California: sportsbooks score major supporter for their online legalization proposal with MLB

The battle between tribes and sportsbook operators over sports betting legalization in California continues, and now a new development is set to spark debate. On Friday, Major League Baseball (MLB) announced its support of the bookmakers-backed initiative that would authorize online sports betting in the state, thus becoming the first major sports league to take sides in the costly and high-stakes battle.

Two primary sports betting initiatives are on the November ballot. Proposition 26, a proposed constitutional amendment that would allow retail sportsbooks at Indian casinos and state-licensed racetracks; and Proposition 27, which seeks to legalize online sports betting while redirecting a percentage of tax revenue to address homelessness.

MLB is supporting Proposition 27, The California Solutions to Homeless and Mental Health Act, which is backed by a number of sports betting companies including DraftKings, FanDuel,  BetMGM, Bally Bet, WynnBET, Barstool Sportsbook, and Fanatics.

DraftKings and FanDuel are among MLB's official betting partners. MLB, which has five franchises in California, has been an advocate of sports betting legalization since the U.S. Supreme Court ruled in 2018 to overturn the Professional and Amateur Sports Protection Act (PASPA), which outlawed sports betting.

"As legalized sports betting continues to expand across the country, Major League Baseball remains committed to protecting the integrity of its games and creating a safe experience for fans who wish to wager on those games," MLB said in a statement released Friday, as reported by ESPN. "Proposition 27 – the only measure on California's upcoming ballot that would authorize and regulate online sports betting – includes strong integrity provisions designed to help MLB carry out those commitments."

"The measure would, for example, (1) require sportsbook operators to notify leagues of suspicious wagering activity, (2) allow leagues to propose restrictions on betting markets that are particularly susceptible to manipulation, and (3) facilitate other forms of integrity-related cooperation between the state, leagues, and operators," the league added. "MLB believes that Prop 27 has the safeguards to create a safe and responsible online sports betting market in California –  a state with millions of MLB fans looking for alternatives to illegal offshore betting sites."

Proposition 26, The California Sports Wagering Regulation and Unlawful Gaming Enforcement Act, is supported by a coalition of more than 50 California Indian tribes, led by Pechanga.

"A large and growing coalition of Indian Tribes, social justice advocates, teachers, parents, homeless and mental health advocates, business, public safety, and labor leaders all strongly oppose Prop 27," Kathy Fairbanks, spokesperson for Yes on 26 and No on 27 campaigns, told ESPN in a statement.

"The measure would legalize a massive expansion of online gambling that will turn every cell phone, laptop, gaming console, and tablet into a gambling device. Worse, there's no fool-proof way to ensure kids aren't gambling online," Fairbanks added. "The out-of-state gambling corporations funding Prop 27 wrote it so they take 90% of the profits out of state, leaving little for California. We're confident voters will reject this deceptive, dangerous measure in November."

California ranks among one of the biggest prizes if a sports gambling ban is overturned. Chris Gove, an investor in the sports betting space and partner in consulting firm Eilers & Krejcik Gaming, estimates that a mature, online sports betting market in California could generate as much as $3 billion in annual revenue. In comparison, industry trade publication VIXIO Gambling Compliance estimates retail-only sports betting would generate $356 million in annual gross revenue by the fifth year.

However, while Prop 27 gained a major supporter in MLB, it is now facing opposition from a group of leaders of California Democratic and Republicans in both the Senate and the Assembly. Concerned over how it might benefit out-of-state operators at the expense of state tribes, four legislators announced their anti-Prop 27 stance last week: Senate President Pro Tempore Toni Atkins, D-San Diego; Senate Minority Leader Scott Wilk, R-Santa Clarita; Assembly Speaker Anthony Rendon, D-Lakewood; Assembly Minority Leader James Gallagher, R-Yuba City.