Pair Of Lawsuits Threaten To Derail Launch Of Arizona Sports Betting

Written By John Holden on August 31, 2021 - Last Updated on September 2, 2021
Lawsuits Threaten Arizona Sports Betting Launch

UPDATE: Maricopa County Superior Court Judge James Smith moved the Yavapai-Prescott Indian Tribe emergency hearing to Sept. 2. After hearing what he might expect from both the plaintiffs and defendants, Smith scheduled a hearing for Sept. 6. The judge informed all parties that he expects to render a decision that night, adding that he expects an appeal thereafter.

On Aug. 26, 2021, just before the close of business at the Maricopa County Superior Court, a pair of lawsuits were filed seeking to stop the implementation of expanded gaming across Arizona. The cases came after the state award eight licenses to professional sports teams and ten licenses to tribes.

The first lawsuit was filed by TP Racing, which was denied a sports wagering operator license. A mere 33 minutes later, the second lawsuit came in on behalf of the Yavapai-Prescott Indian Tribe, which did not receive one of the 10 licenses afforded to tribes.

Each case received an emergency hearing scheduled for Sept. 3. A ruling in favor of either of these plaintiffs could halt the state’s sports betting rollout slated for next week.

AZ sports betting lawsuit #1: The TP Racing complaint

TP Racing kicked it all off. The owner of the Turf Paradise horse-racing track in Phoenix filed suit alleging that the denial of their sports wagering operator license was “arbitrary and capricious, not supported by substantial evidence and/or an abuse of discretion.”

The TP Racing allegations effectively center on the classification of “professional sports franchise” by the Arizona Department of Gaming. The organization argues that they “hold a private commercial horseracing franchise from the National Thoroughbred Racing Association.”

Problematic drafting by Arizona lawmakers?

The Arizona statute’s language, indeed, might be problematic, stating:

“An owner of an Arizona professional sports team or franchise, [ii] operator of a sports facility that hosts an annual tournament on the P.G.A. tour, [iii] promotor of a national association for stock car auto racing national touring race conducted in this state or [iv] the owner’s, operator’s or promoter’s designee….”

TP Racing’s application for sports betting license denied

TP Racing’s complaint relays that the organization applied for a sports betting license. On Aug. 10, the ADG requested for additional information, which TP Racing fulfilled over the next three days.

However, the ADG denied the application on Aug. 16. In a letter dated the following day, the department noted that TP Racing did not qualify as a professional sport, nor did it meet the requirement of a sports facility.

On Aug. 20, TP Racing appealed the decision, which is still pending.

What does TP Racing want?

TP Racing is seeking declaratory and injunctive relief, determining, judicially, the status of TP Racing under Arizona law.

Additionally, the organization has requested a court suspend the rollout of legal sports betting until TP Racing’s appeal is heard.

AZ sports betting lawsuit #2: The Yavapai-Prescott Indian Tribe complaint

The complaint filed by the Yavapai-Prescott Indian Tribe (YPIT) notes that this action stems from the legislature’s passage of HB 2772, Arizona’s bill that brought expanded gaming to the state. The tribe alleges that the law abrogates the gaming exclusivity enjoyed by tribes throughout Arizona.

Violation of the Voter Protection Act claim

The YPIT’s first claim is that HB 2772 violates an Arizona law that prohibits the legislature from deviating from voter referendums unless the passed legislation furthers the goals of the referendum.

Second, the tribe argues that the gaming expansion law violates Proposition 202, which granted tribes in the state the exclusive right to offer gaming activities on tribal lands.

Violation of the Constitutional Prohibition Against Special Laws claim

The second claim that the tribe advances is that the state constitution prohibits the special treatment afforded to Arizona’s professional teams.

As highlighted by the tribe, Arizona case law shows that courts have noted how legislation favoring a particularly small class can become especially problematic under the state constitution.

The Unlawful Emergency Measure and Equal Protection claims

The third allegation put forth by the YPIT is that HB 2772 should not qualify as an emergency measure. The tribe also asserts that the law is a violation of Arizona’s equal protection clause, which states:

“No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.”

Like the argument advanced by West Flagler Associates regarding sports betting in Florida, the plaintiffs argue that the analysis should be conducted under a strict scrutiny lens — the most exacting level of review for the government to justify an action.

The YPIT argues negotiations to amend the state’s gaming compacts excluded the tribe. The alleged exclusion of the tribe would eliminate its exclusivity granted under the previously agreed upon compact.

What does the YPIT want?

The Yavapai-Prescott seeks an injunction and declaration that HB 2772 is unconstitutional. However, the tribe will first seek a temporary restraining order to stop the launch of sports betting.

What to make of these claims?

At first glance, many appeared skeptical of these claims given their timing — just after the ADG announced the allocation of sports betting licenses. Who’s going to file a lawsuit if they receive approval?

But, on close examination, both these lawsuits have serious allegations in them.

The Yavapai-Prescott lawsuit raises substantial questions about the process for amending the 2003 compact that took place earlier this year. The tribe may also have the ability to challenge the validity of the compact in federal court. But that is a matter for another day.

Meanwhile, the TP Racing complaint raises pretty valid questions about the statute’s drafting. While one may not automatically consider Turf Paradise a professional sports venue or franchise, TP Racing makes a viable argument that the state of Arizona has previously considered them such.

Turf Paradise opened in 1956. As TP Racing notes, the ADG on its website calls the facility “one of Arizona’s first sports franchises.”

Photo by Dreamstime
John Holden Avatar
Written by
John Holden

View all posts by John Holden