Gambling Expansion Proposed for Arizona

Gov. Doug Ducey and state lawmakers are working on a major expansion of gambling in Arizona that could include new tribal casinos in metro Phoenix, sports betting on and off the reservations, new table games at tribal casinos and keno from the state lottery.

The expansion would raise revenue for the state, the tribes and major-league teams that would run sportsbooks, helping them all recover from the lingering pandemic, a spokeswoman for the governor said this week.

The expansion is moving in two parts, one that is public and one that, so far, is not.

Arizona’s tribes have gaming compacts with the state that expire over the next few years. The governor is renegotiating those to amend and extend them for 20 years. The last update was approved by voters in 2002 with Proposition 202, which established a framework for state gambling.

The tribes want to expand their operations and, to secure the governor’s backing, some support new off-reservation and non-tribal gambling including sportsbooks, fantasy-league betting and keno.

Those ideas are moving along via widely supported bills at the Legislature that are the subject of public hearings.

The few details that have emerged from the private negotiations in the Governor’s Office include new games and new casinos in the Phoenix area. Those changes have yet to be part of the discussion at the Legislature, however.

“It ensures that it only takes place on a tribal defined geographic location around the Phoenix metro area,” Ducey’s deputy chief of staff Gretchen Conger said of new casinos in metro Phoenix. “It is really specific of where they can be.”

But Conger, citing a nondisclosure agreement with the tribes, said she was unable to say where those new casinos could locate or how many could open.

“Limited new facilities,” Conger said. “Very explicit and limited.”

Among the most controversial developments in metro Phoenix in recent years was the Desert Diamond West Valley Casino built, by the Tohono O’Odham Nation near Glendale. Ducey, city leaders and some of Arizona’s congressional delegation all tried unsuccessfully to stop that project from moving forward for years.

The tribes are in line to get more than just new casino opportunities through the compact amendments, though, according to the Governor’s Office.

Arizona tribes can offer only card games such as blackjack and poker under the current agreements. The amendments could include new games such as baccarat, craps and roulette, according to the Governor’s Office.

“The governor’s intent on renegotiating some of the terms of these compacts through amendments is to modernize them and give more flexibility to the state,” Conger said. “In 2002, when Prop. 202 was passed, things like a cellphone weren’t even contemplated for the possibility of mobile betting. That is the purpose of modernizing the compacts.”

She said Ducey wants to keep gambling “in line with what the voters approved.”

“He cares a lot about the culture of the state and ensuring we maintain that culture,” Conger said. “In addition, he wanted to make sure to increase revenue to the state. An added benefit is this also increases revenue to the tribes.”

Sixteen tribes run 25 casinos in Arizona, according to the Department of Gaming, and another six have slot machine rights they can lease to other tribes. Tribes pay 1% to 8% of their gambling revenue to state and local governments.

The tribal casinos operate about 13,500 slot machines, according to the latest report from the state, with about 280 blackjack tables and about 130 poker tables. That is far below the 20,000 slots and 3,600 card tables allowed under current compacts, according to the Arizona Department of Gaming.

The lawmakers and Governor’s Office do not have an estimate on how much money the gambling expansion would bring to the state.

In the last fiscal year, which ended in June, tribal casinos had more than $2 billion in revenue and contributed more than $102 million to the state, according to the Department of Gaming.

So far, much of the attention on the gambling expansion is on sports betting.

Ducey has shown enthusiasm about bringing sports betting to Arizona since a U.S. Supreme Court ruling in 2018 allowed states to do so.

Twenty states and Washington, D.C. now allow sports betting, while it’s legal but not yet operational in five others. Fourteen more states have pending legislation, according to the American Gaming Association.

In Arizona, tribes must approve of any off-reservation gambling expansions and up until now they have declined to do so. Identical bills in the House and Senate would allow sports betting both on and off reservations, with the support of several tribes. No formal opposition has emerged, and not one person has signed on to oppose the bills.

The Gila River Indian Community, Salt River Pima-Maricopa Indian Community, Colorado River Indian Tribes, Tohono O’Odham Nation, Fort McDowell Yavapai Nation, Navajo Nation, Hualapai Tribe and Arizona Indian Gaming Association have all signed in support of one or both of the identical measures, which can move through the chambers concurrently.

Rep. Jeff Weninger, R-Chandler, is sponsoring House Bill 2772, which passed the Commerce Committee with bipartisan support Tuesday.

He said that the bill would allow for 10 sports betting license holders to set up betting sites in or near major sports stadiums, as well as provide 10 licenses to tribes to set up sports betting sites.

The sports-betting license holders could contract with online wagering companies such as FanDuel Group or DraftKings, both of which are supporting the bill. Additional support comes from other gambling companies such as Bally’s Corp., which has touted the market potential for sports betting to investors.

Weninger said organizations like veteran’s groups could also host fantasy-league gambling, and that Arizonans could start betting on sports by late summer if negotiations run smoothly.

Only one lawmaker opposed the measure, and not because of additional casinos. Instead, she mostly had questions about the data security of companies that operate online sports wagering.

Rep. David Cook, R-Globe, showed some hesitancy to approve the bill without knowing what the governor was offering the tribes in return. Still, he voted for the measure despite those reservations.

“Do you think we will be able to see the agreed upon gaming pact?” Cook asked supporters of the bill.

The Senate version of the bill was held in committee on Wednesday.

The Governor’s Office has no anticipated timeline for finalizing the compacts and making them public.

Lawmakers and media were given brief outlines that sketch out the rough contours of what is in the negotiations.

Amendments to the tribal compacts must receive approval from the U.S. Department of Interior. The new sports-betting and other laws would not take effect until the compacts are posted to the U.S. Federal Register.

The Governor’s Office supports the bills, as they reflect what Ducey has negotiated with the tribes, Conger said.

The sports wagering bills also have support from the Arizona Diamondbacks, Arizona Cardinals, PGA Tour, Phoenix Suns, MLB and NBA.

Amilyn Pierce, a lobbyist for the Diamondbacks, said at a hearing Tuesday that not allowing professional teams to host sports betting in Arizona would put the baseball team at a “competitive disadvantage.”

“We must stay current when it comes to meeting the needs and wants of our fans,” she said. “Arizona cannot be left behind as the rest of the industry continues to modernize.”

Lawmakers asked brief questions about conflicts in allowing the teams to run sports betting. Other states with legalized sports betting have allowed teams to run sports betting venues, so Arizona would not break new ground there.

A similar deal was announced on Jan. 26 between FanDuel Group and the Washington Football Team in Virginia, where the state allowed the team to partner with a sport-wagering operator.

That’s how things would work in Arizona under the bill.

“Pro teams do not actually operate sportsbooks even if they partner for a license. Operators like DraftKings and FanDuel run the actual book,” said Adam Candee, editor of Legal Sports Report, a Las Vegas-based sports betting news organization that tracks sports-betting legislation nationwide.

“The perception many people will have, however, is that the team has an interest in who wins the game for betting purposes. While that is absolutely not true, it’s a perception all involved need to be aware of.”