California voters will have two sports betting initiatives on the ballot this fall: Prop 26 and Prop 27. Both would potentially legalize California sports betting. So does it matter which one passes, or even if both pass?
The answer depends a bit on if you are an online sports bettor, a California tribe with gaming on its land, or a top-ranked sportsbook vying for a piece of California’s potential sports betting market.
It also depends on which prop receives the most votes.
According to UC Davis law professor and federal Indian law expert Katherine Florey, both sports betting initiatives could potentially pass under California constitutional law if each receives over 50% of the vote Nov. 8. The prop with the most votes would prevail on any conflicting issue (think online sports betting — we’ll get to this later), but the runner-up could also score some wins.
“To the extent that the propositions do not directly conflict with each other, both would go into effect,” Florey said in an email to California Casinos. “A court would likely have to sort out which parts of the two propositions conflict.”
And the possibility of both Prop 26 and Prop 27 passing? It is better than some may realize.
A voter will be able to cast their ballot for both proposed initiatives if they so choose.
“There are no restrictions — a voter can vote for either, both, or none,” Florey said.
Prop 26 vs. Prop 27: Similarities and Differences
Where they differ most is on what type of sports betting they would allow.
Prop 27 would allow online and mobile sports betting. In-person-only sports betting at tribal casinos and four state-licensed
horse race tracks would be allowed under Prop 26. Prop 26 would also prevent FanDuel and DraftKings from operating in California. So, if both pass, the presence of online sports betting would be a legal sticking point.
California tribes would profit from both initiatives, although only Prop 27 would allow online partnerships between gaming tribes and nationally branded sportsbooks like FanDuel and DraftKings.
How Would California Tribes React if Both Prop 26 and Prop 27 Win?
According to Florey, “it is very likely that some tribes would get involved” if issues were raised in court pending passage of both Prop 26 and Prop 27 in November.
She is less certain of what the legal challenge would look like.
“From what I have seen, the arguments tribes are making against Prop 27 are that it is poor public policy and undermines tribal sovereignty, not that it is legally shaky in some way,” Florey said. “But the measure is pretty long and complex, and maybe tribes could find some ground for challenge.”
Florey — whose legal study is partially focused on federal Indian law — said she thinks any potential challenge would be brought by gaming tribes (“non-gaming tribes don’t necessarily have a stake in it”) even if gaming tribes aren’t all on the same page.
“Diversity of opinion wouldn’t stop some tribes from filing suit,” she said, “but it might mean they’d have less money and resources to do so.”
IF PROP 27 DOES PASS … Here Are the Likely Sportsbooks to Come to California
Could This Go to Federal Court?
Gaming tribes must have an agreement — called a tribal-state gaming compact — with a state before they can conduct gaming in that state. The compacts are required under a 1988 federal law called the Indian Gaming Regulatory Act, or IGRA.
What’s more, these compacts require federal approval before they can take effect.
But Florey expects any challenge to Prop 26 or Prop 27 to originate in state — not federal — court.
“This would be completely a question of state law,” Florey said in her email. “Unless there was some kind of challenge under a federal preemption or federal constitutional principles, there wouldn’t really be a way to get it into federal court. So this would almost certainly be heard in state court.”
California is certainly no stranger to gaming, especially tribal gaming. There are 82 casinos in the state, all run by tribes. What California lacks is a state legal precedent for sports betting.
California state court action could change that.
When Would Sports Betting Launch With Prop 26 and Prop 27?
It’s uncertain which proposition could bring sports betting to California first.
The timetable for launch under Prop 27 would at least somewhat depend on regulatory rules proposed in statute, Florey told California Casinos.
“I think that’s another thing that just varies in terms of the process that the proposition sets forth for regulation, and how motivated the various (parties) are to get something done quickly,” she said.
Under Prop 26, a tribal-state gaming compact would have to be negotiated — or renegotiated — with the state, signed by state and tribal officials, then approved by the US Department of the Interior before sports betting could ever launch on California tribal land.
The state itself would oversee the launch of sports betting at licensed racetracks.
California Sports Betting Initiatives, Explained
Prop 26 has its supporters. Among them are at least 30 tribes who are behind the Yes on 26 campaign pushing for passage of the initiative.
Under Prop 26, California tribes with a federally approved tribal-state gaming compact would be able to offer retail sports betting and add table and dice games, like craps and roulette. The four licensed racetracks could operate in-person sportsbooks.
American Indian Chamber of Commerce of California President Tracy Stanhoff has called Prop 26 “the responsible approach to authorizing sports wagering because it’s modeled off the successful model that Indian tribes have used to operate gaming for more than 20 years. … The revenue generated by this measure will bring tens of millions of dollars each year to our state budget and local governments alike. It will also support tens of thousands of jobs. It’s a win for tribes and all Californians.”
That said, Yes on Prop 27 seems to have the edge. Online sports betting handle has historically been hard to beat in legal states. Sports bettors typically like to bet without driving to a casino to wager. Prop 27 will allow them to do that.
Gaming tribes and non-gaming tribes would also stand to gain from Prop 27. No online sportsbook could operate in California under the proposal without a partnership with a gaming tribe. The tribes could also operate independent sportsbooks if they wanted, without partnering with a national brand.
Non-gaming tribes would not be able to offer sports betting or partner with someone else to offer sports betting, but they would benefit — “15% of the measure’s tax revenue will be allocated to California Tribes who don’t participate in the online marketplace,” according to the campaign behind Prop 27.