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  • Writer's pictureJHON REYMOND camba

What Is Prop 27 in California?

‘What is Prop 27’ – a question we’ve seen from readers in the last few weeks. Prop 27 was a proposition, introduced in California, to determine whether online and mobile sports betting should have been legalized for residents 21 years of age or older. The proposition was heavily voted against – and online sports betting will now remain illegal in California in most cases.


Prop 27: An Introduction

Prop 27 – Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative – was recently on the ballot in California. It was designed to allow residents to vote on whether to legalize online sports betting or not. The ballot was defeated, with 82.28% of the vote against the proposal. As such, sports betting will remain illegal in the state in most scenarios. We’ll explain more about what the proposition involved on this page and what is prop 27 exactly.


California and Gambling: A Brief Overview

Gambling laws in California are complex; currently, the California Constitution and statutes define what specific forms of online and offline gambling are allowed within state borders. At the time of writing, the California Lottery, card rooms (poker), betting on horse racing (in-person) and gambling within Native American-owned land-based casinos is legal. Provided they hold the correct licensing, Californian land-based casinos and other casino establishments can offer slot machines, lottery games, and a few casino table games.

However, sports betting has never been legal in California although it’s not technically illegal for residents to place bets at sites outside of the US, and Proposition 27 was introduced to see whether voters wanted to legalize sports betting. The ballot was defeated, with 8,821,836 voting against it; just 1,899,784 voted in favor.

As a result of this ballot, sports betting – regardless of whether bets are placed online or offline – remains prohibited in the state of California. This was seen as a major disappointment by some pro-gambling groups in the US, while responsible gambling charities applauded the move.


What Would The Prop 27 California Law Have Done?

The Prop 27 California ballot was designed to legalize and regulate sports betting within the state. However, the proposal was more complex than this, and a number of proposals were put into place. Below, we’ll take a look at what Prop 27 would have done, had it successfully passed.


Allow 21+ Gamblers to Bet on Sports

The main goal of Prop 27 California was to allow gamblers – over the age of 21 – to place real money bets on sporting events online. However, there were some caveats; the number of online gambling firms who would have been able to take bets was limited, and special licenses were required. In addition to this, no high school sports bets would have been allowed to be taken.

The proposal stipulated that bettors would not have needed to be in a physical land-based casino or sportsbook to place their online bets. However, bettors would need to be residents within the state of California – essentially excluding tourists and those from outside the state from being able to bet.

It’s unclear whether residents from California with verified online gambling accounts would have been able to have placed bets while in another state. However, from what we’ve seen from other states in the US, it seems highly unlikely that this would have happened.


Allow Tribes to Offer Online Betting

Prop 27 was designed to allow tribes to offer online sports betting; they would have been able to do so under the tribe’s name and branding, provided they received approval from state regulators. However, to receive a valid online gambling license, tribes would have been required to pay a one-time fee of $10 million. There would also have been a renewal fee payable every five years, although the exact amount was not made public.

Supporters of Prop 27 argue that tribes in California hold a monopoly on the gambling market. It’s easy to see how they come to this conclusion, in some ways; with a few exceptions, Native American tribes are the only licensees allowed to run land-based casinos in the state, and some see this as unfair. The future will show whether they can move towards being part of the legal US online casinos industry.


Allow Limited Commercial Betting

Commercial gambling operators – i.e. those not owned by tribes – would have also been able to get in on the action. However, in order to receive a license to accept sports bets, commercial operators would have been required to pay the state of California a staggering $100 million license fee – and there would also have been a renewal fee due every five years.

To regulate the commercial and tribal sports betting operations, Prop 27 proposed creating a new division within the state’s Justice Department. This division would have been responsible for regulating all online sports betting.


Impose a 10% Tax on Gross Revenue

All operators within the state – regardless of whether they were commercial or tribal – would have been required to pay a 10% tax on all their gross revenue to the state. This money would have gone to a number of causes – including helping the homeless – and other sectors such as education, healthcare, and infrastructure.


Creation of a New Fund

Once betting operators had paid the state’s regulatory costs, all the revenue from the 10% tax and licensing fees would have been combined and put into a new fund. 85% of this fund would then have been used to fund homelessness and related mental health programs. An additional 15% would have gone to Native American tribes that are not involved in sports betting – funding their education, retaining their culture, and improving healthcare services.

