Proposition 26, which would legalize in-person sports betting at casinos and some horse racing tracks, is on track to be one of the most expensive ballot measures in California history. The measure was submitted by Edwin Romero, Jeff Grubbe, Anthony Roberts and Mark Macarro — all chairmen of tribes that operate casinos in California.

Here’s everything you need to know about the proposition.

The official title on the ballot: Allows In-Person Roulette, Dice Games, Sports Wagering on Tribal Lands. Initiative Constitutional And Statutory Amendment.

What The Measure Would Do

Proposition 26 focuses on changing gambling laws in California, according to the California Legislative Analyst’s office.

Current state laws limit certain types of gambling, including a ban on sports betting, roulette and dice games.

If passed, the measure would make four key changes in the state to legalize these types of gambling. It would:

• Legalize in-person sports betting at the state’s four private horse racing tracks and tribal casinos. 

Sports betting, which is wagering on a predicted outcome in a sport, is currently illegal in California. Proposition 26 would make in-person sports betting legal at tribal casinos and at four horse racing tracks: Santa Anita Park, Del Mar Thoroughbred Club, Golden Gate Fields, and Los Alamitos Race Course.

If the proposition passes, people would have to be 21 years or older to place bets at the racetracks. The racetracks would pay a 10% state tax on profits, which would go into a new California Sports Wagering Fund (CSWF).

Generally, the tribes’ sports betting profits wouldn’t be taxed because the tribal lands are sovereign, meaning the people live under a tribal government with separate laws. However, the proposition does require participating tribes to cover regulation costs at the casinos, such as audits and inspections, if they don’t pay into the CSWF.

Federal law requires tribes that want to offer sports betting to amend their contracts with the state before doing so. Those contracts typically cover rules about how gambling is directed, regulated and enforced. For example, the contracts usually set a minimum age and any payments to local governments. If the state and tribes can’t come to an agreement, the tribes can ask the federal government to intervene with its own gambling rules.

Even if the proposition passed, sports betting would still not be allowed on high school games and ones that include California college teams.

• Legalize dice games and roulette at tribal casinos.

As with sports betting, tribes would need to change their contracts with the state before they could offer these new games.

• Require the CSWF revenue to be used in specific ways. 

The funds would help cover the state’s minimum spending on K-12 schools and community colleges, as well as more regulatory costs. The analyst’s office can’t say exactly how much money it expects will go toward education spending, but it’s estimated that about 40% of the overall CSWF funds would go to education.
Any remaining funds would be used in three ways: 70% for the state’s general fund, 15% for gambling addiction and mental health programs, and 15% for gambling enforcement costs.

• Allow enforcement of certain gambling laws to include a civil lawsuit. 

Currently if someone is believed to be breaking a gambling law (e.g. operating a banned card game), they could be fined, get their license taken away and face other criminal proceedings. The California Department of Justice (DOJ), district attorneys and city attorneys can levy charges for violations.
But on an individual level, a person can only file a complaint alleging violations with the DOJ’s Bureau of Gambling Control or the California Gambling Control Commission (managed by the DOJ). If there’s no action on those complaints, it ends there.

If the proposition passes, the person filing the complaint has the option of filing a civil lawsuit if the DOJ declines to get involved. If the defendant loses the case, the civil lawsuit penalties (up to $10,000 per violation) would go to the CSWF.

Arguments For

Supporting groups argue that this ballot measure would strengthen tribal self-sufficiency by adding jobs and increasing economic growth. Casinos are already a primary source of revenue for tribes and this would only grow that revenue source. They argue this ballot measure would not only help tribal communities but also people outside of tribal lands. Supporters say the revenue would go to non-gaming tribes through the Indian Gaming Revenue Sharing Trust Fund, too.

Tribal leaders estimate that the passage of Proposition 26 would nearly double the amount of shared revenue for non-gaming tribes. They say millions would go to improving public services, including at schools and homelessness.

Who supports Proposition 26?

Proposition 26 has one committee in support, according to Cal-Access.

Bear with me here — it’s the YES on 26, NO on 27 - Coalition for Safe, Responsible Gaming, Sponsored by California Indian Tribes committee. Essentially, this committee is working to pass Proposition 26 and defeat Proposition 27. Both are about sports betting. (Learn more about Proposition 27.)

See the full list of supporters.

Arguments Against

Opposing groups argue that the proposition hurts communities by creating job losses in local cardrooms, which are often at odds with casinos. They say the civil lawsuit ability in the ballot measure is an attempt to expand the Private Attorneys General Act (PAGA) to put cardrooms out of business, resulting in unemployment and loss of tax revenue. (PAGA allows aggrieved employees to file lawsuits to recover civil penalties.)

Animal rights advocates oppose Proposition 26 because they say sports betting at horse racing tracks would help fund a destructive industry with dozens of horse deaths every year.

Mental health experts are concerned the measure would lead to increases in problem gambling and addiction because systems in other states allow for multiple bets at a time. It's unclear how much in-person bets could mitigate those effects, but studies show that being close to a casino increases your chances of participation.

Who's against Proposition 26?

Proposition 26 has one active committee against it, according to Cal-Access. It’s solely focused on defeating the ballot measure.

The committee’s name is No On 26 - Taxpayers Against Special Interest Monopolies, Sponsored By Licensed Card Clubs (yes, the card clubs who say that this proposition would put card rooms out of business).

See the full list of opposing groups.

Follow The Money

Fiscally, the highest contributions are coming in almost exclusively from casino owners.

Potential Financial Impact

The ballot measure’s fiscal impact statement summary:

What that means: If passed, participating racetracks and casinos payments would lead to increased state revenues, but regulatory costs would also go up by a similar amount. It’s an open question about how much of an upside exists financially, but the proposition makes it clear that the businesses would have to cover many of those costs through either the CSWF or direct payments.

It’s difficult to project how much state revenue would grow because it’s hard to estimate how many people will use these types of gambling or file — and win — civil lawsuits.

The ballot measure also just allows casinos and racetracks to engage in these kinds of betting — not mandate it — so it’s possible (but unlikely) that some racetracks and tribal casinos may sit this out, especially if the tribes can’t reach an agreement with the state on gaming rules and payments.

What Happens If Propositions 26 and 27 Pass?

Voters will decide the outcomes of two sports betting propositions this year: Proposition 26 and Proposition 27, which would legalize online sports betting.

Usually, the competing measure with more votes goes into effect, but proponents of Proposition 27 believe the measures can run concurrently. It's likely a judge will make the final call.

More resources

• Read more about Proposition 26 in CalMatters’ 2022 Voter Guide
• Listen to AirTalk’s breakdown of Propositions 26 and 27
• Read the full report from the Legislative Analyst’s Office on Proposition 30

Video: 1-Minute Explainer

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