize sports betting (retail with Prop 26, online with Prop 27).
• Prop 26 would add other new gambling options at Indian casinos.
• Card rooms fear Prop 26 could put them out of business.
• Tribes believe Prop 27 would infringe on their tribal sovereignty.
• Conservatively, Prop 27 would provide at least $200 million to homelessness programs.
• Prop 27 would not be required to help fund K-12 schools and community colleges.
• Since they add a new betting option, both props could increase problem gambling.
• Both props would generate more state tax revenue, with Prop 27 generating significantly more.

15. How Are Prop 26 and Prop 27 Different? 

In many ways. But we’ll hit on the biggest differences here.

16. How Are Prop 26 and Prop 27 Similar?

Both would tax sports betting revenue at 10%.

And, at their cores, both would legalize sports betting in some capacity.

Both would create new funds where tax money would go: California Sports Wagering Fund with Prop 26, California Online Sports Betting Trust Fund with Prop 27.

Both have stipulations about not targeting minors with ads.

Both set the legal sports betting age to 21. So, no, 18-year-olds would not be able to bet on sports, even at the 18+ casinos in California.

17. Why Are There Two Sports Betting Measures on the Ballot?

Because, right now, there are two sides with competing interests that aren’t yet at the point where they want to compromise.

Attempts to create a single sports betting ballot proposal in the legislature failed for that very reason.

So, now, each competing interest group has its own measure on the Nov. 8 ballot.

California tribes want to maintain control over the state’s gambling scene. 

Private sports betting companies want as much of the California market share as possible. 

Prop 26 would achieve what the tribes want, and Prop 27 would achieve what the private sports betting companies want.

As things currently stand, there are just too many differences between the two sides for there to be just one sports betting option.

18. Why Are There So Many Prop 26 and Prop 27 Commercials?

Because there is so, so much money to be made.

California is — by far — the largest state in the country at nearly 40 million residents. The next-largest state, Texas, has 10 million fewer residents.

New York, the country’s fourth-most-populous state at just shy of 20 million, currently has the biggest sports betting market in the country. And, again: California has a population twice that size, plus 21 major pro sports franchises and many more college programs.

Projected $3.1 Billion in Revenue

That’s why Eilers & Krejcik Gaming, an independent research firm, estimates that a full online and in-person California sports betting market would generate $3.1 billion in revenue every year.

California tribes and private sportsbooks want as big a slice of that massive money pie.

So, it’s worth pouring a record-shattering $440 million into the Prop 26 and Prop 27 campaigns and their ads if there’s a chance at a much bigger prize down the line.

Looking Beyond the November 2022 Election

19. Can I Vote Yes on Both Prop 26 and Prop 27?

Of course.

With ballot initiatives, you can vote for however many you want — or none at all.

According to a California Casinos survey conducted in August 2022, 61% of Californians interested in sports betting want both ballot initiatives to pass.

20. What Happens If Both Prop 26 and Prop 27 Pass?

If both pass, we’ll be in for a legal battle.

The California Constitution says that, if ballot measures with conflicting provisions both pass, the measure that received a higher percentage of the vote will overrule the other measure in any areas of conflict.

Prop 27 Saw This Coming

The writers of Prop 27 were clearly aware of this stipulation. In the actual language of the measure, they wrote that Prop 27 does not conflict with Prop 26.

“The People of the State of California find and declare the following: … Online and in-person sports betting are complementary and supplementary to each other,” the measure reads. “They can be offered concurrently in California in order to maximize the amount of tax revenue generated.”

That obviously can’t just be taken as fact. 

So, again, this would be a legal battle, as a judge would have to decide which aspects of Prop 26 and Prop 27 conflict. Then, if there are any conflicting provisions, those from whichever measure received the higher percentage of votes would take effect.

TRIBES VS. CARD ROOMS: The War Between Prop 26 and Card Rooms Boils Down to One Thing: Blackjack

21. What Happens If Neither Passes?

If neither passes, we can start the countdown to 2024 — because you’d better believe tribes and sports betting companies are going to try and try and try until sports betting is legalized in California.

The question really is: How might 2024 ballot measures, or just one measure, come about?

Could California tribes and private sportsbooks reach compromises on key issues and write one unified ballot measure? Will competing interests still be too different to reconcile in the second attempt? Or could the legislature get something on the ballot?

