The two sports betting ballot initiatives Californians can vote on this November take very different approaches to problem gambling.
Proposition 27, the California sports betting proposal that would legalize online wagering, lays out strict guidelines for regulators and operators. However, it doesn’t allocate any tax revenue to help stop the problem.
The initiative’s selling point is that the tax revenue will be used to alleviate the state’s homelessness problem. Instead of siphoning money from its main purpose, Prop 27 enacts more specific regulations to fight the problem from the start.
Proposition 26, on the other hand, takes the opposite approach. This ballot initiative would legalize in-person betting at four horse tracks and at California tribal casinos.
Regarding responsible gaming, the proposal left leeway in its regulatory framework. But it will use allotted tax revenue to fund programs to help addicted gamblers.
Prop 27 problem gambling initiatives
In the 63-page initiative, the sections devoted to protecting problem gamblers can be broken up into four categories:
- Age verification
- Responsible gaming mandates
- Advertisement/Marketing mandates
The first, and arguably the most important section of the consumer protection section is how the initiative keeps minors from betting.
By keeping underage children from betting on the apps, operators can lower problem gambling rates before it becomes a problem.
One study from McGill University in Montreal said underage gambling was linked to increased delinquency and criminal behavior, poor academic performance, higher rates of school truancy and dropout and disrupted familial and peer relationships. Therefore, ensuring children stay off these apps is of the utmost importance.
Prop 27 requires operators to use “commercially reasonable” efforts to verify the age of the bettor. It also must display a message on its website stating that it’s illegal for minors to wager.
At first glance, these regulations look very lax. But under this initiative, an operator can only be licensed if it also operates in 10 other states. As a result, only the largest and most reliable operators will be doing business in the Golden State.
In the 20 other states where online sports betting is legal, underage betting is a rare occurrence. Additionally, youth gambling rates haven’t changed much either. Based on the data from other states, and the requirement to be in those states to obtain a license, it’s unlikely California faces an underage gambling issue.
Furthermore, as technology improves, operators will have more tools at their disposal to verify identities.
Responsible gaming mandates
Under the regulatory guidelines of Prop 27, all operators must display a link on their webpage dedicated to responsible gaming.
The link will take the user to a page that shows the following information:
- Tools for imposing voluntary self-restrictions on betting activity
- A prominent message displaying the problem gambling helpline
- Link to an organization that provides more information on problem gambling
These measures are all about overall awareness. As long as customers know the warning signs, they can get help if needed.
Additionally, companies must train their employees on how to identify a problem gambler.
This is the process most problem gamblers use once they decide they have a problem. When a bettor joins the self-exclusion list, that person is no longer allowed to wager on the site for a predetermined amount of time.
Consequently, Prop 27 mandates that operators give customers an avenue to self-exclude themselves. Additionally, it requires that regulators establish a list of those who self-excluded. The list will be updated and accessible to all licensees.
Towards the end of the consumer protection section of the initiative, it breaks down all of the restrictions placed on a company’s advertising efforts.
Regulators do not need to approve any marketing material before sending it out. But there are four guidelines all advertisements need to abide by:
- Can’t purposefully target minors or self-excluded bettors
- Must disclose the identity of the operator
- Provide links to problem gambling information
- It can’t be deceptive or misleading to a “reasonable consumer”
Additionally, sportsbooks must maintain a copy of all advertisements for at least three years.
Prop 26 problem gambling initiatives
The tribal sports betting ballot initiative was much shorter than the online operator proposal. It was just 11 pages.
Its sheer length keeps it from getting too deep into the regulatory weeds. But it hit on the two main ways it hopes to stop problem gambling.
California Sports Wagering Fund
The proposal would create the California Sports Wagering Fund. The CSWF is funded by tax revenue from the horse tracks’ sportsbooks.
Tribal casinos must renegotiate their compacts and then make revenue-sharing payments. Their sports betting tax revenue will not be in the CSWF. California horse racing venues, however, will contribute.
The state will take 15% of that fund and send it to the California Department of Health. The agency will use the funds for the research, development and implementation of programs and grants for problem gambling prevention and mental health. It will also give county and city governments grants to address the same issues.
Like its counterpart, Prop 26 heavily focused on how its operators would market their sportsbooks. The initiative laid out three main guidelines for an operator’s marketing content:
- Operators can direct advertisements only to an audience that is reasonably expected to be at least 21 years old.
- Direct marketing initiatives must use a method of age confirmation to ensure the recipient is at least 21 before engaging with the communication.
- Advertisements can’t encourage minors to bet nor make them attractive to children.
Why are the initiatives so different in their approach?
The simplest explanation is that it all stems from the different mediums used for sports betting.
With less human interaction, comes less leeway for regulatory grey areas. Therefore, Prop 27 needed to be specific with what it allows operators to do.
The inverse is true for Prop 26. Any sportsbook employee can check an ID, which makes it tougher for minors to place a wager.
Additionally, the brick-and-mortar environment is easier to plaster responsible gaming signs around the sportsbook. As a result, there’s less of a need to put those requirements in writing.
Ultimately, both frameworks take positive steps toward stopping problem gambling and encouraging responsible wagering. Neither initiative strays too far off the beaten path from other states’ setups.
Since there isn’t a big problem with problem gambling in other states, there’s no reason to assume there would be one in California.