Deciphering The Arizona Sports Betting Bill And Gaming Compact

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It was one week ago that Arizona authorized sports betting at its tribal casinos, and off-reservation through retail and mobile licensees. Both tribal operators and commercial entities will be able to offer both retail and mobile sports betting. The legalization of sports betting in Arizona falls within the purview of two documents, the 2021 Gaming Act and an amended Arizona Gaming Compact.  

The 2021 Gaming Act became law last Thursday when House Bill 2772 was signed by Gov. Doug Ducey. At the same time, the state and Arizona tribes agreed to an amended Arizona Gaming Compact.

Indications are that sportsbooks will be taking bets by fall, if not sooner. Until then, sports fans will be left to deal with some intricacies in these two documents to understand just what’s going to happen this year in Arizona. 

What Law Governs Sports Betting In Arizona

Legalization and authorization of Arizona sports betting is a state function. States were given the authority to legalize sportsbooks within their jurisdictions after the US Supreme Court struck down PASPA (the Professional and Amateur Sports Protection Act of 1992) in May 2018. Arizona exercised that authority with last Monday’s passage of the 2021 Gaming Act.

Governance of sports betting, however, is not exclusively a state function. It is a mix of state, tribal, and federal oversight of Class III gaming — which includes sports betting, called “event wagering” under Arizona law — both on and off tribal lands. In Arizona, tribal gaming falls within the Arizona Tribal-State Gaming Compact, which was last passed in 2003. The expansion of legal gaming in Arizona falls under an amended Arizona Gaming Compact. 

It’s important to understand just how these two elements work together to give Arizona sports fans a wealth of opportunity for sports betting.

Gaming On Tribal Lands Under Gaming Compacts

Gaming on tribal land is governed by state, tribal, and federal law under federally required tribal-state gaming compacts — although the tribes have historically had the upper hand. Most tribes have gaming compacts with the state government, which are approved by the Federal government, to operate gaming on their land.

Existing tribal-state compacts combined with state law have given tribes “substantial exclusivity” in exchange for Class III gaming contributions to the state known as exclusivity fees. HB 2772 provides a handful of exceptions to that exclusivity, in exchange for more gaming opportunities — including authorization of sports betting — both on- and off-reservation. 

The Arizona Gaming Act is contingent upon federal approval of a new tribal-state compact (2021 gaming compact amendment, or Arizona Gaming Compact) with tribes offering Class III gaming. Regulation of Class III gaming — including sports betting — is handled by the tribes. Monitoring that activity is a state function. 

Gambling Under Amended Arizona Gaming Compact

In Arizona, new compacts will replace 2003 compacts signed with the state, for the remainder of the existing compact term plus a renewable 10-year term. The tribe or the state can, in writing, before the end of the initial term that it doesn’t wish to renew the compact for eligible reasons. 

Authorized Class III Tribal Gaming as defined under the 2021 amended Arizona Gaming Compact includes:

  • Class III Gaming Devices (multi-station devices, kiosks, host systems) 
  • Blackjack
  • Jackpot Poker
  • Keno
  • Lottery
  • Off-track pari-mutuel wagering
  • Pari-mutuel wagering on horse races
  • Baccarat
  • Roulette
  • Craps
  • Sic bo, Pai gow
  • Dealer-controlled electronic table games
  • Event Wagering (sports betting)
  • Fantasy sports contests
  • Other gaming activity, as allowed by compact

Expanded tribal gaming opportunities, in addition to sports betting under the compact, include the addition of:

  • Fantasy sports betting
  • Baccarat and craps
  • Thousands more slot machines
  • Up to 11 new casinos statewide (four in the 10-year initial compact term)

Sports Betting On Tribal Lands

The 2021 Gaming Act permits tribal and commercial entities to apply for a license to operate mobile betting apps in the state. It also allows commercial entities to apply for a license to operate retail sportsbooks. The Act then authorizes tribes that have signed the most recent tribal-state gaming compact to offer retail sportsbooks on their lands without a state license.

Retail sports betting on tribal lands is covered by the Gaming Compact. Tribes that conduct Class III gaming on tribal lands under a compact with the state, or that have a mobile sports betting license, are authorized by the state to accept bets on sports, including e-sports, events, portions of events, individual performance, or any combo. in accordance with statute and the compact. 

Prohibitions include wagers on injuries and penalties and prop bets in a college sports event, with operators restricted from offering parlay and prop bets other than those prescribed by the Arizona Department of Gaming (ADG). 

Licensed Sports Betting Under The 2021 Arizona Gaming Act (Off Of Tribal Lands)

Licensed sports betting under the new legislation can only take place off tribal lands. Tribes are exempt from retail licensure, but up to 10 tribes that have signed the most recent gaming compact will be eligible for mobile sports betting operator licenses for bets placed off tribal land. 

There are also 10 sports betting operator licenses available under the legislation for non-tribal entities limited to the following: 

  • The owner of an Arizona professional sports team or franchise
  • Operator of a sports facility that hosts an annual PGA Tour tournament
  • Promoter of a national association for stock car auto racing national touring race in Arizona, or;
  • The owner’s, operator’s, or promoter’s designee contracted to operate both retail sports betting at a sports facility, and mobile sports betting throughout Arizona.

Licensed sports betting operators (non-tribal) can accept bets at the following location, per HB 2772: 

  • A sports betting facility within a five-block radius of the operator’s sports facility, and
  • Mobile sports betting, including bets accepted through a platform approved by the state

Arizona horse racetracks are eligible for limited sports betting licenses under the law. There would be 10 limited wagering licenses available, at 10 locations. 

Sports Betting Licenses: How Long Are They Valid? 

Sports betting licenses authorized by the ADG are valid for two years if the license is a limited wagering license, supplier license, or management services provider license. Sports betting operator licenses are valid for five years. 

The ADG will have 60 days from the date of application to grant, or deny, a sports betting operator license. 

Excluded from sports betting licensure are the following: 

  • Employees of the ADG or professional sports team
  • Collegiate, professional, or Olympic coaches and players
  • Individuals convicted of specific crimes, or who is able to directly affect event outcomes tied to wagers

State Revenue Outlook

A fiscal note on the 2021 Gaming Act estimates that the State of Arizona will generate $32.4 million in new state General Fund revenue through expanded gaming by fiscal year (FY) 2024. 

Half of that estimated revenue — or $15.2 million — is expected to be generated by sports betting.

Now that sports betting is law, all that’s required to get sportsbooks open both on- and off-reservation is federal approval of the new gaming compacts. Several tribes have already signed their compact.

How soon can federal approval be expected?  In as few as 90 days. 

About the Author

Rebecca Hanchett

Rebecca Hanchett is a political writer based in Kentucky's Bluegrass region who covers legislative developments at Gaming Today. She worked as a public affairs specialist for 23 years at the Kentucky State Capitol. A University of Kentucky grad, she has been known to watch UK basketball from time to time.

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