Allow online sports betting

What did voters decide?

Voters didn’t just reject Proposition 27, they defeated it by one of the largest margins for initiatives, with 82% opposed.

What would it have done?

Prop. 27 would have allowed licensed tribes and gaming companies to offer mobile and online sports betting for adults 21 and older outside Native American tribal lands. Gaming companies — such as FanDuel and DraftKings — could only offer sports betting if they made a deal with a tribe. 

The measure creates extremely high thresholds for gaming companies to do business in California, making it all but impossible for smaller gaming companies to compete. 

The proposition would have created a new division within the state’s Justice Department to regulate online sports wagering. That division could also decide whether to approve new forms of gambling, such as betting on awards shows and video games. It also gives the Justice Department additional powers to address illegal sports betting. 

Tribes and gaming companies would pay fees and taxes to the state that could total several hundred million dollars a year, state analysts estimate. The actual amount is uncertain, in part because gaming operators are allowed to deduct certain expenses to reduce their tax bill. 

After covering the state’s new regulatory costs, most of the money would be used to address homelessness and for gambling addiction programs, while 15% would go to Native American tribes that aren’t involved in sports betting.

Why was it on the ballot?

Sports betting — other than on horse racing — isn’t legal in California currently. 

The U.S. Supreme Court allowed states to legalize sports betting in 2018. Since then, 35 states plus D.C. have made the move. It’s proven to be big business: Americans bet more than $57 billion on sports betting in 2021. The explosion of sports betting has also concerned advocates, who say that gambling addiction will increase, and that research into the long-term effects of legalizing sports betting has fallen short. 

California lawmakers tried to negotiate a deal on sports betting in 2020, but weren’t able to work one out in time to get a measure on the ballot. Then came a rush of groups trying to qualify their own sports betting initiatives for the 2022 election. Ultimately, two different measures made it onto the ballot. Prop. 27 would allow online sports betting across the state, while Prop. 26 would allow in-person sports betting only at tribal casinos and horse race tracks. If both pass, both could go into effect, but in all likelihood a court would decide.