Online sports betting is heading to the California ballot in November

On June 27, the California secretary of state reported that an initiative to legalize online and mobile sports betting had qualified for the ballot. The final random sample count concluded that over 1.1 million of the nearly 1.6 million signatures submitted were valid. The required number of signatures for the initiative was 997,139.

The initiative, sponsored by Californians for Solutions to Homelessness and Mental Health Support, proposes a constitutional amendment and statute that would authorize a gaming tribe, an online sports betting platform with an operating agreement with a gaming tribe, or a qualified gaming company with a market access agreement with a gaming tribe to operate online sports betting for individuals 21 years of age or older in the state but outside of Indian lands.

Tribes and technology companies would be required to pay a one-time $10 million licensing fee and a license renewal fee of $1 million every five years. Gaming companies would be required to pay a one-time $100 million licensing fee and a license renewal fee of $10 million every five years. The sports wagering tax would be 10% and apply to sports wagers after deducting free bets, promotional credits, players’ winnings and prizes, and federal gaming taxes. Licensing and tax revenue would be allocated to the newly established California Solutions to Homelessness and Mental Health Support Account and the Tribal Economic Development Account.

The proposed law would create the Division of Online Sports Betting Control within the Department of Justice. The initiative would give the division authority to regulate the online sports betting industry and investigate illegal sports betting activities.

This is the second initiative related to sports betting that has qualified for the ballot. The first initiative is backed by American Indian Tribes and would legalize sports betting at American Indian gaming casinos and licensed racetracks. The online sports betting initiative contains a provision that states that if this initiative and the other sports betting initiative that has already qualified for the November ballot are both approved by voters, they would both take effect because the two are not in conflict.

Californians for Solutions to Homelessness and Mental Health Support reported over $100 million in contributions as of March 31, 2022. Its top three donors include BetMGM LLC, Betfair Interactive US LLC (FanDuel Sportsbook), and Crown Gaming, Inc. (DraftKings).

The campaign has received support from the mayors of Fresno, Long Beach, Oakland, and Sacramento. Tamera Kohler, chief executive officer of the Regional Task Force on Homelessness for the San Diego Area, said, “This initiative is a critical step forward, dedicating revenue to the issue of homelessness is a win-win for our state. It would provide an ongoing funding source of hundreds of millions of dollars each year to fight homelessness and provide mental health services to those most in need. We are excited to partner with the coalition to pass this important measure in November 2022.” 

Californians for Tribal Sovereignty and Safe Gaming and Coalition for Safe, Responsible Gaming are leading campaigns in opposition to the initiative. Together the committees have raised over $65 million. The top three donors include the San Manuel Band of Mission Indians, the Rincon Band of Luiseno Mission Indians of the Rincon Reservation California, and Yocha Dehe Wintun Nation. Chairman James Siva of the California Nations Indian Gaming Association said, “Don’t be fooled. These measures are not a fix to homelessness, but rather a massive explosion of gaming that will directly undercut tribal sovereignty and self-sufficiency.”

As of June 28, 2022, sports betting was legal or legal but not operational in 35 states and D.C. Five of the states—New Jersey (2011), Arkansas (2018), Colorado (2019), Maryland (2020), and South Dakota (2020)—legalized sports betting through a ballot measure.