Arizona Sports Betting Bill Continues Limp Forward In Senate

Within a span of minutes on Tuesday, the Arizona Senate pulled a sports betting bill and then brought it back to life in the form of an amendment — onto a historical horse racing bill. The Senate Appropriations Committee hearing was nothing if not good theater, complete with passionate players, apparent villains, and in the end, a somewhat happy ending for those who favor legal sports betting.

Over the last week, the Arizona Senate has wrangled sports betting every way from Sunday, passing it out of the Commerce Committee last week with grave reservations and lots of finger pointing, and this week attaching it to a bill that would trigger what those in gaming call the “poison pill.” SB 1794, a historical horse racing bill, could potentially violate tribal-state compacts, but instead of moving sports betting on its own, the Appropriations Committee voted to attach it to HHR with a series of last-minute amendments, including one that came in after the committee deadline, but was somehow allowed. The vote was 5-4-1.

Those in favor — from a racetrack to the state’s benevolent horseman’s association to the licensed beverage association — gave impassioned testimony as to why SB 1794 doesn’t violate the compacts and how allowing sports betting at bars, restaurants, racetracks, or anywhere else is the right thing to do.

Members of the Arizona Licensed Beverage Association have “longed for the opportunity to expand the entertainment opportunities in their businesses,” testified Ben Isaacson on behalf of the organization. And an amended sports wagering and/or historical horse racing bill would put an end to that longing, he said.

Would HHR trigger Arizona’s ‘poison pill?’

The original sports betting bill, SB 1797, which is now a 63-page amendment, would allow for retail and statewide digital sports wagering, with potential online platforms tethered to 10 tribal casinos and 10 professional sports franchises or venues.

It seems fairly clear to most that SB 1794 does, in fact, violate tribal-state compacts and would allow the tribes to stop making revenue-sharing payments to the state. According to existing compacts, tribal casinos pay up to 8% of gross gaming revenue to state and local jurisdictions annually, and in 2020, they contributed nearly $45.7 million to the Arizona Benefits Fund. Since 2004, when the Department of Gaming first started tracking contributions, the tribes have contributed about $1.5 billion. Lawyer Kurt Altman, who was testifying on behalf of ESL Gaming, offered another view.

“The attorney general argues why historical horse racing would trigger the poison pill,” he testified, “but I think I can make a better argument that it doesn’t. We’re doing parimutuel wagering, which was legal long before 2002 [when the pacts were first signed], and any form of gambling that was legal before 2002 does not violate the pacts.”

But in 2018, state Attorney General Mark Brnovich wrote:

Wagering on historic racing through the use of player terminals has been prohibited in Arizona since before May 1, 2002. Any change to Arizona’s pre-May 1, 2002 gaming laws could cause one of the signatories to the Arizona Tribal-State Gaming Compact (the “Compact”)[1] to initiate action under Compact section 3(h)(1), which would limit the State’s ability to regulate some aspects of tribal gaming and dramatically decrease the revenues the tribes must provide to the State.

Lawmakers seemed relatively unmoved by any of the testimony, making it likely that there was an agenda that went well beyond the bills at hand. Stakeholders in Arizona all appear to be on board with the sports betting bills making their way through both the House (HB 2772 is already out of committee on on the House floor) and Senate. Both bills were initiated by Gov. Doug Ducey, but were filed by sponsors Rep. Jeff Weninger and T.J. Shope. All three are Republicans.

Tribal leaders testified that they support the bills, which would allow for statewide mobile sports betting, both on and off reservations. Sportsbook operators, who would be able to partner with either a tribe or a professional sports venue, offered testimony in both the House and Senate in support of the bill.

Arizona lawmakers just playing politics now

So, all the wrangling appears to come down to politics. Last week, in the Senate Commerce Committee, some members were upset at being kept in the dark about the compacting process. Anyone involved in the compacting process must sign a non-disclosure agreement. The net result is that lawmakers felt they were voting on a bill without knowing the details of the compact, while the tribes are involved in the compacting process, but weren’t sure what was in the bills. In essence, few people involved have a clear view of both the legislative process and the compacting process.

But Tuesday, the rift went deeper than that. There were few questions and little discussion about the content of the sports betting amendment added to SB 1794. Attaching sports betting to HHR could effectively kill the issue for this session. Or it could slow the process down. Or it could just be an attempt to exert power over the governor with the intent of stripping the HHR portion of the bill when it reaches the Senate floor.

Whatever the goal, lawmakers in both chambers now have some form of a sports betting bill to consider, which they must act on by key legislative deadlines. In the House, a bill that originates in the House must be voted on by the full chamber by March 10, and a bill that originated in the Senate must be voted on by the full House by April 10. The Senate has similar deadlines, and the legislature is set to adjourn on April 24.

The question now is which bill will move forward. HB 2772 moved much more easily through the House, and it would be a surprise if it doesn’t get full House approval. If that does happen, which Senate committee it lands in could seal the bill’s fate. On the flip side, should the full Senate strip HHR from SB 1794 and pass it with the sports betting amendment, the bill should have a fairly clear path through the House.

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