How to Tell the Difference Between Prop 26 vs. 27, the Two 'Sports Betting' Propositions on the Ballot
Gambling is a $53 billion-dollar industry in the United States, including sports betting — especially since 2018, when the Supreme Court struck down a 1992 federal ban on state-authorized sports betting.
Betting on sports is currently legal in more than 35 U.S. states plus the District of Columbia — but it's illegal in the state of California.
An unpublished 2019 study estimated that Californians were making $15.7 billion in illegal sports bets placed via friends, bookies or offshore sites.
So, two measures on the ballot this November attempt to legalize sports betting: Prop 26 and Prop 27.
California ballot propositions notoriously carry complicated backstories and ambiguous wording. But the debates surrounding Props 26 and 27 have been particularly mired in confusion — thanks to giant billboards, YouTube advertisements, sponsored Google search results and piles of direct mail pieces, all urging either a "Yes" or "No" vote.
Here's how that spend breaks down for Prop 26:
And here's where the money is coming from regarding Prop 27:
Collectively, supporters of both props have spent more than $570 million in advertising.
Since that has made the decision-making process especially baffling for California's voters this election season, here are the basic tenets you need to know about each of these two propositions — including how they overlap and where they differ.
What's the Buzz?
There are six key issues regarding sports betting that are under debate leading up to Election Day. These are the buzzwords and phrases you'll be hearing — and how they break out between Props 26 and 27:
1. "Special Interest Monopolies": In this case, the "special interest" mentioned by the opposition campaign — led by card rooms — is California's Indigenous tribes. Allowing sports betting and expanding gambling to include roulette and dice games (like craps) at tribal casinos could conceivably take revenue away from non-tribal card rooms.
2. "Out-of-State Gambling Corporations": Large online gambling companies like FanDuel, BetMGM and DraftKings have supported Prop 27 — and all of them stand to benefit if it passes. Although FanDuel has an office in Santa Monica, it's headquartered in New York City. BetMGM's headquarters are in New Jersey; DraftKings is in Massachusetts.
In order to operate online sports betting in California, eligible businesses must pay $100 million for the license and must partner with a local tribe.
Additionally, bets must be placed while the device is physically within state lines (although the gambler won't have to be a California resident).
3. "Tribal Sovereignty": Indigenous tribes in California have the license to operate tribal casinos under agreements known as tribal-state gaming compacts, required under the federal Indian Gaming Regulatory Act (IGRA). Historically, operating casinos has been a way for tribes to become financially self-reliant.
Under Prop 26, the legalization of sports betting would lead to a renegotiation of these tribal-state compacts to include in-person sports betting at racetracks and Native American tribal casinos, potentially reinforcing their financial independence.
If Prop 27 passes, however, allowing online sports betting would theoretically divert gambling revenue away from tribal casinos. However, gambling companies must partner with local tribes who have a tribal-state compact to enter the market. (Tribes that do not operate casinos would also receive a portion of the taxes from Prop 27.)
Proponents of Prop 26 who oppose Prop 27 are largely in favor of keeping the realm of gambling and sports betting power and revenue to California’s tribes. If an out-of-state source comes in, then the power shifts towards corporations.
4. "Underage Gambling": In California, you must be at least 21 years old in order to place any bet. However, there's a question as to whether people under age 21 — especially children — might gain access to online sports betting via a computer or mobile device.
Prop 26 would enforce age limits by allowing anyone or any entity to sue a casino that allows underage betting.
Theoretically, a parent — or even another casino that is operating legally — could file a civil lawsuit in a state trial court.
But first, the person or entity would need to ask the California Department of Justice to lodge a case. If there is no action within 90 days, or the DOJ’s case gets rejected by the court, they can then sue. The penalty — which can be up to $10,000 — would go towards the California Sports Wagering Fund.
Prop 27, on the other hand, would create a new unit within the California Department of Justice to regulate online sports betting. The prop will also require gamblers to pay a state penalty if they place an online bet with an unlicensed entity.
5. "Gambling Addiction": Some people physically become "hooked" on the dopamine rush from the reward of placing bets, which can negatively affect their financial, work and personal relationships.
About 1% of Americans have a gambling disorder. By legalizing sports betting, opponents say California is inviting a spike in problem gambling.
Under Prop 26, 10% of daily bet revenue would go to forming a new California Sports Wagering Fund, 15% of which would go to mental health and problem-gambling programs.
Under Prop 27, tribes and gambling companies must pay 10% of sports bets made each month to the state. These funds would create the new California Online Sports Betting Trust Fund, 85% of which will go towards homelessness and gambling addiction programs.
6. "A Permanent Solution for Homelessness": Originally coming out of the "California Solutions to Homelessness and Mental Health Act," 10% of the revenue from sports betting in Prop 27 would be taxed and go to the state funds, creating the "California Online Sports Betting Trust Fund."
Then, 85% of that money would be allotted towards initiatives addressing housing, homelessness and mental health.
Homeless advocates largelyhave been mixed to back Prop 27. Some say that the half a billion that has already been pumped into ballot advertising alone could have been spent on directly fighting homelessness — by building housing units or providing mental health services, for example. Others are excited about the prospect of long-term funding.
However, Governor Gavin Newsom has said that voters should not see this as a "homelessness initiative."
According to the state’s Legislative Analyst’s Office, the total revenue increase from Prop 27 would likely not exceed $500 million. While "permanent" funding would be created, 85% of 10% is quite small in comparison to the larger corporate revenues — and there is no opportunity to increase it in the future, even as needs increase, without another proposition going on the ballot.
Does It Have to Be One or the Other?
As with all California state ballot measures, if either Prop 26 or Prop 27 receives more than 50% of votes, it passes. However, with Prop 26 and 27 both addressing the legalization of sports betting, if they both pass, both may not necessarily take effect and may go to a court to decide.
Supporters of Prop 27 say that it is complementary and supplementary to Prop 26. But some of the advertising campaigns are urging voters to choose.
However, you can vote "Yes" for both of them, "No" for both of them or "Yes" for one and "No" for the other.
