Legalizing sports betting in California turns into bet worth billions

Over the next four months, California voters will sit ringside as two heavyweight contenders battle it out. The prize is projected to be billions of dollars.

In November, voters will decide if and how to legalize sports betting in California. 

"Really, this is more than the ‘Thrilla in Manila,’ if you think what this is going to be like," said Sonoma State political science professor David McCuan. "These two ballot measures will probably set records."

One gaming industry estimate puts the potential annual revenue at $3 billion.

"California is the golden ticket," said McCuan. "There isn’t a better market if you’re looking at gaming." 

Two sports betting initiatives qualified for the ballot, hoping to spell out how and where people can bet on sports. Proposition 26 is also called the "Tribal Sports Wagering Act" by proponents. It is backed by a coalition of dozens of Native American tribes. 

SEE ALSO: California will end arrests for loitering for prostitution

It would legalize in-person sports betting at tribal casinos and four horse racetracks including Golden Gate Fields for people 21 and older.

It imposes a 10% tax on sports bets at horse racetracks, for the state to spend on problem gambling and mental health programs, enforcement of gaming laws, and money for the state’s general fund.

The state’s independent Legislative Analyst’s Office estimates it could generate tens of millions of dollars each year for the state.

"It will bring money to the state of California; it also will help tribes continue the self-sufficiency and stewardship they’ve maintained for 20 years," said Kathy Fairbanks, a spokesperson for the Tribal Act.

Proposition 27, also called the "California Solutions to Homelessness and Mental Health Act," is backed by sports betting giants like FanDuel and DraftKings. It would legalize sports betting online for people 21 and over.

Gaming companies must partner with a tribe, and pay a $100 million licensing fee and a $10 million renewal fee every five years.

Revenue from a 10% tax would be split 85% to housing and homelessness services, the rest to tribes not involved in online sports betting.

The LAO estimates state revenue could reach the hundreds of millions each year.

"Money you can rely on, year after year," said Nathan Click, spokesperson for the online gaming initiative. "In the state of California, we don’t have a permanent revenue source, to fund homelessness projects and to get people into permanent housing."

Both sides have already been running ads, spending big to get voters’ attention and just getting started. Campaign analysts predict spending could eclipse the $224 million spent by those for and against Proposition 22, the measure to exempt Uber, Lyft, Instacart drivers from state labor law.

"These two ballot measures because they’re mano a mano, head to head, they should set spending records," said McCuan. 

Expect big attacks and endorsements during the campaign. Labor leader Dolores Huerta recently put her backing behind the in-person measure. She called the online initiative "misguided and dangerous." 

"It doesn’t offer enough protections to ensure with a 100% certainty that kids under 21 aren’t gambling," contended Fairbanks.

Click responded by saying: "Those are simply false attacks. Look at the experience of 23 other states that have legalized online sports betting, they’re proving you can do so, safely and responsibly."

Last week, the online sports betting campaign rolled out new ads, announcing the support of two tribes — the Middletown Rancheria of Pomo Indians and the Big Valley Rancheria Band of Pomo Indians — straying from the more than 60 aligning with the in-person measure.

"California tribes are supporting our measure, especially those that are in rural counties that are small and economically disadvantaged," said Click. 

Fairbanks responded with, "It undercuts their tribal self-sufficiency; it will undercut the ability to continue providing jobs and economic development." 

As the fight continues, it’s important to note, voters could approve both measures, which would likely tie things up in court – or they could reject both. Either way, the more than a dozen other states without legal sports betting are watching closely.

"Seeing a state like California take the plunge would definitely be something lawmakers in those states would have to think about especially if the California model proves to be a good one," said Geoff Zochodne, a sports betting analyst with the online site "Covers."