California’s Prop 26 Is About Much More Than Sports Betting

Written By David Danzis on August 30, 2022

While most voters are aware of the two California sports betting ballot questions, perhaps lesser known is that one of the proposals — Proposition 26 — significantly benefits Golden State tribal casinos in ways that extend far beyond sports gambling.

Besides legalizing in-person sports betting at California tribal casinos and select California horse racing venues, Prop 26 would also permit Native American gambling parlors to offer roulette and dice games. Expanding table games would increase annual tribal casino revenue, which already rivals that of the Las Vegas Strip.

Buried in the fine print of Prop 26 is another perk for California tribal casinos. The initiative contains language allowing tribal casinos to take legal action against California cardrooms on the basis of alleged violations of state gambling laws.

Retail sports betting projections fall short of online expectations

According to an Eilers & Krejcik report, revenue from retail-only sports betting in California would pale in comparison to online or a hybrid of both.

The firm’s report, titled “Battle at the Ballot Box: Analyzing California’s Pending Sports Betting Ballot Measures,” estimates in-person sports betting could net $1.3 billion in annual revenue. Alternatively, online and mobile sports gambling could generate upwards of $2.8 billion on an annual basis.

Should both of the competing initiatives pass on Nov. 8, E&K estimates $3.1 billion in gross gaming revenue, easily making the Golden State the largest market in the country.

Will either California sports betting question pass in November? Don’t bet on it

The details within Prop 26 are why proponents of the November ballot initiative are spending millions of dollars. Millions more are pouring in against Proposition 27, the other ballot question which would legalize online sports betting in California.

Not to be outdone, the seven online operators behind Prop 27 put up $150 million to bolster their campaign.

In total, more than $370 million has been raised in the battle between the two sports gambling measures. The California sports betting campaigns comprise the most expensive ballot initiative contest in U.S. history.

Prop 26 and Prop 27 are about much more than sports betting

However, experts are weary that either will pass in November. Eilers & Krejcik believes both Prop 26 and Prop 27 have a less than 50% chance of gaining voter approval.

So, why are both sides spending millions of dollars on what appear to be losing propositions? Simply put, sports betting is a means to an end.

The commercial operators behind Prop 27 not only get a five-year tax break (which would essentially eliminate their $100 million licensing costs), but they also get a head-start on the real goal: Online casinos in California.

For tribal casino operators, Prop 26 will increase their land-based gambling revenue and put immense economic pressure on competitor cardrooms. And, just like the online operators looking beyond sports betting, California tribal casinos are eying iGaming’s potential.

In the six states where casino gambling and sports betting are available in online capacities, revenue from digital slots and table games outpaces sports considerably. In some cases, the difference is as much as 300%.

Photo by Shutterstock / PlayCA
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David Danzis

David Danzis is a lead writer and analyst for CatenaMedia's network of Play sites, appearing on PlayNJ, PlayCA and PlayOH. He is a New Jersey native and an honors graduate of Rutgers University. As a newspaper reporter for the New Jersey Herald and Press of Atlantic City, David earned statewide awards for his coverage of politics, government, education, sports, and business. After years of reporting on Atlantic City casinos, NJ online gambling and sports betting, his focus is now on emerging gaming markets. David lives in NJ with his wife and two children. When not on the beach, golf course, or snowboarding, David enjoys watching his beloved New York sports teams — Yankees, Jets, Rangers, and Knicks.

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