Would Props 26 or 27 benefit West Contra Costa’s only casino?

A man in a baseball cap repeatedly slams his balled up fist against a large, red button. He reaches into the back pocket of his jeans, pulls out a thick wad of $20 bills, and feeds the electronic bingo machine in between his frustration-filled hits. Next to him, a middle-aged woman in a bejeweled T-shirt and pink hoodie raises her arms in the air with pure joy, excitedly stamping her feet. Her machine dings and flashes bright, colorful lights, like the many others around her. Rows of machines are packed tightly together and nearly every seat is filled. 

This is the San Pablo Lytton Casino on a Sunday night. 

The only casino in West Contra Costa County, Lytton Casino is the largest contributor to San Pablo’s city budget, accounting for 60% of the city’s General Fund revenue. On Tuesday, there are two measures on the ballot involving tribal casinos and gambling: Propositions 26 and 27. The one that could more clearly affect the Lytton Casino, and consequently, San Pablo, is Prop 26.

Doug Elmets, a spokesperson for the casino and the Lytton Rancheria of California — the tribe that owns the San Pablo Lytton Casino — said the tribe has not taken a position on either proposition. 

The Lytton Rancheria does not have a compact with the state, which would be needed to authorize gambling. The San Pablo casino operates Class II electronic bingo machines and not Class III gaming like blackjack, craps, roulette and slot machines that would require a compact. 

But the Lytton Rancheria still could financially benefit from Prop 26. Tribes that have compacts and would directly benefit from it have promised to share 15% of the revenue from sports betting with tribes like the Lytton Rancheria that are part of the state’s Indian Gaming Revenue Sharing Trust Fund.

“Whether we get there in 2022, or, hopefully, we get there in 2024, we believe it is the right path.”

Amy howe, fanduel ceo

For Prop 27, it’s not clear how much the Lytton Rancheria could get, because the state has not established a formula for allocating money, and because the tribe would have to agree to certain conditions, including a surcharge.  

The Yes on 26 coalition claims that within a few years, Prop 26 would generate approximately $436 million in new sports gaming revenue and that some tribes could receive more than $900,000 annually.

In 2018, the Supreme Court left it up to the states to decide whether or not to legalize sports betting. Although California did not legalize it, 35 other states plus Washington, D.C., did. And in 2021, Americans bet more than $57 billion on sports, according to the American Gaming Association.

Now California is looking to cash in on the lucrative sports betting business, and the battle over the control of it is in full swing. The amount of campaign spending on these propositions has already shattered records, with over $400 million raised in fundraising for and against Prop 27 alone, according to a Wall Street Journal review of campaign finance records. 

Prop 26 would allow tribal casinos and horse race tracks to offer in-person sports betting. Since tribes are sovereign nations and can’t be taxed, the measure would impose a 10% tax only on race tracks. The revenue would be primarily spent on education and state regulatory costs. Any money left over would be used three ways: 15% for mental health and gambling addiction programs, 15% for enforcement costs, and 70% for the state’s general fund.

The proposition would allow people who believe someone is breaking gambling laws to file lawsuits, which could ask for penalties of up to $10,000 per violation. Opponents of Prop 26 argue that this could drive card rooms out of business, and will lead to lost jobs and tax revenue at the local level, especially in communities of color. 

The California Cities for Self-Reliance Joint Powers Authority, which is made up of five cities with card room operations, is asking voters to reject the measure.

“Prop 26 includes a hidden poison pill that allows for unlimited lawsuits against cardrooms — a highly regulated industry that provides critical tax revenue for cities across California,” Juan Garza, the authority’s executive director, said in a statement. 

“If you’re fighting a tribe, you’re losing.”

Jacob Mejia, Pachannga tribe spokesperson (Sportshandle.com)

Prop 27 would allow out-of-state gaming companies and licensed tribes to offer mobile and online sports betting to people over 21 on non-tribal lands. The campaign is funded by gaming corporations including DraftKings and FanDuel. These companies would have to partner with a California tribe and pay $100 million to obtain a license for sports betting. Alternatively, tribes could offer sports betting platforms on their own, but would have to pay a $10 million entry fee. 

The tribes and gaming companies would pay 10% of their revenue from sports bets each month to the state, with 85% going towards programs for homelessness and addiction, and 15% to tribes that are not involved with online sports betting. The other 90% would go to the larger gaming corporations outside of California, like DraftKings and FanDuel. Opponents worry that Prop 27 could threaten tribal sovereignty and make it easier for underage people to gamble. 

Kathy Fairbanks, spokesperson for the “Yes on 26, No on 27” campaign, said that Prop 27 won’t lead to a solution for homelessness.

“It won’t help California. And really, in the big picture, it amounts to a massive expansion of gambling,” she said. “Really any online device becomes a gambling device and there are no foolproof ways to ensure that kids aren’t setting up fake accounts.” 

The Yes on 27 campaign did not respond to emails for comment. 

Despite the promise of a cut of the revenue, only three out of 110 federally recognized tribes in California support Prop 27 according to Cal Matters. 

Amy Howe, CEO of FanDuel, vowed to fight to get Prop 27 on the ballot again if it fails this time. “We believe there is a path to get there,” she said, at the Global Gaming Expo in Las Vegas on Oct 11. “Whether we get there in 2022, or, hopefully, we get there in 2024, we believe it is the right path.”

At an Expo panel later that day, three tribal leaders discussed why they believe Prop 27 can’t beat a united front of California tribes. Sportshandle.com quoted Jacob Mejia, a Pechanga tribe spokesperson, as saying, “If you’re fighting a tribe, you’re losing.”

In Measure N, Hercules voters asked to keep 8% utility tax on books indefinitely