WHAT WOULD IT DO?

Prop. 27 would allow licensed tribes and gaming companies to offer mobile and online sports betting for adults 21 and older outside Native American tribal lands. Gaming companies — such as FanDuel and DraftKings — could only offer sports betting if they made a deal with a tribe.

The measure creates extremely high thresholds for gaming companies to do business in California, making it all but impossible for smaller gaming companies to compete.

The proposition creates a new division within the state’s Justice Department to regulate online sports wagering. That division could also decide whether to approve new forms of gambling, such as betting on awards shows and video games. It also gives the Justice Department additional powers to address illegal sports betting.

Tribes and gaming companies would pay fees and taxes to the state that could total several hundred million dollars a year, state analysts estimate. The actual amount is uncertain, in part because gaming operators are allowed to deduct certain expenses to reduce their tax bill.

After covering the state’s new regulatory costs, most of the money would be used to address homelessness and for gambling addiction programs, while 15% would go to Native American tribes that aren’t involved in sports betting.

WHY IS IT ON THE BALLOT?

Sports betting — other than on horse racing — isn’t legal in California currently.

The U.S. Supreme Court allowed states to legalize sports betting in 2018. Since then, 35 states plus D.C. have made the move. It’s proven to be big business: Americans bet more than $57 billion on sports betting in 2021. The explosion of sports betting has also concerned advocates, who say that gambling addiction will increase, and that research into the long-term effects of legalizing sports betting has fallen short.

California lawmakers tried to negotiate a deal on sports betting in 2020, but weren’t able to work one out in time to get a measure on the ballot. Then came a rush of groups trying to qualify their own sports betting initiatives for the 2022 election. Ultimately, two different measures made it onto the ballot. Prop. 27 would allow online sports betting across the state, while Prop. 26 would allow in-person sports betting only at tribal casinos and horse race tracks. If both pass, both could go into effect, but in all likelihood a court would decide.

ARGUMENTS FOR:

Supporters say Prop. 27 would create a permanent source of funding to reduce homelessness and will allow every tribe to benefit — including tribes that decide not to offer sports betting. It would protect against underage gambling with fines for violators and would prohibit betting on youth sporting events.

Supporters

  • Yes on Prop. 27 committee
  • FanDuel, DraftKings, BetMGM and four other gaming companies, which are funding the measure
  • Three Native American tribes: Santa Rosa Rancheria Tachi Yokut Tribe, Middletown Rancheria of Pomo Indians, and Big Valley Band of Pomo Indians
  • Mayors of Fresno, Sacramento, Oakland, and Long Beach
  • Some homelessness advocates, including Bay Area Community Services and Sacramento Regional Coalition to End Homelessness
  • Major League Baseball

ARGUMENTS AGAINST:

Opponents say that Prop. 27 would turn every cellphone and computer into a gambling device. They say it would escalate the risks of underage and problem gambling. They also say it would drive business away from tribal casinos and threaten tribal sovereignty because tribes would have to give up some of their rights in order to offer sports betting. And they argue that most of the money would go to companies in other states.

Opponents

  • No on Prop. 27 committee
  • 50 Native American tribes and tribal organizations
  • California Democratic Party
  • California Republican Party
  • Lt. Gov. Eleni Kounalakis
  • California Teachers Association, Communication Workers of America, United Food and Commercial Workers, labor leader Dolores Huerta
  • Homelessness and housing advocates, including Coalition on Homelessness San Francisco and California Coalition for Rural Housing