The history of gambling in California: Prop 26 and 27 explained

If sports betting is legalized in California, who should operate it? Californians have answered a similar question in the past.

SACRAMENTO, Calif. — There are seven propositions on the November ballot. Propositions 26 and 27 are making history, as more than $450 million have been poured into campaigns for and against them so far.

Native American tribes are battling gambling companies for control over what could be another multi-billion dollar industry, but ads for and against the propositions are bringing up other questions.  

• Is legalizing this industry a way to fight homelessness? 
• What about gambling addiction? 
• What have casinos already done with gambling profits? 

To look at what could be in store, we're also looking at the past. 

HISTORY

From donations to the fire station, to a community health clinic on the way, It's hard to ignore the benefits the town of Esparto in Yolo County has enjoyed since the neighboring Yocha Dehe Wintun Nation implemented gambling in the 1980s.

A stark contrast to what Yocha Dehe Wintun Nation Chairman Anthony Roberts said life was like growing up.  

"it was just tough," Chairman Roberts said. "Tribes living in poverty struggling to make ends meet, not knowing where our next meal was going to come from."

The tribe, which runs the Cache Creek Casino and Resort is now flooded with cash. 

"So specific numbers we don't normally talk about, but I will say that gaming has helped our tribe tremendously," Chairman Roberts said.  

Sixty-year California Veteran Journalist Dan Walters, who has covered the history of casinos in the state, says that combined, casino tribes make billions. 

"They make a lot of money on their casinos, a lot of money," Walters said. "Billions and billions of dollars a year." 

Dozens of tribes are supporting Proposition 26 to legalize in-person sports betting at tribal casinos, but first, let's rewind. 

How did California get to the point where tribes operate casinos?

In 1987 a California tribe won a U.S supreme court case. If the state allows any sort of gambling, at the time bingo parlors, the tribes were allowed to have it on their land too.  

"They made money and they built better facilities," Walters said. "Within a few years, they were kind of expanding the definition of the court's permission and started putting in a form of slot machine." 

Walters reported on the efforts of the California attorney general at the time, who was trying to shut the casinos down.  

"State authorities said they were illegal, but they fought over it, and the tribes continued to have slot machines and finally made enough money on the slots to finance some ballot measures in California that gave them a monopoly over almost full casino gambling in California," Walters explained.  

In 2000, California voters overwhelmingly supported Proposition 1 to permit tribes to operate slot machines, lottery games, and bank and percentage card games — like blackjack.  

"For the better part of two decades (California voters) have supported tribal gaming here in California on our lands," Chairman Anthony Roberts said. "That's given us the opportunity to become economically viable to provide health care and education." 

PRESENT

Fast forward 22 years, and now Californians are presented with a similar gambling question: If sports wagering should become legal in California, who should operate it?  

"There are a number of ways that ours are better," Nathan Click said.   

Nathan Click is running the "Yes on Proposition 27" campaign, which will legalize online sports betting run through large corporations like DraftKings and FanDuel. It also creates a pathway to legalize online betting on non-sporting events like award shows and video games. 

Why is Prop 27 being promoted by supporters as a way to fight homelessness? 

"Prop 27 would, for the first time in state history, create a permanent source of funding for homelessness interventions," Click said. "These are things like permanent supportive housing, tiny homes, mental health and addiction treatment that gets folks off the streets.”

They've added in what experts call sweeteners, some funding for homelessness, and they partnered with three non-gaming tribes that don't enjoy the same financial benefits that tribes with casinos do. 

"It's it's a common thing when people draft ballot measures they have what they really want, and then they throw in a few goodies on the side so that people would be more willing to vote for it," Walters said, "It goes back to think of the lottery initially back in the 80s. The lottery was sold to the voters on the assumption that quote 'the schools win too' because some of the money from the lottery would go to the schools." 

HOMELESSNESS

So, how much money is Proposition 27 promising to provide to homelessness?  Authors of the proposition titled it "The Homelessness and Mental Health Support Act."

Ninety percent of revenue goes out of state to the large corporations and three non-gaming tribes. 

After taking out money for fees, what's left of the remaining 10%, 85% of that is designated for homeless funding. 

Percentage-wise, it's not much, but a small percentage of a large amount is still a lot of money. The independent Legislative Analysts Office predicts it will bring in hundreds of millions a year for homelessness.  

The state of California however, has already put billions toward solving the homeless crisis. 

So what's different about this money? 

"The state has spent some one-time money, but that's only one-time money," Click said. "We haven't had a permanent ongoing funding source, and that's a revenue stream that will help cities and counties plan for the long term."

