If Prop 27 passes this November, legal online sports betting could be live in California by September 2023.
That’s according to Anita Lee, the principal fiscal and policy analyst for the California Department of Justice, who spoke at a joint hearing of the California Assembly and Senate Governmental Organization committees on Wednesday. The two California sports betting initiatives were discussed at the hearing. Supporters of Prop 27 and Prop 26 also aired their opinions on the future of California sports betting.
Prop 26 and Prop 27 have caused tremendous rancor from both sides. They’re pitting large tribal governments against smaller California tribes. Meanwhile, out-of-state sports betting companies and big CA tribes spend millions of dollars on advertising. The election is Nov. 8, 2022, and voters can support one, both, or neither of the proposals.
If passed, Prop 26 would authorize only in-person sports betting at California tribal casinos or the four California horse racetracks. Prop 27 would allow online sports betting operated by mobile sportsbooks in partnership with California tribes.
All official supporters of the two proposals were allowed 10 minutes for a prepared comment. A question-and-answer session following from members of the two committees followed. Later, a public comments period was allowed.
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Prop 27 Could Launch CA Sports Betting By Sept. 2023
The most revelatory information from the 90-plus-minute hearing came from Lee regarding the timeline of the launch of California sports betting under Prop 27.
That would allow Californians to wager on sports legally by the early stages of the 2023 NFL season. California is the fifth-largest economy in the world. It would need to create a new state regulatory commission to oversee online and retail sports wagering before it launches.
Details of what Prop 27 proposes for a CA sports betting:
- Legal sports betting for individuals 21 years of age or older
- Sports betting permitted off tribal lands no later than September 2023
- Sports wagering on professional and college teams, including in-state schools
- Prop 27 would allow wagering on entertainment awards shows (such as the Academy Awards)
- Licenses would be granted only to operators who are currently active in at least 10 other states
- Operators would pay 10% of adjusted gaming revenue to state after subtracting promotions and losses
- Portion of monthly tax payments paid in advance by tribes when the license is applied for ($10 million to get license, $1 million at renewal)
- Sports betting companies would pay $100 million for licensing toward future earnings, and $10 million at renewal
- Tax revenue breakdown: 85% for homelessness, 15% to tribes not involved in sports betting
- Create new unit for CA Dept. of Justice to regulate online sports betting
The group of Prop 27 supporters at the hearing included a California tribal leader, a workers union representative, the executive director of a California card rooms organization, and the CEO of a homelessness non-profit organization.
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Estimated State Tax Revenue Under Prop 27
Lee predicted state tax revenues under Prop 27 to be in the range of $100-450 million, but “not to exceed $500 million.” Some detractors question whether the 10% tax rate is too low, considering New York charges 51% for sports betting.
Citing that “homelessness is a generational problem in our state right now,” Prop 27 supporter Kurt Oneto, the lead government law lobbyist at Nielsen Merksamer, pointed out that under new sports betting laws, revenue would still need to adhere to established guidelines for spending on that issue based on need.
Senator Anthony J. Portantino, one of two committee members leading the hearing, pointed out that California can allocate funds to homelessness based on the current formula and homeless count. It could not go to only the largest tribes and cities.
Tribal Chairman: ‘Mobile Sports Betting Is Coming’
Jose Simon III, Chairman of Middletown Rancheria of Pomo Indians in rural Lake County, was the tribal leaders to speak in favor of Prop 27. The Middletown Rancheria of Pomo Indians is one of three California tribes to publicly endorse Prop 27. The other two: the Big Valley Band of Pomo Indians and Santa Rosa Rancheria Tachi Yokut Tribe.
“Mobile sports betting is coming,” Simon said. “I stand alone. This is one issue (smaller tribes) stand separate on, but make no mistake: I am a tribal leader and I work for tribal issues. On many other items we stand together. I heard today (the word) ‘division’ … there is no division. This is an opportunity for us to make a sovereign decision for our tribe.”
“The 1999 compact laid out for us how to make us more profitable,” Simon continued. “Prop 27 is another step toward that.”
Card Rooms Advocate: ‘Poison Pill Hidden Inside’ Prop 26
Shavon Moore-Cage, from American Federation of State, County & Municipal Employees District 36 and representing the City of Hawaiian Gardens, lambasted Prop 26.
“We (are) strongly opposed to Prop 26 because of a poison pill hidden inside of it. (Prop) 26 threatens 32,000 jobs, and $5.6 billion in economic output,” Moore-Cage claimed.
That poison pill is a provision in Prop 26 that expands the Private Attorneys General Act, which would allow tribes to hire private attorneys to sue card rooms in potentially costly lawsuits that card rooms worry could put them out of business.
Moore-Cage called those lawsuits “frivolous lawsuits” and said that Prop 26 “attacks local card rooms.”
Hawaiian Gardens is home to Hawaiian Gardens Casino, one of the state’s most prominent card rooms. California card rooms are generally in favor of Prop 27. Beyond expanding the PAGA, Prop 26 could further eat into card rooms’ customer base by offering another in-person betting option. There used to be well over 100 card rooms in California. As of August 2022, only 59 are operating.
Moore-Cage stressed the importance of card rooms on tribal lands. She said customers and members are generating income for the local tribal nations.
“If these local card rooms are closed, it will be detrimental to the local tribes, which fund vital programs,” Moore-Cage said.
“We are not anti-Native American tribes,” Moore-Cage continued, “We want them to thrive, but (Prop 26) threatens others, (and) places others at risk in California.”
Prop 26 Supporters: Tribal-Friendly Gambling Laws Have Made a ‘Transformative Impact’
Other California tribal representatives urged passage of Prop 26. They say the current tribal-friendly gambling laws have had a “transformative impact” on tribes based on revenue sharing.
The supporters present at the hearing included representatives of California Nations Indian Gaming Association, the Pechanga Band of Mission Indians, the Yocha Dehe Wintun Nation, the Santa Rosa Band of Cahuilla Indians, the Kawaiisu Tribe of Tejon, the Ione Band of Miwok Indians, and the executive director of a Sacramento homelessness non-profit organization.
According to supporters, California has received more than $1.6 billion for social programs since tribal-state gaming compacts went into place in the 1980s. They claimed that figure includes a total of $25.5 million to run elders programs, repair buildings, housing, youth programs, support welfare child programs, and fire prevention, as well as land stewardship, in one southern tribal land alone.
One supporter claimed that Prop 26 “would nearly double the funding to small tribes.” He also claimed it would continue to assist the 47 tribes in California that do not have gaming in the form of card rooms or casinos.
Tribal Sovereignty at Stake for Opponents of Prop 27
At issue is the California Solutions to Homelessness and Mental Health Support Act (also known as Prop 27). Opponents point out it is backed by prominent online sportsbooks.
Opponents to Prop 27 claim it breaks the promise California voters made to tribes more than 20 years ago. They say the state entrusted CA tribes to make their own decisions regarding gaming issues. The issue of Prop 27 is tied to tribal sovereignty for these opponents.
“Massive expansion to online gambling assaults our sovereign rights,” said one of the Prop 26 supporters.
Opponents make the charge that Prop 27 was written by out-of-state sports betting corporations that are now pumping hundreds of millions of dollars into California in the form of ads to gain support for a measure that would largely benefit those companies.
Future public hearings are not planned at this time. State Senator Bill Dodd, the second committee member leading the hearing, did say a schedule may be made available in coming weeks.