november 2022 VOTER GUIDE
NO ENDORSEMENT ON PROPS 26 & 27
Dueling Gambling Measures
These two measures are competing over billions of dollars in revenue from sports betting. One is supported by Native American tribes, and the other is supported by gaming corporations like DraftKings and FanDuel. Though both campaigns are billing these props as solutions for solving the homelessness crisis, neither one will actually move the needle. The state’s sports betting industry is projected to be worth $3 billion, and while the extra money from both propositions’ tax revenues sounds nice for the state, the spending “plans” for how those revenues would be allocated are vague. We’re not endorsing either one because we’d like to see more nuanced plans for addressing homelessness at the state level.
The Context
While gambling has been illegal in California for years, the passage of California Proposition 5 in 1998 allowed Native American tribes to install gambling devices like slot machines in their casinos. This, combined with the fact that tribal casinos don’t have to pay corporate income tax, created a great deal of political power for them, as it generated money for them that they could then leverage as spending power in political races. Now, gambling is a multi-billion dollar industry.
Sports betting is still illegal in most of California, but after a 2018 US Supreme Court decision struck down a federal anti-gambling law, the race to define how legal sports betting will work in the rest of the state is on. Prop 26 would legalize sports betting only at tribal casinos and is supported by over 50 tribes. Prop 27 would legalize sports betting anywhere, including online, and is supported by sports betting companies. This is essentially a battleground on which Native American tribes and massive corporations are duking it out over who will tap into the probably tens of billions of dollars that stand to be made from the sports betting industry annually.
The Money
This is an expensive race for a massive pot of gold. Both campaigns are still fundraising fast, and have smashed records for California campaign financing. Together, Prop 26 and their allies have raised over $160 million, while 27 and their allies have raised over $190 million.
Both would generate massive tax revenue for California, as would be the case with the creation of any new industry. Since Prop 26 limits sports betting to just tribal casinos, it would generate less revenue overall but more for the tribes, which they probably deserve. Prop 27 would generate much more revenue overall and open the door for sports betting companies like FanDuel and DraftKings, which already have massive deals with professional sports leagues, to get the majority of the funds generated by the “Holy Grail” of sports betting—aka, California.
Additional Details
With great revenue generation comes great regulation: while legalizing sports betting could create tax revenue reaching the mid-hundreds of millions annually, it could also cost the state tens of millions in new regulatory costs.
Support & Opposition
Prop 26, a signature-gathering initiative, is supported by 50+ Native American tribes, but opposed by the gaming companies putting on the other proposition. Prop 27 is funded and supported by seven US sportsbooks, including Bally’s, BetMGM, DraftKings, Fanatics Betting & Gaming, FanDuel, Penn National/Barstool Sportsbook, and Wynn. The companies have gathered 1.6 million signatures. This measure is, likewise, opposed by the 50+ tribes who signed on for the other prop.
Paid for by TogetherSF Action. Not authorized by any candidate or a committee controlled by a candidate. Financial disclosures are available at sfethics.org.
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