Arizona Lawmakers Approve Sports Betting Legislation

Jay Dieffenbach

The Arizona sports landscape is going to change dramatically with the state Legislature triggering a brave new world in sports betting, which now appears to be coming to the Grand Canyon State by the end of 2021.

Gov. Doug Ducey is expected to sign House Bill 2772 into law, legalizing sports and fantasy betting, as well as a new keno game run by the state lottery.

At long last, Arizona joins the ranks of states approving sports-betting legislation in the wake of the landmark 2018 U.S. Supreme Court decision.

Arizona lawmakers voted on final approval late Monday, 23-6 in favor, with one abstention. A key provision benefiting casinos owned by Native American tribes was a helpful factor, and sports betting will now be allowed on and off reservations.

Ducey negotiated the package and, just after the vote, tweeted his response.

The result will allow bettors to place wagers on professional and college sports at sites owned by pro sports teams and at tribal casinos. It also allows gambling on fantasy sports.

The state’s four major pro teams – the NHL’s Arizona Coyotes, Major League Baseball’s Arizona Diamondbacks, the NBA’s Phoenix Suns and NFL’s Arizona Cardinals – will be able to run sports-betting operations at their venues, at a retail location within a quarter-mile and online.

There would be 10 licenses awarded to sports, which could include professional golf and even NASCAR.

Tribes would also receive 10 licenses and could run sportsbooks at their casinos in the state.

Perhaps most important for eager sports bettors: All can offer mobile betting, with online sportsbooks such as FanDuel, DraftKings and BetMGM among the likely participants.

The Governor and the Tribes

In his January State of the State address, Ducey heralded “a modernized gaming compact that will bring in more revenue for our tribal nations and our state budget.”

The governor’s prime role during the process has included ongoing negotiations with the tribes as he looked to extend a 20-year agreement that was set to expire.

The target goal of a new deal with the tribes is tied to raising more revenue for Arizona by expanding different kinds of gambling outside of tribal-run casinos.

Tribes, already offering slot machines, blackjack and poker, now will be free to expand their exclusive gambling offerings, adding games such as Baccarat and craps.

Finances and Particulars

Rep. Jeff Weninger, a Chandler Republican who sponsored the bill, said it could easily create $100 million per year for the state’s general fund.

Some keys:

  • The bill officially brings state-wide mobile sports betting to Arizona residents
  • Daily fantasy sports (DFS) also is included in the bill
  • Sports-betting license holders may now contract with online wagering companies such as FanDuel Group and DraftKings
  • Betting on collegiate sports is allowed, but not prop bets

Sportsbooks would see an 8% tax rate on all revenue after payouts to gamblers, and, though the financial impact for the state is somewhat uncertain, there are estimates floating out there.

From an Arizona Republic story: 

The Joint Legislative Budget Committee, which reviews new laws to estimate their financial impact, estimates all the new gambling under the law will bring the state about $34 million in new annual revenue, but warned that the estimate is based only on broad details in the bill and the experience of other states.

For example, the JLBC predicts that the Department of Gaming will charge sportsbook operators $150,000 annually for their license, though that is not set in the law.

The JLBC estimates sports betting alone will bring about $15 million in revenue to the state general fund, based on those fees and tax collections. The estimate is based on sports betting in Iowa, Indiana, Pennsylvania and West Virginia.

The Fantasy Aspect

Sports fans do enjoy their fantasy sports, many of which were under a cloud of mystery in terms of their legal standing.

But no more.

Under this bill, the Arizona Department of Gaming can now license fantasy sports operators, who can take bets online.

If you’ve never played fantasy sports, it works like this: Bettors select their virtual teams made up of actual players in recognized sports and wager on them.

The Republic also reported that “fraternal organizations, veterans' groups and horse tracks could install kiosks for fantasy betting.”

As is usually the case in matters of new sports-betting laws, not everyone is happy.

Sen. Sally Ann Gonzales, D-Tucson, called the legislation “a sham," criticizing fellow Democrats for supporting the bill in exchange for an agreement from the governor to let them direct how $90 million in federal COVID-19 funding from the federal government is spent in the state.

She said the House and Senate would each get $45 million to allocate.

Sen. Rebecca Rios, D-Phoenix , said Gonzales was not being truthful and that a majority of Democrats supported the measure before meeting with the governor over the COVID funds.

"This was a negotiation years in the making in which numerous tribal leaders have spoken to my caucus on numerous Zoom meetings to say this is what they want," Rios said.

"We've worked for years with the tribes on this," Ducey spokesman C.J. Karamargin said Monday in the Arizona Republic story. "This is in everyone's best interest."

As for the college betting angle, the Arizona Board of Regents also opposes the measure but, according to Gonzales, lawmakers solved that issue.

"They've gotten their marching orders," she said. "If they want budgets for their universities, they better stay out of this fight."

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