Arizona House committee moved a proposal onto the House floor Tuesday to allow professional and college sports betting in the state. The move comes after the Commerce Committee approved an amended version of Rep. Jeff Weninger’s HB 2772 after hearing from the stakeholders (teams and the tribes) that it supports the deal Gov. Doug Ducey struck with tribes.

In other states, lawmakers usually first regulate sports betting and then compact with their native tribes to allow it. But Ducey took a different road as he already “has an agreement in principle” with the tribes, which essentially means that besides legalizing the industry, operators could conceivably kick-off digital sports betting operations across the state in 2021.

Details of the Hearing

The House Commerce Committee approved House Bill 2772 with a 9-1 vote, which would also legalize fantasy sports betting from digital operators, and new betting at horse racing tracks and entities like the VFW, which would be allowed to sell Keno tickets.

Although there were no representatives of the state’s tribes present at the hearing, a lobbyist representing two smaller tribes announced that would welcome legal and regulated sports betting to the state. He stated that HB 2772 had taken the tribes into consideration and included the setup of a tribal trust fund for the tribes to benefit from if sports betting was to become legal. “This is part of the package of very carefully negotiated agreements between the state of Arizona and the tribes,” he said. “This bill is going to finalize an agreement that will bring funds to many different tribes. The original idea of the gaming compacts was that all tribes would benefit, not just the big tribes in the metro areas.”

Among voters that were in favor of the bill, there was a little controversy. Rep. Diego Espinoza said he liked to see bars and restaurants excluded, indicating to withdraw the measure in the full House if they were included. However, David Delos, president of the Arizona Licensed Beverage Association, took to opportunity to present his case to the committee, asking how it can be that only the giant players should benefit at the expense of small businesses, which are not even mentioned in the bill.

Democratic Rep. Pamela Powers Hannley said she was “an outlier” when she cast the lone no-vote over a few concerns, including data privacy and problem gaming.

What Changes Does HB 2772 Seek?

The bill would allow for retail and online betting via operators tethered to professional sports franchises and tribal casinos. There would be ten licenses assigned for pro franchises and tribal casinos, and ten retail-only licenses for horse racetracks. The number seems to be a bit tricky for the 16 federally recognized tribes which operate 24 casinos; according to the limited numbers, some of those would be left out. However, Weninger, the prime mover of the bill, said the tribes are on board.

If the bill passes, Arizona will become the second state where the same body would regulate tribal and commercial gaming. Michigan is the first state to do so, which launched only in January this year.

How Have We Reached Here?

The new betting options have been broadly anticipated since the Republican governor unveiled “an opportunity for a modernized gaming compact to draw more revenue” for Arizona’s tribal nations and the state budget in his State of the State address in January. Ducey has delved into a new compact with tribes for several years, with a view to boosting state revenue by extending gambling outside of tribal-operated casinos. All major professional sports teams in the Copper State support the bill, which would enable them to operate sportsbooks inside and near their venues.

Arizona will extract around 8% of the new non-tribal gambling profit, meant for the General Fund. The proceeds from a maximum 8% tax on tribal gaming profits will be reimbursed to special state accounts and local governments. Kelsey Lundy, a lobbyist representing the three leading fantasy sports betting companies in the country, said they estimate around $42 million in annual state revenue.

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