Yes on 26 spokesperson Kathy Fairbanks suggested compromise could be an option if both measures fail during a September debate with Yes on 27 spokesperson Nathan Click.

A trio of tribes — the San Manuel Band of Mission Indians, Rincon Band of Luiseño Indians, and Wilton Rancheria — is currently trying to get a tribal-led online CA sports betting initiative (that includes in-person betting on tribal lands) on the 2024 ballot. 

It is still in the signature-gathering process.

22. How Would Sportsbooks Launch With Prop 26 and Prop 27?

Prop 26

Tribes that run casinos would have to renegotiate their gaming compact to include sports betting, and those new compacts would need state and federal approval.

Prop 26 doesn’t specify the process through which sportsbooks would launch at California’s licensed horse racetracks — Santa Anita Park, Del Mar Racetrack, Los Alamitos Race Course, and Golden Gate Fields. The only requirement listed is that the racetrack must have hosted live horse racing within the previous 18 months.

However, one can assume the California Gambling Control Commission would set forth a procedure for these four retail sportsbook sites.

Prop 27

Prop 27 establishes lofty requirements for online sportsbooks looking to launch in California.

First of all, the licensing fee is $100 million. Second, the company must have licenses in at least 10 other US states in order to be eligible in California. 

That automatically rules out companies such as Fanatics, Bally Bet, and FOX Bet. Of course, these sportsbooks could presumably apply for licenses when they reach that 10-state requirement. 

Or, perhaps companies would merge in order to gain access to California.

Any sports betting company launching in California would have to do so in partnership with a California tribe. Tribes, however, can also apply for their own online sports betting license, and that license application fee is $10 million.

Analyzing Support and Opposition

23. Do All Sportsbooks Support Prop 27?

Seven sports betting companies are funding the Prop 27 campaign: FanDuel, DraftKings, BetMGM, PENN Gaming, Fanatics, Bally Bet, and WynnBET.

FanDuel owns the largest share of the US sports betting market. DraftKings is second, BetMGM is third, PENN Gaming (Barstool Sportsbook) is sixth, and WynnBET is eighth.

Caesars Sportsbook comes in at fourth.

But Caesars is nowhere to be seen in the California sports betting battle, even though it stands to make boatloads of money if Prop 27 passes.

Why?

Simple: Caesars has longstanding relationships with two California tribes — the Buena Vista Rancheria of Me-Wuk Indians and the Rincon Band of Luiseño Indians. Both these tribes own the state’s two Harrah’s Resorts, which is a Caesars brand.

Caesars already runs casino operations at Harrah’s Resort Southern California (Rincon Band) and Harrah’s Resort Northern California (Buena Vista Rancheria). 

So, if Prop 26 passes, it’s logical to think Caesars would help run the sportsbooks at those properties, too. It already runs sportsbooks at tribal-owned Harrah’s Resorts in Arizona and North Carolina.

WORKING TOGETHER? Prop 26 Spokesperson Suggests There’s Room to Compromise With Prop 27

24. Why Do Some Tribes Support Prop 27?

Three California tribes have publicly endorsed Prop 27: the Big Valley Band of Pomo Indians, Middletown Rancheria of Pomo Indians, and Santa Rosa Rancheria Tachi Yokut Tribe.

Both Pomo Indians tribes are limited-gaming tribes, meaning they operate casinos with 350 or fewer slot machines. The Tachi Yokut Tribe, however, is a gaming tribe that owns Tachi Palace Casino Resort, one of California’s largest casinos. 

So support doesn’t just depend on the tribe’s gaming status.

Support mostly boils down to the fact that Prop 27 would give tribes a chunk of the California online sports betting market, which could generate north of $3 billion in annual revenue — far greater than what Prop 26 would generate.

“Prop. 27 will provide us with economic opportunity to fortify our Tribe’s future for generations and protect Tribal sovereignty,” said Leo Sisco, Chairman of the Santa Rosa Rancheria Tachi Yokut Tribe, in a press release. “And it is the only measure that will deliver hundreds of millions of dollars each year to help solve homelessness and address mental health in California.”

During a Sept. 7 debate, Prop 27 spokesperson Nathan Click also said the campaign has talked with various California tribes that support Prop 27 but just haven’t done so publicly.

