In recent weeks, the latest blows were traded in the fight for California sports betting supremacy. Prop 26 and Prop 27 each released negative ads targeted toward one another. They were the newest pieces of advertising campaigns that have dominated California airwaves and totaled up to $218 million in spending.
Those ads are becoming increasingly vitriolic. Both sides have chosen to air gripes and attacks designed to swing support in their direction. A pair of ads concerning Prop 27 have hit the airwaves in California. The arguments and information given might confuse observers.
What’s true? What’s not? Are claims being exaggerated? Does any of this make sense?
Let’s break it all down.
Opponents Claim Profits Will Leave CA if Prop 27 Is Passed
The advertisement, released July 22, utilizes fear of outsiders to appeal to voters. Beneath the sportsbooks shown in the ad are the cities where they are headquartered: New York and Boston. The message is clear: The motives of non-California companies are not to be trusted.
The ad, funded by supporters of Prop 26, makes these controversial claims:
- Out-of-state gambling corporations wrote Prop 27
- Those same out-of-state corporations are funding the marketing campaign to pass Prop 27
- 90% of profits will go to out-of-state corporations (presumedly BetMGM California, FanDuel California, and other sportsbooks)
- Only a “tiny share” of sports betting tax revenue will go to homeless and “even less to tribes”
- “Loophole” promotional costs item in Prop 27 will serve to reduce revenue that goes to California tribes
“Hidden agendas, fine print, loopholes … they didn’t write it for the tribes and the homeless. They wrote it for themselves,” the ad says.
Supporters List ‘Homelessness’ as Reason to Support Prop. 27, Criticize Large Tribes
In this ad, which was released Aug. 1 and presented in part by BetMGM, proponents of Prop 27 explain that non-gaming tribes have “been left in the dust” by the larger tribes with casinos and gaming in place. According to the ad, those tribes have reaped “billions” in revenue and done nothing to help smaller tribes or the citizens of California.
The ad shows a glitzy casino when talking about the wealthy tribal nations in California that support Prop 26. Then, when the ad shifts to discuss smaller tribes, it shows a rickety trailer and abandoned automobiles, apparently on small impoverished tribal lands.
The ad goes on to claim:
- Prop 27 will “fund permanent solutions to homelessness”
- Prop 27 will assist every tribe in California
The video calls out the Barona Band of Mission Indians and Santa Ynez Band of Chumash Indians specifically for “attacking Prop 27.” It even shows unflattering photos of Barona Beth Glasco and Kenneth Kahn, the leaders of those two tribes, respectively. According to this ad, those two leaders represent large tribes looking out only for themselves.
According to the messaging, Prop 27 is a “game-changer” that voters should pass to address critical social issues and to level the playing field.
Fact-Checking Yes on Prop 27 and No on Prop 27 Advertisements
Vote No on Prop. 27 Claims
Out-of-state gambling corporations wrote Prop 27: This is true. While propositions can come out of the legislature, this one came from the mobile sportsbook companies. Jason Robins, CEO of DraftKings, recently said: “The tax rate, everything is set in a very reasonable way because you can actually write the whole piece of legislation on the ballot, which is nice.”
Out-of-state gambling corporations are funding marketing to pass Prop 27: Yes, that’s true. But not surprising, as corporations in all industries will use their vast resources to lobby for legislation to help them enter new markets.
90% of profits will go to out-of-state corporations: There is really no way to know this early whether a California sports betting market will unjustly support out-of-state sports betting operators. The fact is: Operators will be required to pay tax rates, just like any corporation does in a state where it does business. Whether that will be at the 90% level, compared to tax revenue that goes to in-state tribes and social programs, we just can’t know yet.
IF CA HAS SPORTS BETTING … Potential California Sportsbook Welcome Promotions
Only a small portion of sports betting tax revenue will go to homeless programs: The topic of homelessness is a hot-button issue in California, where some see income disparity as a serious social crisis. Opponents of Prop 27 say very little of the tax revenue that will go to address the problem.
It is true, based on how tax revenue is divvied in other states, that a minority of the revenue is earmarked to social programs, compared to a general fund, for example. Also, you could technically claim “little” is going to homelessness compared to the overall revenue earned by sports betting operators even if the figure is in the millions.
A loophole exists in Prop 27 that allows corporations to not pay taxes on money spent to acquire customers: Prop 27 does allow sports betting operators to deduct a portion of the money spent on bonuses and offers from its taxable amount. Many states do the same, though some have regretted it, and others have introduced legislation to fix that. It remains to be seen if California, which is the fifth-largest economy in the world, would be impacted negatively by a policy that allows sportsbooks to reduce taxable revenue. Calling it a “loophole” is misleading.
Verdict? MOSTLY TRUE
Vote Yes on Prop. 27 Claims
Prop 27 will permanently fund solutions to homelessness in California: There’s a reason people use fear in messaging and politics: It happens to work. In this case, pro-Prop 27 groups are using the fear of homelessness and the issues attached to it (mental health, for example) to scare citizens into voting for Prop 27.
Still, in the sense that “permanently fund solutions” means that this prop will make it so state tax revenue will always go toward trying to help the homeless population in some way, this is true.
Prop 27 will assist every tribe in California: If Prop 27 is passed and the associated sports betting laws are implemented, all tribes, regardless of size, will have an opportunity to earn revenue. The smaller tribes think larger tribes don’t want competition, while the larger tribes want to have more control over the way sports betting is rolled out in California.
Larger tribes oppose Prop 27 because they are selfish: It’s true that most of the larger tribes in California oppose Prop 27. It’s true that those tribes already earn significant revenue from gaming in the form of casinos and resorts. However, just because those groups are looking out for their interests, doesn’t mean the tribes are selfish.