Battle over legalizing online sports betting in California heating up

SAN FRANCISCO -- The battle over whether to legalize online sports betting has become one of the most expensive in California history.

Under Proposition 27, online sports betting companies would hit a jackpot. While Indian casinos say it would take a major hit if people could bet on their favorite team from anywhere.

"This is going to activate the largest market in the world for sports betting," Dan Wallach, a sports gaming and betting lawyer and expert told KPIX.

READ MORE: What is Prop 26 and Prop 27?

Proposition 27 hopes to legalize online sports betting in California.

"You'll also be able to bet on fantasy sports, e-sports, the Academy Awards and other types of competitions that aren't traditional sporting events," Wallach continued.

If passed, Californians would be able to gamble on popular sports betting apps like Draft Kings, Fan Duel, and Bet MGM among others, and require these companies to pair up with local Indian casinos.

"The sports industry captures the imagination of the entire electorate," said Wallach. "If you add a gambling component to that engagement with sports it will become the most popular form of gambling in the United States."

The ads have been hard to miss. Spending on advertising for both Props 26 and 27 have smashed state records with over $350 million spent between both campaigns.

Three California tribes have openly backed Prop 27 while 57 others have formally opposed the legislation.

In Northern California, two tribes are separated by about 50 miles, a very winding road, and vastly different perspectives about how 27 would impact their communities

Ben Ray III, a tribal administrator for the Big Valley Rancheria said 27 passing would be "very dramatic" for his community.

"You're talking about a small tribe, limited revenues, small gaming institutions so for us to have statewide reach between 25-30 million people that could participate in something like this, it would be tremendous for us and help us quadruple our efforts, particularly for homes and purchasing more land to build more homes on," Ray said.

While hesitant to speak to media, leadership of Big Valley Rancheria said their support for Prop 27 all comes down to the funding they would receive to combat homelessness and addiction in their community.

"It would add to what we're already trying to do here because we believe in trying to assist ourselves in raising up to help everyone along the way for their families," said Ray.

Further south in Wine Country, Graton Rancheria chairman Greg Sarris says it would break the bank for large casinos that depend on their gambling sovereignty.

"If you can gamble online, that will definitely affect the in-house sports betting because if you're just interested in sports betting, why get up from your couch and go to a casino sometimes 45 minutes, an hour away," said Sarris.

The billion-dollar online sports gambling industry has the potential to siphon funds away from his casino.

"If our business is impacted, we would have to let go people we hire with all these benefits," Sarris continued. "And because we are such big players in our communities it will affect the communities we live in."

He echoes the opposition's claims that Prop 27 would undermine the self-reliance of the tribes.

"When we found a way to take care of ourselves and in taking care of ourselves to share with others, the corporate monster has come once again to take our land and take what is ours," Sarris said.

If passed, Prop 27 would require 15% of tax revenue from online sports wagers to go to non-gaming tribes or tribes with small casinos. The other 85% would go for housing and substance treatment across the state.

It also claims to bring in big bucks for housing and addiction treatments.

As it is, the state Homeless Housing, Assistance and Prevention Program received about $1 billion in funding last year. Under Prop 27, that amount is expected to dramatically increase.

Despite our requests, the two Bay Area housing organizations that back the bill declined to speak with us for this story, but the CEO of Bay Area Community Services which has endorsed the proposition said in a statement:  "California can capture hundreds of millions of dollars in revenue and use it to help solve one of our greatest challenges. This funding will be used to build housing and help provide mental health treatment to our neighbors in need."

Under Prop 27, tribes and gambling companies would have to pay 10% of sports bets made each month to the state. But critics say loopholes exist to allow gaming companies to make significant deductions for expenses.

"If you introduce a mobile component in California this would blow away the field and be far and away the most lucrative market for operators and for the state government of any of the 35 [states] that have legalized sports betting," Wallach said.

It all comes down to the numbers. If approved, the proposition is projected to increase state revenues dramatically by at least $500 million per year.

"It is the holy grail of us sports betting markets," said Wallach. "Every year sports betting remains illegal in California it's costing these companies in opportunity loss so they're all in in 2022 for good reason."

If voters approve Prop 27, people aged 21 and over will be able to legally gamble on their favorite sports teams over the internet as early as September 2023.