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Staff Report
City Council
Item No. 6.F
Meeting Date: September 14, 2022
From: Charles McClendon, City Manager
Title: Resolution Regarding Propositions 26 and 27
City Council
RECOMMENDATION:
To consider resolutions related to Propositions 26 and 27.
BACKGROUND:
Propositions 26 and 27 have qualified for the statewide election ballot for November 8, 2022. In early July officials from the Agua Caliente Band of Cahuilla Indians (ACBCI) reached out to staff requesting a meeting with Mayor Gutierrez to discuss the ACBCI position on the propositions and to seek support for that position. The meeting was held on July 6 and tribal chairman Reid Milanovich explained the ACBCI position on the propositions and asked for support from Cathedral City. Subse quently the topic was raised by Mayor Gutierrez during the discussion of future agenda items at the August 10, 2022 City Council meeting. Council agreed to ask staff to place the item on the next agenda to allow for a full Council discussion.
Council discussed the resolutions during the August 24 Council meeting. No motions related to the resolutions were passed and Council asked for the item to be placed on the next agenda when all Councilmembers would be present.
DISCUSSION:
Following is a summary of the two propositions taken from the California Secretary of State website:
Proposition 26
1886. (19-0029A1)
AUTHORIZES NEW TYPES OF GAMBLING. INITIATIVE CONSTITUTIONAL AND STATUTORY AMENDMENT. Allows federally recognized Native American tribes to operate roulette, dice games, and sports wagering on tribal lands, subject to compacts negotiated by the Governor and ratified by the Legislature. Beginning in 2022, allows on -site sports wagering at only privately operated horse -racing tracks in four specified c ounties for persons 21 years or older. Imposes 10% tax on sports-wagering profits at horse -racing tracks; directs portion of revenues to
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enforcement and problem -gambling programs. Prohibits marketing of sports wagering to persons under 21. Authorizes priva te lawsuits to enforce other gambling laws. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Increased state revenues, potentially reaching the tens of millions of dollars annually, from payments made by facilities offering sports wagering and new civil penalties authorized by this measure. Some portion of these revenues would reflect a shift from other existing state and local revenues. Increased state regulatory costs, potentially reaching the low tens of millions of dollars annually. Some or all of these costs would be offset by the increased revenue or reimbursements to the state. Increased state enforcement costs, not likely to exceed several million dollars annually, related to a new civil enforcement tool for enforcing certain gaming laws. (19-0029A1.)
Proposition 27
1911. (21-0017A1)
ALLOWS ONLINE AND MOBILE SPORTS WAGERING. INITIATIVE
CONSTITUTIONAL AMENDMENT AND STATUTE. Legalizes online and mobile sports wagering, which currently is prohibited, for persons 21 years and older.
Such wagering may be offered only by federally recognized Indian t ribes and eligible businesses that contract with them. Individuals placing bets must be in California and not located on Indian lands. Imposes 10% tax on sports -wagering revenues and licensing fees. Directs tax and licensing revenues first to regulatory costs, then remainder to: 85% to homelessness programs; 15% to nonparticipating tribes. Specifies licensing, regulatory, consumer -protection, and betting-integrity standards for sports wagering. Summary of estimate by Legislative Analyst and Director of Fina nce of fiscal impact on state and local governments: Increased state revenues, potentially reaching the mid- hundreds of millions of dollars annually, from online sports wagering-related taxes, licensing fees, and penalties. Some portion of these revenues would reflect a shift from other existing state and local revenues. Increased state regulatory costs, potentially reaching the mid-tens of millions of dollars annually, that would be fully or partially offset by the increased revenues. (21- 0017A1.)
The full analysis of the propositions from the Legislative Analyst’s Office are attached.
The ACBCI seek Council support for resolutions in support of Propos ition 26 and in opposition to Proposition 27. The sample resolutions proposed by the tribe are attached.
The CalCities Board took a position of neutral on Proposition 26 and opposed on Proposition 27. The following summary comes from the CalCities website:
Action taken on gaming ballot measures
After an update on several priority bills in the Legislature — including measures related to housing and land use, behavioral health services, single -use plastics, and transportation — and ongoing state budget negotiations, the Board took action on two ballot measures that have qualified for the November ballot.
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The Board voted to take a neutral position on Proposition 26, the Cali fornia Sports Wagering Regulation and Unlawful Enforcement Act. This ballot measure would legalize in-person sports wagering on tribal lands and specific horse racing tracks and allow roulette and dice games at tribal casinos. It would also impose a new 10% state tax on horse racing tracks based upon daily sports wagers.
Additionally, the Board voted to oppose Proposition 27, the California Legalize Sports Betting and Revenue for Homelessness Prevention Fund, for several reasons: It jeopardizes local tax re venues, fails to ensure that all California cities receive funding to address homelessness, lacks proper enforcement mechanisms commensurate with the substantial increase in virtual sports wagering, and creates an unlevel playing field between existing car drooms and new market participants.
This proposed measure would authorize online sports wagering in California upon the payment of a multimillion -dollar licensing fee and periodic renewal fees.
It would also impose taxes payable to the state, some of which would be required to be allocated to the Homeless Housing, Assistance, and Prevention Program.
FISCAL IMPACT:
None with these resolutions
ATTACHMENTS:
Prop26-Legislative Analysis
Prop27-Leiglative Analysis
Resolution Prop 26
Resolution Prop 27