Recent meetings for public comment on sports betting draft rules illustrated how the Arizona Department of Gaming faces a task different from regulators in any other state to legalize sports wagering.
Perhaps because legislation started as a compact agreement, major policy points usually determined by lawmakers were left to regulators. These include number of online betting skins or brands will be allowed, license fees, tax rate and license allocation.
Given the unusual nature of these demands on a regulator, it’s no surprise the Arizona Department of Gaming (ADG) left these policy issues out of its initial set of draft rules.
Over two virtual meetings concluding Monday, ADG director Ted Vogt pleaded for stakeholder feedback on these policy issues. He got little help.
Stakeholders want one online sports betting skin
Skins turned out to be the only one of the four major policy issues that stakeholders wanted to address publicly.
David Miller of the PGA Tour/TPC Scottsdale, Joe Solosky of NASCAR, Amilyn Pierce of the Arizona Diamondbacks, Andrew Diss of the Arizona Coyotes and Andrew Winchell of FanDuel all supported one skin.
“As somebody who was involved in the conversations about the legislation, I can say with 100% certainty that it was always our belief that it would only be one skin,” Pierce said.
Matt Olin, CEO of Apache Gaming Enterprise, disagreed. He argued that the first draft of legislation brought to the House did not contemplate multiple skins. But this was edited and changed by the final version.
The law does indicate that an event wagering operator “may use more than one event wagering platform.” However, Pierce contended this language meant a licensee could use different platforms for mobile and retail.
Olin was the only speaker in favor of multiple skins. With a single skin, Arizona could have up to 20 mobile sports betting apps.
How will the Department decide tribal licenses?
A curious part of the Arizona law all along was how it allows ten licenses to professional sports entities. There aren’t that many sports teams in the state. And then it limits tribal licenses to 10 when there are 22 gaming tribes in the state. Sixteen of them operate casinos.
Perhaps the tribes reach an agreement amongst themselves to share revenue with only 10 applying for mobile sports betting licenses. But if more apply than there are licenses, the ADG will be left with the difficult task of determining which tribes are more deserving.
“There are 22 tribes in the state of Arizona,” Vogt said. “If all of them wanted to get a license, there would only be 10 available. … What sort of process would you recommend the state engage in in allocating those licenses provided there were more qualified applicants than available licenses?”
Under compact agreements, all tribes in the state can have retail sports betting at their casinos.
Racetracks must partner with sports team or tribe
Racetracks seemed surprised that they must partner with a licensed event wagering operator to offer retail sports betting at their facilities.
Dave Auther, co-owner of Arizona Downs, couldn’t believe this development.
“The deal that we would make with a sports club in order to qualify as a limited event wagering operator, does that mean a certain percentage of our income has to go to some club that already has a license? In order for us to get in the game, we have to play a club some more money?”
Vogt said it would take a contract between a limited wagering operator and one of the master licenses (sports entity or tribe).
“What would motivate a master licensee to contract with us?” Auther responded. “Is it money or goodwill or friendship?”
Auther also didn’t understand the method for limited event wagering licensing. He explained that there are three racetracks in the state, with about 40 off-track betting locations that are satellites of these tracks.
He figured a limited event wagering license would get sports betting for each track and all its OTBs. But Vogt explained that a total of 10 racetracks and OTBs would get sports betting.
“We think that’s substantially limiting our access to sportsbooks and would object to that,” Auther said.
What’s next for Arizona sports betting
The ADG is working fast to try to get sports betting up and running by the beginning of the NFL season.
Vogt said he hoped to get an updated draft of sports betting regulations out by the end of the week. That will include an updated time frame for voting on the final rules and beginning licensing.
Perhaps stakeholders provided more input on tax rate, license fees and license allocation through written comment.
“We certainly understand that Arizonans are excited at the advent of event wagering and fantasy sports,” Vogt said. “They’ve waited a long time. And so the Department in turn has set an aggressive timetable to go live. Right now our target is still Sept. 9, which coincides with the NFL season opener.”