AP projects Californians have voted to reject Proposition 27, the measure legalizing mobile and online sports betting.
The measure would have allowed licensed tribes and gaming companies to offer these services to anyone 21 or older. In contrast to, which would restrict sports betting to tribal casinos or select race tracks, this measure allows users to place bets from anywhere outside of Native American Tribal lands.
The proposition outlines that only certain gambling companies could have offered sports betting. First, the licensed companies could offer the service under their own name or brand if they partner with a tribe with a tribal-state compact. Additionally, only gaming companies with betting licenses in at least 10 U.S. states and territories were eligible.
California currently has compacts with 79 tribes, regulating gambling within the state. Since tribal lands are sovereign nations, the indigenous leaders who chose to offer sports betting would have negotiated the limits with the governor before memorializing it into the tribe's compact with the state.
According to the state legislative analyst, tribes that wish to participate in sports betting under this measure would have to relinquish some of their rights under federal law to become licensed. In one example provided by the state, tribal casinos wishing to take part in sports betting would need to agree to a certain amount of state regulation.
Prop 27 will tax tribes and companies with licenses, requiring them to pay 10% of sports bets made each month, after subtracting for expenses. The state legislative analyst outlined these expenses as any bets made with credit from promotional officers, prize payments and federal gambling taxes. Additionally, tribes and companies must pay a portion of these monthly payments before getting their license approved or renewed.
These taxes and fees are expected to generate hundreds of millions of dollars — as much as $500 million. The state revenue from these companies would have been deposited into the California Online Sports Betting Trust Fund which will first be used to cover state regulatory costs. The majority of the remaining amount — 85% — would have been divided between efforts to address the homelessness crisis and gambling addiction. A smaller portion, 15%, would have gone to tribes not involved in sports betting.
The proposition would have created a new unit in the California Department of Justice that oversees online sports betting regulations which include, the requirements to get a license and what type of events and bets are allowed. The unit will also investigate illegal gambling activities which include the "fixing" of events. "Fixing" is when someone tries to manipulate the outcome of, for example, a sporting event, to win money.
Additionally, the measure allowed the state to penalize anyone placing illegal bets. According to the state's analyst, those placing illegal online sports bets would have had to pay 15% of the amount they bet and an additional $1000 penalty for every day the fee was not paid.
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