Arizona Governor Provides Latest Necessary Push Toward Legalized Sports Wagering

• Gov. Ducey needs to secure cooperation from Native American tribes to move ahead
• Many states including Arizona see sports wagering as necessary helping COVID-19 victims
• 20-year compacts ending plus renewed strategy could forge a “win-win” solution for AZ

Add Arizona to the list of US states quickly adding sports wagering toward the top of their agenda list, helping them out of their financial deficit due to COVID-19.

Arizona Governor Doug Ducey realizes it will not be an easy process, but he seems willing to make the sacrifices and do the work necessary now to speed the process. That is the basic takeaway from recent comments he has made while trying to get momentum building to make changes for sportsbooks beginning operation ASAP.

Following a similar pattern to Governor Andrew Cuomo in New York and taking place in the state of Washington, Ducey addressed his desire to put together a new plan in his State of the State address. This included the potential of Arizona sports wagering both on and off the state’s tribal reservations.

The timing might be a bit touchy as Ducey recently negotiated new gaming compacts for all Arizona Native American tribes with that 20-year agreement not set to expire until 2022. In speculating on the current issue, he said:

There’s also an opportunity for a modernized gaming compact that will bring in more revenue for our tribal nations and our state budget,

The Challenge

Getting sports wagering legalized is not a straightforward path. Existing state laws would need to be changed and receive mandatory approval by voters. Also, the federal law governing tribal gaming off-reservation would require further clarification. The Indian Gaming Regulatory Act mandates that tribal gaming must take place on reservation land. There would be the contention that mobile (online) wagering occurs at the location of the server processing the bet, rather than on the device accepting it outside.

In 2020 another bill sponsored by Sen. Sonny Borrelli and Rep. Steve Pierce failed to gain traction. This year with Gov. Ducey’s support it might advance further ahead, although it leans into a “gray area” allowing sports betting kiosks at bars and other locations throughout Arizona with this language:

An Indian tribe that is authorized to operate sports betting pursuant to this section may operate sports betting through kiosks or similar machines that are located at one or more premises that have a bar license, a beer and wine bar license or a private club license that is issued pursuant title 4 and may enter into a lease or rental agreement for the purpose of operating sports betting with a person that holds a bar license, a beer and wine bar license or a private club license.

The New Solution

Ducey has proposed to work out the new compacts with the state’s native Indian tribes to provide them the exclusive right to casino-style gaming in Arizona. While the 20-year compacts are ending it might give the state some extra leverage in negotiations.

In viewing other similar and current situations involving tribal compacts, the tribes have been reluctant to allow sports wagering. Or in most cases, demand control overall activity. The most prominent example is in California.

In this case, the tribes seem interested in keeping the revenues flowing. And for Ducey, revised compacts are the optimum way to generate additional dollars for the state without imposing new taxes at a crucial time he wants lawmakers to enact more tax cuts. In a “win-win situation”, the new deal, Ducey said, will result in more revenue for the tribes and more money for the state government, which currently gets a share of tribal gaming revenues.

Ducey press aide C.J. Karamargin told Capitol Media Services:

Our goal is to bring Arizona gaming into the 21st century. A lot has changed since the first compacts were signed, back when cellphones weren’t the thing they are now. The world looks a lot different today and our proposal is intended to reflect the way people live their lives today.

A Wait and See

Ducey has attempted this strategy before targeting off-reservation keno but failing due to tribal compacts. Perhaps learning from that, he is adjusting a new strategy with better timing. The key being keeping the tribes satisfied while simultaneously introducing sports wagering elsewhere.

Arizona will also have to make traditional new decisions on tax allocations, etc. And whether to prohibit wagering on in-state college teams including Arizona and Arizona State.