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In-Depth: What's the difference between Prop 26 and Prop 27?

Propositions would legalize sports gambling in California in very different ways
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Posted at 3:47 PM, Oct 11, 2022

SAN DIEGO (KGTV) - Voters have a chance to make California the 31st in the US to legalize sports betting. But two different proposals on the upcoming ballot want to do it in two totally different ways.

Proposition 26, officially called the "California Sports Wagering Regulation and Unlawful Gambling Enforcement Act," would allow in-person sports betting, but only at casinos on tribal lands and a few privately owned horse racing tracks.

It also legalizes games like craps and roulette, which are currently banned in the state.

Proposition 27, called the "California Solutions to Homelessness and Mental Health Support Act," would allow online sports gambling. People could place bets from any phone, computer, tablet, or connected device, as long as the user is within state lines and not on tribal land.

Both propositions include language to safeguard against underage gambling. Both also prohibit gambling on youth sports. Prop 26 takes the extra step of making it illegal to bet on any collegiate game involving a team from a California school.

The two propositions also differ in deciding where the revenue from sports gaming would go.

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Prop 26 sends 90% of the sports gambling profit to the tribes that own the casinos.

The remaining 10% goes to the state as a tax. That money is split. 70% of it goes to the general fund. 15% of the tax will fund gambling addiction programs. The remaining 15% would pay for enforcement and regulation of the sports gaming industry.

Under Prop 27, 90% of all the money bet (after taking promotional offers, prize money, and federal taxes) goes to the companies or tribes that run the online gaming platforms. That could be private companies like FanDuel, Draft Kings, or Bet MGM.

The other 10% of the money bet goes to the state. It would be put in a newly created "California Online Sports Betting Trust Fund."

From that fund, 85% goes to cities and counties to use on permanent housing for the homeless, homeless support programs, and other mental health services. The remaining 15 percent goes to tribes across California that don't have any kind of gaming.

Both propositions say revenue for the state is hard to predict. It could be in the tens to hundreds of millions of dollars.

Right now,30 other states and the District of Columbia offer some form of legalized sports betting.Almost all of them started after a 2018 Supreme Court ruling legalizing sports gambling across the country. Comparing revenue from other large states could give an indication of how much California could make.

New York launched retail sports gaming in 2019 and online gaming in 2022. In just under 3 years, the state has brought in $399.7 million.

Pennsylvania launched sports betting in 2018. It has made $294.9 million in tax revenue.

New Jersey was the first state to legalize sports gaming, starting in June of 2018. Since then, the state has made $256.1 million in taxes.

Illinois launched its legal sports betting program in 2020 and has brought in $166.7 million.

No other state has made more than $100 million from sports gaming revenue in that time.

With so much money at stake, people on both sides of the issue for both propositions have already spent a lot of money to either promote or defeat the issue.

"What we're in the middle of now is the most expensive direct democracy campaign in world history," says Thad Kousser, a Political Science Professor at UC San Diego and the Director of the Yankelovich Center for Social Science Research.

"I think what California must learn to do is follow the money, right? Take a look at who's backing this."

According to filings with the Secretary of State, more than $575 million dollars have already been spent on the two proposals combined to try and sway voters. Commercials for and against each prop have filled the airwaves since before the primary election.

"It's probably not a perfect truth in advertisements," says Kousser. "But we've got a lot of resources, and a lot of voters seem to be figuring out exactly what's behind these initiatives."

According to state election records, a handful of individual tribes including Pechanga, San Manuel, Agua Caliente, and Granton Rancheria have been the biggest donors both for Prop 26 and against Prop 27. Those are some of the largest gaming tribes in California. They would likely benefit the most from having in-person sports gaming legalized.

Gaming companies like FanDuel, Draft Kings, and BetMGM have put up the most money in support of Prop 27.

A handful of individual, private casinos have donated the most to beat Prop 26.

Both proposals need 50% + 1 of the vote to pass. A recent ABC 10News/Union-Tribune Poll shows 43% of registered voters plan to vote "yes" on Prop 26, and 37% planning to vote for Prop 27.

If both pass, there is some debate over what happens.

Traditionally, if two competing proposals pass, the one with more votes takes precedence.

But the language in Prop 27 says they're not "competing" proposals so both can go into effect. Election experts say that would benefit Prop 27 since it would be easier for people to place bets online than having to be at a casino.

Prop 26 does not have any language in its text about what happens if both pass. But experts say if Prop 26 gets more votes, its supporters would likely sue to make sure Prop 27 can't take effect. That would ensure the only sports gaming in the state happens on tribal land.

Kousser says if neither pass, he expects this issue to come up again in future elections.

"It will come back again and again," says Kousser. "There's just too much temptation for the money, especially if California falls into budget shortfalls or deficits."