On April 15, Arizona Governor Doug Ducey signed a sports betting bill and expansion of tribal gaming that will be one of the most comprehensive in any state in decades.
The bill Ducey signed will allow for the expansion of tribal casinos and additional table games, including baccarat, roulette, craps, pai gow, and keno— balanced by off-reservation sports betting, fantasy sports and keno.
Part of the deal is a new 20-year compact Ducey negotiated with the tribes that will allow as many as 11 new tribal casinos. The total number of slot machines could rise from its current 15,600 to a maximum of 20,500.
The sports betting bill was passed despite an apparent logjam due to old fashioned political horse-trading.
The bill’s sponsor Senator T.J. Shope had to balance the interests of the state’s gaming tribes, the professional sports leagues and the racetracks, and even bars and restaurants that wanted a piece of the action. Eventually the bars and restaurants had to settle for nothing while the racetracks got the consolation prize of money for larger purses, but not what they had sought: historical racing machines.
At the end he commented: “It’s one of those things where everybody is happy in many respects and not in other respects. But at the end of the day, it helps Arizona.”
Senator Shope had to maneuver his bill against a competing sports betting bill that also included historical horseracing machines, which were a poison pill as far as the gaming tribes were concerned because they too closely resemble slot machines—for which the tribes have insisted on a monopoly. Any bill without the tribes was DOA.
Shope talked to the competing bill’s sponsor, who was also the chairman of the Senate appropriations committee, Dave Gowan. As Shope described it to CDC Gaming Reports: “The issue in the Senate was over historic horse racing, and while I knew the appropriations chairman was coming from a good place and was genuinely trying to help, he knew I had over 20 votes, which is over two-thirds of the membership.”
That closed door conversation led to Shope’s bill moving forward. “It was never a vote problem, the votes were always there to pass the thing. It became more of a turf battle between myself and the appropriations chair, and the racetracks and all the other entities that were at the table,” said Shope.
Eventually the tribes and the non-tribal interests such as professional sports, reached a compromise. “We were kind of boxed in, but the tribes wanted to go full Vegas-style with their casinos and had to change the compact anyway, so there was some teamwork that needed to be hatched,” said Shope.
The tribes needed to give in on a total monopoly on gaming because they wanted to expand the games they could offer to include roulette and craps, but more importantly, to expand off the reservation to build casinos in the metro Phoenix area. In return, they had to concede sports betting to the racetracks and professional sports teams. The racetracks (and fraternal organizations) also got betting on fantasy sports and Keno.
The racetracks didn’t make out so good because they and the tribes have a history. In 2002 when the tribes went to the ballot box to authorize casino gaming in the state, the racetracks put up a competing initiative. The tribes have not forgotten. In addition, the tribe had been negotiating with Governor Ducey for multiple years to update their 20-year compacts, whereas the racetracks were, so to speak, late out of the gate.
Shope added, “The racetracks weren’t the only ones who came in late. We got to a point where every bar in the state wanted a license of some sort.” They too were too late.
Shope also got the assistance of former Arizona Coyotes captain Shane Doan who stopped by the Senate and lobbied individual senators.
An opponent of the bill, Senator Sally Gonzales, who is also a member of the Yaqui Tribe, opposed the bill, while admitting, “The tribes do want it and they’ve asked our leaders to vote for it, but you know how they’re doing it. With their hands behind their backs. Because they need and want a new compact and the governor is holding this legislation to pass before he signs a new compact with them.”
Even before the governor signed the bill, DraftKings expanded on its deal with the PGA Tour by announcing it would open a retail sportsbook at the golf club TPC Scottsdale. DraftKings plans to create a “19th hole” retail location at the club.
DraftKings Chief Business Officer Ezra Kucharz hailed the agreement: “This momentous effort to pursue a first-of-its-kind sportsbook with the PGA Tour is a testament to the vision of both organizations that we believe will ultimately benefit Arizona sports fans who want to legally bet on sports.”
DraftKings will also become the exclusive sportsbook partner of the Waste Management Phoenix Open golf tournament, which is played at TPC Scottsdale. The tribes got 10 sports betting licenses, with the professional sports teams such as the Arizona Diamondbacks, and Arizona Cardinals also getting 10.
The pro licenses are limited to stadiums that seat at least 10,000, which can include hosts of PGA golfing events or auto racing events, such as the Phoenix Raceway.
The tribal licenses will have to be shared out between the 16 tribes that operate 25 casinos in the state.
All 20 license holders will also be able to offer mobile sports betting. Bettors will be able to register remotely to use these sites.
The license holders are likely to work with national providers such as FanDuel and DraftKings, MGM’s BetMGM, William Hill, PointsBet, Penn Interactive (Barstool) and FOX Bet Sportsbook.
Also legalized by the bill is betting on fantasy sports, which will be limited to the racetracks and fraternal organizations such as the VFW. Fantasy sports may also be hosted by individuals if the contests aren’t open to the general public and are limited to 15 participants. These wagers will be taxed at 8 percent.
Sports betting is likely to start by the end of the year. The delay is imposed by the fact that the U.S. Department of the Interior must approve of the changes to the state tribal gaming compacts—which are separate from the enabling legislation.
It is unknown how much money the state will take in annually in new taxes on these legalized activities, but one sponsor claims it could be more than $100 million. Sports wagers will be taxed at 8 percent. Revenue from that is projected to be about $4.1 million.
However it is estimated that an estimated $3 billion a year is bet in the Arizona underground economy.
