With two months to go before California voters decide the fate of two sports-betting initiatives, lines continue to be drawn. Five statewide elected officials have voiced concerns about Proposition 27, adding to a growing list of dissidents.
Prop 27 would legalize online sports betting in California. It requires sportsbooks to partner with one of California’s 109 federally-recognized tribes to offer their service to the public.
Proponents emphasize that 85% of the tax revenue generated would go to homeless and mental health support programs. Opponents point to the low tax rate (10%) to remind voters that the majority of the revenue would go to out-of-state operators.
More than 50 tribes oppose Prop 27 but endorse Proposition 26, which would allow in-person sports betting at California tribal casinos and California horse racing venues. Gov. Gavin Newsom, despite not formally endorsing either proposition, rejected claims about homelessness and Prop 27.
Then there is the independent research firm Eilers & Krejcik. They predicted that both props are likely to fail.
Five Democratic leaders voice new opposition to Prop 27
Levying a range of criticisms that include exploitation of the homeless, native tribes, first responders and school kids, five Democratic leaders honed in on the revenue sharing between the operators and the state. The five are all state elected officials.
- Lt. Gov. Eleni Kounalakis
- State Treasurer Fiona Ma
- State Controller Betty Yee
- Superintendent of Public Instruction Tony Thurmond
- California State Insurance Commissioner Ricardo Lara
Kounalakis opposes low tax rate of Prop 27
Kounalakis, who seeks her second term this November, has occupied the relatively light political office of lieutenant governor since 2019. In California, the position has few responsibilities outside of being a stand-in for the governor.
She sits on the Public Higher Education Systems Board and the State Land Use Commission. Both are only incidentally involved in revenues generated from gaming revenue. Of Prop 27, she stated:
“Proposition 27 exploits California’s tribes and our resources while making no real investments in California. Ninety percent of the revenue generated by Proposition 27 would go directly into the pockets of out-of-state corporations while threatening funding for California’s needs. Vote No on 27.”
Her argument fixates on the low tax rate (10%) for mobile operators, which leaves a small profit margin for any services to significantly benefit the state.
This position may stem not just from her current political duties but from a desire to pursue higher office. She has commented that she wants to see a woman assume the California governorship, implying that she’d like it to be her. If so, perhaps brokering a more equitable sports-betting ballot proposition is on her mind.
Ma says Prop 27 won’t really help homeless nor tribes
Ma has served as California treasurer since 2018. In that time, she has brought construction jobs to the state, pushed to increase diversity in corporate boardrooms, and championed the (almost mythical, at this point) high-speed Las Vegas rail.
As chief banker for the state, she has invested in public services with a focus on combating homelessness. Her concern with Prop 27 also hits on the low tax rate as well as the exploitation of the homeless.
“Prop 27 will allow the out-of-state corporations that wrote the initiative to exploit deduction write-offs and loopholes to minimize the amount of taxes that are supposed to help fund homelessness programs or help California’s poorest Native American tribes.”
She also hit on the challenges other states currently face around tax write-offs on promotional play.
“These same out-of-state corporations have promised large tax benefits to other states as well, and those states are coming up short on promised budgets.”
States like Virginia and Colorado have allowed sports-betting operators to avoid, in some cases, the reporting of any taxes in the first year(s) of operation, leading to state budgets coming in well below projected numbers.
Like Kounalakis, Ma has also indicated that a 2026 run for governor is on her mind, which could be a reason her opposition.
Yee calls Prop 27 ‘a bad deal’ for California
Yee has held the office of state controller, which oversees the accounting operations of the state, since 2015. She, unlike the other officials in this group, isn’t running for re-election in 2022.
She is, like the above two women, also eyeing a gubernatorial campaign in 2026.
Yee’s office generally focuses on the financial security of the state. She sees Prop 27’s tax rate tilting the scales firmly toward the out-of-state operators and away from tribes and in-state programs.
“Prop 27 is a bad deal for California. The fine print says 90% of the revenue goes to the out-of-state corporations, who wrote the measure, to pad their profits.”
Thurmond against Prop 27’s exemption on education
Thurmond has championed expanding education services since assuming his position in 2019. His background lies in social work with a focus on youth education. Along with the standard tax rate objection, Thurmond takes Prop 27 to task for its exemption from the state constitution’s minimum educational spending limits provision.
“In 1998, California voters promised our children a guaranteed portion of all new state general fund revenues would go to public schools. But according to the Legislative Analyst, the out-of-state corporations behind Prop 27 exempt their new revenues from the state’s minimum education funding levels, allowing them to send 90% of their profits out of California. That is why I join California educators in opposing Prop 27.”
Prop 27 would hurt tribal first responders, Lara says
Lara has served as the state insurance commissioner since 2018. His office is principally responsible for aiding Californians in natural disaster relief and recovery. Tribal first responders, an already poorly-funded workforce, would suffer greatly in his mind should Prop 27 be adopted.
“Tribal fire departments are part of California’s first line of fire defense and an integral part of emergencies such as wildfires. Prop 27 is bad for California because it threatens to reduce the amount of revenue tribal gaming brings to our state and local governments, including funding for critical public safety services.”
Prop 27 sets aside 15% of gaming revenue for non-gaming tribes. That is the only direct provision for tribal economies. In this way, Lara’s claim continues the general argument that Prop. 27 shorts the state and, most importantly, the tribes who will partner with sportsbooks.
Opposition not against sports betting
These criticisms reflect an overall distaste for the way the legislation was constructed. They’re not against sports betting, per se.
With three of these high-ranking elected officials also considering gubernatorial campaigns, there’s a message here. It may be that Californians deserve a more equitable sports betting measure.