We’re just one month out from a vote on California online sports betting under Prop 27. If it passes, sports bettors in the Golden State would be able to bet fast, easy, and legally on sports events across the state without ever leaving home.
That would mean online betting on traditional sports like football and baseball by September 2023.
And that’s not all.
Esports and awards show betting would also fall under the ballot measure’s definition of “competitive event.”
That’s right. The state that gave rise to the US video game industry and the silver screen could finally allow betting on events produced by both industries, should Prop 27 become law on Nov. 8.
Esports, or video game competition, is the fastest-growing nontraditional sports arena in the world, with monthly viewership in the US up 11.5% to an estimated 29.6 million viewers in 2022. That viewership is expected to grow at least 6% to 31.4 million monthly viewers in 2023.
Awards show viewership is nothing to scoff at, either. Oscars viewership alone topped nearly 17 million this year. That’s about 15% of the viewership of the 2022 Super Bowl (112 million).
Not that the payout from nontraditional sports betting exactly rivals traditional sports. That’s especially true in California, which is home to 15 pro franchises worth a combined $43 billion.
But the home of Atari, Activision Blizzard (Call of Duty series), and both the Oscars and the Golden Globes would be a fitting place for esports and awards show betting. And the handle could be surprising.
There is, after all, a reason Prop 27’s writers included it in the initiative.
Prop 27 and Awards Show Betting
Four states (New Jersey, Michigan, Indiana, and Louisiana) allow betting on awards shows.
New Jersey, which dominated the US mobile sports betting market from 2018 until New York’s mobile launch early this year, took in nearly $750,000 in Oscars handle when it launched awards show betting in 2019.
But New Jersey isn’t California. The Golden State dominates the Garden State in both population and geographic size.
With California’s country-leading population of just under 40 million, plus its year-round tourist population, California is poised to top the US in sports betting handle and revenue if Prop 27 passes.
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How much awards show betting revenue is possible in California would depend on which events bettors could access under state regulation. Betting on the Oscars, the Golden Globes, and the Emmys — all three based in California — would mean more revenue than betting on the Oscars alone.
Another revenue factor is the simplicity of awards show betting. Oscar betting is all moneyline: A bettor picks who wins or loses, and that’s it. That could be an attractive option for first-time California online sports bettors. Or just folks who don’t care who will make the NFL playoffs next year.
How sports betting operators would offer awards show betting would remain to be seen. Could you imagine a DraftKings California app with an “Awards Show” tab?
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Prop 27 and Esports Betting
California is home to some of the top names in the US video gaming market.
Activision Blizzard (Call of Duty franchise) is based in Santa Monica. Electronic Arts (Sims, Apex Legends) is in Redwood City. Each has generated millions of players across the US and the globe.
Tournaments and other competitions that have evolved from these player interactions are now massive profit generators called esports. Under Prop 27, California would become the latest state to allow legal sports betting on esports competition.
The payoff could be significant. A June 2022 press release from Globe Newswire says the US video game market will reach $48.2 billion by 2027 — easily surpassing the $43 billion combined value of California’s top 15 pro teams right now.
California would receive a piece of that action.
What kind of bets (esports offers more interactive ways to bet than traditional sports betting) would be allowed under Prop 27 would be up to the state of California to decide. But the potential for serious profit, and recurring state revenue, is there.
Prop 27 and Online Sports Betting Regulation
All online sports betting under Prop 27 would be controlled by a state Division of Online Sports Betting Control.
Prop 27 would amend the California state constitution to create the division, which would have “exclusive power, authority, and jurisdiction to implement and enforce” online sports betting in California, according to the ballot measure.
Besides deciding what kinds of online bets would be accepted and which operators will be licensed to accept those bets, the division would ensure:
- Online sports betting is limited to individuals 21 years of age or older
- Betting is taxed and enforced, generating potentially millions of dollars to fight homelessness and expand mental health support in California
- Consumer protections are in place for patrons
- Illegal activities, such as event fixing, are identified and prosecuted
- A 15% surcharge is placed on bets made through an illegal or tax-exempt online platform, with those bettors potentially fined up to $1,000 for each day of nonpayment
There would be some limits on the division’s power, too, including its inability to limit promotional credits to bettors.
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Prop 27 and Exemption From K-12 and Community College Funding
Prop 27 sets out in clear terms how state revenue from online sports betting revenue is spent. That revenue — as much as $500 million a year, according to top-end estimates from the California Legislative Analyst’s Office — would go into a newly created California Online Sports Betting Trust Fund.
Regulatory costs to the state would come off the top. The rest of the money be split two ways for two specific purposes:
- 85% would be used to address homelessness and mental health through funding to cities and counties for housing, rental assistance, support services, mental health and substance use disorder treatment.
- 15% for tribes not involved in online sports betting. This funding could be used for tribal government, health, economic development, or other needs.
As a result, Prop 27 exempts state revenue generated from online sports betting from a California constitutional requirement for minimum funding of K-12 and community college education.
The California Constitution (Article 16, Section 8) says “from all state revenues there shall first be set apart moneys to be applied by the State for support of the public school system and public institutions of higher education.”
Not under Prop 27, which would amend Article 16 to say that funds created by Prop 27 “shall not be considered General Fund revenues for the purposes of Section 8.”
Could Prop 27 Help Fund Tribal Schools?
That would certainly ensure funding forged by online betting partnerships between tribes and sports betting operators under Prop 27 goes to its intended purpose. But it would also do something else: Free up revenue for tribes to use on their own schools and tribal colleges.
There is a need. According to a 2020 ProPublica story co-published with The Arizona Republic, schools managed by the Bureau of Indian Education, or BIE, are “the only option” on many rural reservations.
Tribal colleges are also at stake. A 2021 CalMatters report says tribal colleges are in demand but underfunded “as Native communities face economic fallout from the pandemic.”
“Unaccredited tribal colleges aren’t currently eligible for any state or federal educational funding, including COVID-19 relief funds,” the report said. “That means new tribal colleges often have to rely on funding from tribes and other private donations.”
Prop 27 would create new revenue for gaming and non-gaming tribes alike that could, potentially, go toward tribal education. The Prop 27 campaign hasn’t highlighted this in its ad campaign, but it is true.
A Final Word
How much Prop 27 would ultimately benefit the state and its tribes remains to be seen.
The new online betting division that would regulate wagering under the law will certainly have plenty of betting options to place before the public. That could bring in billions of dollars a year in handle, and millions in new state funding.
For California, it seems, the more options may be the better bet — whether it’s on football or an actress in a ball gown.
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