PROBLEM GAMBLING

Critics of Proposition 27 have pointed to the issue of problem gambling. As of right now, 3.7 million Californians experience problem gambling in their lifetime. 

"Gambling actually does create a high, it creates a dopamine high," California Council on Problem Gambling Director Robert Jacobson said. "It doesn't create a high that's going to result in you, for example, passing out. If you're drinking, eventually you pass out, but people who gamble can do it for days at a time." 

The California Council on Problem Gambling is neutral when it comes to gambling propositions. 

“Gambling has become a massive part of our culture, and I think the conversation of if gambling should exist if it shouldn't exist, that conversation happened 20 years ago," Jacobson said. 

What they do give input on is if propositions will provide funding to help treat addiction that will arise from them if passed. 

"Proposition 26 currently includes dedicated funding for problem gambling services, proposition 27 does not," Jacobson said.  

Proposition 27 does allow the state legislature to decide if they want to allocate money towards problem gambling, but Jacobson fears they won't.  

"Because the recurring theme that's going to come through our conversation, is that not enough research exists," Jacobson said.  

Chairman Anthony Roberts believes his tribe can handle the problem. 

"Tribes have been doing this for a better part of two decades," Chairman Roberts said. "They already have their policies and regulations in place to combat problem gambling and underage gambling."

UNDERAGE GAMBLING

Let's talk about underage gambling. One ad against Prop 27 claims the proposition, which turns every digital device into a sports wagering tool, won't be able to control minors from placing bets.  

The "Yes on Proposition 27" campaign disagrees. 

"Twenty-seven has the strictest rules to ensure that those who place bets are over the age of 18," Click said. 

"The more widespread the marketing for that online gambling and the more exposure that people have to that marketing, ultimately, the higher the prevalence rates become, and the speed with which addictions develop and the severity with which addictions develop," Robert Jacobson said. 

If Proposition 26 is passed, in addition to legalizing sports betting in casinos on Native American land, it includes four horse tracks in the state. 

HORSE TRACKS

"Why the horse tracks? Well, by including it, it didn't really cost the tribes anything," Walters said. "It kind of eliminated some potential opposition. The cardroom people still didn't like it because Proposition 26 has a poison pill clause in it that subjects the cardrooms to some legal harassment that they otherwise would not have." 

In other words, it helps eliminate opposition, creating more of a monopoly.  

"The measure also, they don't talk about it very much, also legalizes other games in Indian casinos, such as roulette," Walters explained.  

PROP 26

Pro 26 tribes fear they will lose revenue if 27 passes.  

"We feel like this would be a huge infringement on our brick and mortars," Chairman Roberts said. 

Walters, however, said 85 to 90% of the revenue they currently make is from slot machines. People enjoy the physical aspect of pulling the lever or pushing the button.

"It's almost the whole game," Walters said. 

Walters said it's a separate, younger, male base that will generate revenue for online sports betting or in-person. 

The question should be, who will get billions on top of the billions they are already making?  

In a Sacramento Press Club debate with both Proposition 26 and 27 campaigns, Kathy Fairbanks with proposition 26 said that some of the tribes who are backing the in-person-only initiative this year are also backing an initiative in 2024 for online sports wagering, but run through the tribes instead of large out-of-state operators

"Mobile sports betting is something that people want," Fairbanks said. "Again, we want to start slowly and responsibly."

Nathan Click called it hypocritical. 

"They say it's unsafe now, but in 2024, in just two years when it's their initiative, they'll be totally fine with it," Click said. "That's obviously incredibly hypocritical and shows exactly why they're opposing our initiative."

VOTING

People can vote yes on both prepositions.  

"To the extent that they're in conflict with each other, the one that has the most votes will prevail," Walters said. "There will probably be some court battles." 

You can vote no on both, or yes on one of them and no on the other.  

"t's not going to go away," Walters said. "If both of these measures are defeated, I think we'll be back in 2024 ballot with at least one more measure" 

So gear up for billboards, TV, and radio advertisements. These campaigns have already outspent every other initiative in California history because the win is worth the bet.

POLLS

The most recent polls out from Berkeley show that neither of the propositions is doing well right now among voters. 

For Proposition 27 (online), voters put no 53% of the time and yes 27% of the time.  

For Proposition 26 (in person), voters put no 42% of the time and yes 31% of the time.  

In an event in Las Vegas last week, the Las Vegas Review Journal said representatives of both the tribes and Fan Fuel and Draft King admitted their propositions would likely fail.  

Fan Duel and Draft King reps say confusion over the two initiatives and the fact that a majority of the tribes oppose the online measure in its current form would likely lead to defeat.

WATCH RELATED: Ballots hit mailboxes across the state for the November election (Oct. 2022).