NEW TACTICS: Inside the Prop 27 Campaign’s Reshaped Strategy to Erase 20% Gap By the Election

25. Why Do Most Tribes Support Prop 26?

This one is pretty straightforward.

Right now, California tribes have full control over the state’s legal casino gambling. While its impact on tribes’ sustainability and quality of life can at times be overstated, gaming revenue does still provide significant funding for tribal communities.

So, logically, tribes want the same type of control over legal sports betting. That’s the financial reason 58 tribes have publicly endorsed Prop 26.

But there’s another reason: tribal sovereignty. 

Many California tribes believe allowing private sportsbook companies to be major players in the state’s sports betting scene infringes upon their ability to self-govern and financially provide for themselves.

“The vast majority of California tribes are opposed to the out-of-state operators’ initiative,” Chairwoman Lynn Valbuena, San Manuel Band of Mission Indians, said in a press release. “It will hurt tribes and is bad for California. It threatens decades of progress for California’s tribal governments, erodes tribal sovereignty, and threatens our future economic sustainability.”

LEGAL CA SPORTS PICKS: 5 Best Ways to Use Fliff, Which Offers Californians Legal, Free Sports Picks

26. Who Is Funding Prop 26 and Prop 27?

Prop 27

The Yes on 27 campaign has been funded almost exclusively by seven private sports betting companies: FanDuel, DraftKings, BetMGM, PENN Gaming, Bally Bet, Fanatics, and WynnBET.

In total, those seven companies have contributed $169.4 million.

The No on 26 campaign has been funded exclusively by California card rooms and affiliated entities. They have raised $42.5 million. Commerce Casino and Hawaiian Gardens Casino, two of California’s biggest card rooms, have each donated $10.1 million to lead the way.

Prop 26

The Yes on 26 campaign has been funded via donations from California tribes, totaling $116.9 million. However, Yes on 26 and No on 27 work hand-in-hand. No on 27 has raised an additional $116.3 million, funded almost exclusively by tribes. (The California Democratic Party has also donated $1,398.93.)

CA CASINOS: These Are the 10 Biggest Casinos in California – October 2022

Between Yes on 26 and No on 27, the top donors are:

• San Manuel Band of Mission Indians — $103.3 million
• Federated Indians of Graton Rancheria — $30.2 million
• Pechanga Band of Indians — $25.4 million
• Yocha Dehe Wintun Nation — $20.3 million
• Barona Band of Mission Indians — $10.4 million

27. Who Supports and Opposes Prop 26?

Support

As of October 2022, 58 California tribes had publicly endorsed Prop 26. That list includes eight of the 10 tribes that own California’s 10 largest casinos; 29 gaming tribes (casinos have more than 350 slots); 15 limited-gaming tribes (casinos have fewer than 350 slots); and 14 non-gaming tribes.

It should be noted, however, that seven of those 14 non-gaming tribes are known to be currently building or planning to build casinos.

Beyond tribes, notable support for Prop 26 includes the California Hawaii State Conference of the NAACP and various local community political and business organizations.

Opposition

The main group opposing Prop 26, other than private sports betting companies, is California card rooms.

Card rooms, which Indian casinos see as their main gambling competition in California, fear a provision in Prop 26 would open the door to frivolous lawsuits that could ultimately put card rooms out of business.

Also, Prop 26 allows Indian casinos to offer sports betting, roulette, and dice games. Those offerings would further eat into card rooms’ in-person gambling customer base.

28. Who Supports and Opposes Prop 27?

Support

Seven sportsbook companies have solely funded the Yes on 27 campaign. Those companies are: FanDuel, DraftKings, BetMGM, PENN Gaming, Bally Bet, Fanatics, and WynnBET.

MLB has also endorsed Prop 27. So, too, have various community leaders in cities hit especially hard by homelessness and some homelessness prevention organizations.

UH-OH: New Poll Projects Overwhelming Defeat for Prop 26 and Prop 27 in California

Opposition

Other than most California tribes, main opposition for Prop 27 includes both the California Democratic and Republican parties, as well as various state education organizations, such as the California Teachers Association.

These education organizations cite fear that Prop 27 would enable young people to gamble more easily as a reason for opposing the measure. 

However, it should also be noted that Prop 27 would exempt sports betting revenue from minimum spending requirements on K-12 schools and community colleges.