The Question:

Should California (a) increase the allowable gambling activities at American Indian-owned casinos and (b) allow betting on sports events at casinos and horse racing tracks?

The Situation:

The California Constitution and California statutes define what types of gambling are allowed in the State. Currently, the California Lottery, card rooms, betting on horse racing, and gambling in American Indian-owned casinos are allowed. No dice games or “Nevada casino” style gaming, or betting on sports events is legal in California.

The rules governing American Indian-owned casinos are set by individual agreements between the owner tribe(s) and the State of California (“Compacts”).

The Proposal:

If passed, Prop 26 would:

• Allow tribal casinos to run roulette and dice games like craps.
• Allows tribal casinos and four-horse racetracks to offer onsite betting on sports events like football games. No betting would be allowed on high school sports or on California college sports. 
• Limit sports betting to those 21 or more years old.
• Impose a 10% tax on net sports betting at racetracks. The tax revenue would go to a new fund created by this Proposition.
• Allow negotiation of any tax coming from betting on sports in casinos and whether it would be directed to the new fund in the Compacts.
• Tax revenue left after deducting the costs of sports betting regulation would be divided to send 70% to the state General Fund, 15% for programs dealing with gaming, mental health research, and 15% to the Department of Justice for enforcing gaming laws.
• Allow a person or entity who is aware of violations of the gaming law to file a civil action if the California Attorney General declines to act.  Any penalty assessed in a civil action goes to the new fund.
• Prop 26 and Prop 27 both legalize sports betting in some way.  If both pass it is possible that both will take effect. It is also possible that some provisions conflict. If a court finds that parts of the propositions are in conflict the one that received the most yes votes will be law.

Fiscal Effect:

Predictions of the impact of this law on state and local revenue are difficult to determine because much depends on the terms of the agreements between the casinos and the State and on how much people who play the games or bet on sports will spend.

Prop 26 could increase state revenues from tax payments made on sports betting at racetracks and civil penalties for violations of the law, potentially reaching the tens of millions of dollars each year.

There will also be increased costs to enforce and regulate the new betting, potentially reaching the low tens of millions of dollars each year. This amount could be offset by increased revenue. There also would be increased state enforcement costs, not likely to exceed several million dollars each year related to a new civil enforcement tool for enforcing certain gaming laws.

Supporters Say:

• Prop 26 would continue the 20-year legacy of allowing closely regulated gaming to support American Indian economies.
• Prop 26 is the most responsible approach to authorizing sports wagering, and would promote American Indian self-reliance.

Opponents Say:

• Prop 26 would massively expand gambling in California for the benefit of large tribal casinos.
• Prop 26 would leave casino workers unprotected from worker safety, wage-and-hour, harassment, and anti-discrimination laws.