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The Sports Betting Initiatives: Yes or No on Proposition 26

Ever since the Supreme Court overturned the Professional and Armature Sports Protection Act, a slew of states have slowly legalized sports betting through propositions and legislation. This year, on the 2022 ballot, California also has the choice to legalize sports betting in two different initiatives: proposition 26 and 27. Both would potentially bring in more state revenue with an emphasis on redirecting these funds to solving homelessness.

Illustrated by Melody Zhang


By Lucia Liu, Shu Han Jin, Benjamin Qiao

 

Our first published article “Wanna Bet” was published over a year ago. At the time, the sports betting initiatives were only in their signature gathering phase, and I had personally found out about it while shopping at Trader Joes.


Today, with less than a week until the midterm elections, we have come back to the same propositions that essentially gave The Municipal Journal a start: Proposition 26 and 27—two sports betting ballots pegged to bring Sports Betting back into California.


Sports betting was initially illegalized due to the ease of cheating. By bribing players, people are able to influence the outcome of the bet and thus cheat the process. Today’s concern, however, is vastly different.


We have sent out over 40 emails reaching out to supporters and opponents of the two initiatives, and here are the perspectives that they offered:


One opponent of Prop 26 that we reached out to was independent conservative Marc Ang, who is the President and founder of Asian Industry B2B, an organization dedicated to elevating Asian American communities in Southern California. Marc himself is a fierce advocate for small businesses, a conservative journalist, and libertarian in his ideology.


He wasn’t bothered by sports betting, but rather, he opposed a certain “poison pill” embedded within the proposition. “There’s a serious problem because that poison pill would allow certain card rooms to be shut down and targeted by the government, and that would cause tens and thousands of jobs to be destroyed.”


There has long been existing animosity between tribal casinos and card rooms because casinos consider the practices of cardrooms to be illegal. Now with Prop 26, one of the biggest fears for cardrooms is that larger tribal casinos could bankrupt cardroom businesses with lawsuits.


“It allows people or entities that believe someone is breaking these laws to file a civil lawsuit in state trial courts.”


Haig Kelegian, the owner of one cardroom business in California, explains, “[The provision] allows for anyone to sue a card room for illegal gaming. We’re not concerned about the outcome [of the lawsuits], but how much money they will cost us.”


According to California law, house-banked games, in which players are playing against the casino as opposed to other players, are only allowed in tribal casinos. Player-banked games, on the other hand, are legal, which is what card room games are currently labeled as. The issue here is that there is a “loophole” in the definition of player-banking — while players have the option to deal, it is not required that the dealer rotates.


Since only player-banked games where players play against each other are allowed outside of tribal casinos, card rooms have found a way to exploit this system through third-party dealers. Essentially, card rooms would hire an outside individual to deal for the house, acting like an outside player. While this still counts as a player-banked game, the third party is actually working under the house, seemingly breaking the law.


But cardroom themselves aren't exactly victims of an evil ploy. They have had a notorious history of "flouting the law." According to CBS Los Angeles, in Bicycle Casino was found falsely documenting the transactions of players having to pay a penalty of $500,000. And they are certainly not alone, cardrooms, overwhelmingly, are the hotspot for bribery, money laundering, and prostitution.


Back to Ang, he believes that “[Native American Tribes] are basically going to be the favored and play with whatever angle so their tribal casino can get the benefits while hurting smaller local ones.”


Over in LA, there are already several successful tribal casinos, including Morongo and Pechanga. On the other hand, the smaller cardrooms, such as Bicycle Casino, will most likely shut down if Prop 26 passes. The closing of so many small cardroom businesses will cause LA County to lose 71.1 billion dollars just in direct general fund tax revenue.


As of now, there are five major California tribal casinos that are pushing to make Prop 26 a reality, as it will guarantee them the option to use private trial lawyers to bury their card room competitors with frivolous lawsuits. Unfortunately, this will only give benefits to these five tribal casinos rather than Native Americans as a whole.


Meanwhile, Jenni-Ann, the president of the Clovis Democratic Club, is a supporter of Proposition 26. All chartered democratic clubs endorse according to their party’s stance, but the California Democratic Party is neutral on this proposition, giving democratic clubs some leeway.


When asked about her perspective on Proposition 26, Jenni-Ann responded, “Sports betting is going to come sooner or later. There’s going to be a lot of pressure to get it.”


Currently, the California Constitution and state laws have specific rules limiting gambling, including bans on sports betting, roulette, and games with dice—the only exceptions being horse racing betting, tribal casinos, state lotteries, and card rooms. Proposition 26 would legalize in-person sports betting at racetracks and tribal casinos. On top of this, these locations would be required to make extra payments to the state, in order to support state regulatory costs.


Since states were given the right to legalize sports betting, many states have already begun the process of legalization. Jenni-Ann predicts that sports betting will probably come to California too.


Even if sports betting would eventually come to California, something that doesn’t necessarily have to come to California is the part of Proposition 26 that would potentially allow tribal casinos to easily sue cardrooms (their biggest competitors) and run them out of business. Jenni-Ann argues that tribal casinos would need some legal ground for suing cardrooms, which wouldn’t allow tribal casinos to sue many cardrooms easily.


But why was sports betting illegal in the first place? Professional leagues believed that sports betting hurt their game’s integrity. Their firm stance led to the signing of PASPA in 1992, which required all states to tell the government whether they wanted to have sports gambling within their borders. California was among the 46 states that refused sports betting entirely (Nevada opted for yes, while Oregon, Montana, and Delaware opted for limited options).


Eventually on May 14, 2018, the Supreme Court declared that states were allowed to implement their own sports gambling laws. Many states immediately started the legalization process which became more widespread. The NFL, which fought the legalization of sports gambling for years, announced its first marketing agreements with three sports-gambling providers in April 2021.


At the end, there are two perspectives. For Marc, he focuses on the anti-business aspect—that Prop 26 will open up a way for large casinos to file frivolous lawsuits against card rooms. And this, as a result, will cause “tens and thousands of jobs to be destroyed.”


According to“No on 26," the advocacy coalition against Prop 26, Prop 26 will result in 32,000 good-paying jobs and a $500 million loss in tax revenue, referring to the bankruptcy of card rooms in California. Now, whether Prop 26 will put all cardrooms out of business is speculative, and there certainly are provisions against frivolous lawsuits. But then again, are cardrooms really the businesses to preserve?


Ultimately, do you care more about legalizing sports betting in California, or against putting cardrooms out of business?


As of now, Prop 26 is heading downhill. Despite the record-breaking $112 million spent on TV advertisements, according to Mark DiCamillo, the lead poll director at Berkeley IGS, these measures have done the opposite of what people expected—the ads are confusing and annoying, and are causing more people to vote against it. Out of the 6,939 Californians likely to vote in the next election, 31% are voting yes, 42% are voting no, and 27% are undecided.



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