Prop 26 would allow tribal casinos and horse racetracks to offer in-person sports betting. The measure would impose a 10% tax only on racetracks. The revenue would be primarily spent on education and state regulatory costs, with any money left over to be used in three ways: 15% for mental health and gambling addiction programs, 15% for enforcement costs, and 70% for the state’s general fund.
The proposition would allow people who believe someone is breaking gambling laws to file lawsuits, which could ask for penalties of up to $10,000 per violation. Opponents of Prop 26 argue that this could drive card rooms out of business, and will lead to lost jobs and tax revenue at the local level, especially in communities of color.
Gaming corporations including DraftKings and FanDuel funded this measure. These companies would have to partner with a California tribe and pay $100 million to obtain a license for sports betting. Alternatively, tribes could offer sports betting platforms on their own, but would have to pay a $10 million entry fee.
The tribes and gaming companies would pay 10% of their revenue from sports bets each month to the state, with 85% going towards programs for homelessness and addiction, and 15% to tribes that are not involved with online sports betting. The other 90% would go to the larger gaming corporations outside California, like DraftKings and FanDuel.
In 2018, the Supreme Court left it up to the states to decide whether or not to legalize sports betting. Although California did not legalize it, 35 other states plus Washington, D.C., did. And in 2021, Americans bet more than $57 billion on sports, according to the American Gaming Association.