However, it’s notable that none of the revenue or licensing fees would have been included in the state’s General Fund for allocating money to programs such as public education or healthcare. Instead, it would have been up to the tribes to do so; the state itself would only have used the money to help the homeless and fund mental health services.


Who Supported Prop 27?

Several major backers were in support of Prop 27 – as shown in the table below:

SUPPORTER NAMEREASONBetMGMCommercialBetfair Interactive US LLCCommercialCrown GamingCommercialFanDuel SportsbookCommercial

As you can see, the four major supporters of the proposal were all prominent online or offline gambling companies. They all stood to gain a lot if the ballot was approved, and they would likely have generated hundreds of millions of dollars every year through betting activity.


Who Opposed Prop 27?

Something we’ve seen a lot in the US, when it comes to state ballots around gambling, is that there’s also a lot of pushback against the legalization of online gambling and betting. This was no different with Prop 27, and several responsible gambling charities and legislators were vocal about their opposition to the ballot.

For example, Californians for Tribal Sovereignty and Safe Gambling, along with the Coalition for Safe, Responsible Gambling, led major campaigns opposing the proposition – advising residents to vote against it. Together, they raised more than $240 million which was used to combat the vocal support from betting companies.

Interestingly, the biggest donors to the two groups were the San Manuel Band of Mission Indians and the Pechanga Band of Luiseño Indians – two Native American tribes who run land-based casinos in the state. They were worried about commercial operators coming in and “taking a piece of their pie”, and thus campaigned heavily against the proposal.

James Siva, chairman of the California Nations Indian Gaming Association, said: “Don’t be fooled. These measures are not a fix to homelessness, but rather a massive explosion of gaming that will directly undercut tribal sovereignty and self-sufficiency.”

Another major argument from those who opposed the bill was that it would “eliminate the sovereign right of Californian tribes to operate gaming within the state.” However, many pointed out that tribes essentially hold a monopoly on gambling within California, something many legislators and gamblers aren’t happy with.


Betting in California: The Future

It remains to be seen what will happen in regard to sports betting in California. At a time where much of the US is moving towards legalization of sports betting – both online and offline – many industry insiders are disappointed that the ballot wasn’t successful. However, it’s important to note that state voters voted heavily against it – so it’s unlikely we’ll see a new ballot on the cards any time soon.

At the time of writing, sports betting has been legalized – or legislation has been drawn up to regulate it – in 36 states, plus Washington D.C. Five of these states held ballots to determine whether sports betting should be legal, namely New Jersey, Arkansas, Colorado, Maryland, and South Dakota.

For now, it looks very likely that there will be no change in California; advocates argue that this allows tribes to maintain their monopoly on the gambling market in the state, while critics state it’s good, as residents are less likely to develop gambling issues.

The most viable option for California to run a new ballot on the proposition is if and when a new governor takes office; however, even then, the process will likely take many years – and again, it will certainly face fierce opposition.


Questions About Prop 27

Prop 27 was designed to allow California voters to decide whether or not sports betting should be legal in the state. They overwhelmingly voted against the ballot – and it looks unlikely that this will change anytime soon. Below, we answer some common questions surrounding Proposition 27.


What is Prop 27?

Before Prop 27, Californian land-based casinos and other gambling businesses were prohibited from taking sport bets. Proposition 27 was created to let voters decide whether to legalize sports betting in the state or not – and voters voted heavily against it.


Is sports betting still illegal in California?

Yes, sports betting in California remains prohibited. The gambling laws in California remain complex, and only a few tribal land-based casinos. Despite being seen as a largely “progressive” state, California is lagging behind most other states in the US when it comes to the legalization of sports betting and online gambling.


Who supported Prop 27?

Prop 27 had several supporters, most of whom were commercial gambling businesses wanting to cash-in on the sports betting market within the state. For example, BetMGM and Betfair were both advocates of the proposition – putting tens of millions of dollars into the cause.


Who opposed Prop 27?

Responsible gambling charities and tribes were against Prop 27; the former saw it as a risk for problem gamblers. The latter felt as though it would risk their land-based casino operations if commercial operators were allowed to come in and take bets. Hundreds of millions of dollars were donated by critics to help defeat the ballot.


What happens next?

It’s unclear what happens next. As Californians voted heavily against Prop 27, it’s highly unlikely that we’ll see another ballot anytime soon. Sports betting will likely remain illegal under California law for a while.


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