Legal Online Sports Betting in California: Good or Bad for Californians

Since the Supreme Court struck down the controversial law PASPA (the one that banned sports betting on a federal level) in 2018, many states have legalized sports betting and are already reaping the fruits of this decision.

California is on the verge of legalizing sports betting at land-based venues, as well as online and mobile sports betting, but curiously, many people are opposing the latter and there is now a state-wide campaign against Preposition 27 (the one legalizing online betting).

We will explore the reasons behind this push against the preposition, and we will also discuss the arguments of the opposing side.

What is Preposition 27

Before we discuss the proponents and opponents of the measure, it’s important to give you a brief summary of Preposition 27.

Preposition 27 proposes a constitutional amendment, which would legalize online sports betting and allow an online sports betting platform to enter a contract with a gaming tribe and provide online betting to persons over the age of 21 on the territory of California (outside tribal lands).

The preposition will appear on the midterm election ballot. Election day will be on November 8, 2022.

For and Against Preposition 27

The people and groups actively campaigning against Preposition 27 have given us a plethora of arguments to consider. Perhaps the most emotional argument they use, and the one you will have definitely seen in ads if you live in California, is that online sports betting would lead to more people addicted to gambling, and would allow children to bet as well.

Emotional arguments, whether they are true or not, are unfortunately very effective, especially if voters aren’t familiar with the issue. One of the sponsored ads claims that by making sports betting readily available, everyone with an Internet access could be a potential victim of gambling addiction, including children.

The last argument can be easily fought if one looks at states with legal online betting industries. In order to bet online in states like New Jersey, you have to open an account with a regulated online operator and to do this, you have to verify your identity, using an ID or a driver’s license, and your location via GPS-locator. This bars children from betting as effectively as a person checking customers’ IDs at a land-based venue.

In terms of overall addiction, there could be a debate. Addiction rates will rise when online betting is legalized, but that’s simply because there would be more people betting. The per capita percentage will not necessarily rise, and various online operators have schemes preventing addicted players from gambling their fortune away.

Also, now it’s the time to address the elephant in the room – Preposition 26. Preposition 26 will also appear on the ballot, and if successful, it would legalize land-based sports betting on tribal lands. There isn’t a big push against this preposition, and we suppose you already know why.

The groups that oppose Preposition 27 are made out of gaming tribes that oppose all and every attempt to legalize commercial gambling. They have since raised $114.13 million for lobbying against it, which shows how influential they are in California, the state with the biggest number of tribal casinos in the US.

Californian tribes have successfully blocked legalization attempts in the past , and Preposition 27 is no different. Their other argument is that it would hurt tribal economy and that they would have to compete with out-of-state operators.

Tribes can just as well open their own betting websites, but as it is with any industry, they would have to compete for a bigger market share. This is what the argument essentially boils down to – should the Californian tribes be the only ones allowed to conduct legal sports betting operations or not?

Proponents of Preposition 27 have also noted that Californians would continue to bet online, whether it’s legal or not. If it is legal though, they wouldn’t use predatory websites, which could steal their data and money. For those who already bet online, online betting legalization is the only safe haven.

In addition, legalizing online and mobile sports betting offers a big injection of tax revenue with the proposed 10% tax on betting revenue.

Preposition 27 will also create the California Online Sports Betting Trust Fund, which would use “revenue from licensing fees, renewals, and the sports wagering tax” to sponsor the California Solutions to Homelessness and Mental Health Support (85%) and the Tribal Economic Development (15%) funds.

Still, the pro-27 lobby is just as wealthy and influential; it’s not a band of rogues. It’s made out of mostly gambling operators, although the California Solutions to Homelessness and Mental Health Support also supports the measure and has since raised over $100 million to put it on the ballot.

Conclusion

Two big lobbies, that of gaming tribes and that of commercial operators, will meet on the midterm ballot. They both have financial incentive for their side to win the debate, so the question is whether you, as a Californian, want online and mobile sports betting to be legal or not.

Do not appeal to emotional arguments on either side; think pragmatically about the matter in hand and make an informed choice this coming November.

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