A Closer Look at SB 1158, Arizona’s Newly Proposed Sports Betting Bill

Is Arizona warming to the idea of legal sports betting? Senator Sonny Borrelli (R-Lake Havasu City) and two other republican lawmakers believe the time is ripe for the Grand Canyon State to take advantage of changes in the US sports betting landscape and tap into a significant new source of tax revenue that Borrelli believes could be worth millions of dollars for the state.

Senator Borrelli believes his proposed bill, SB  1158, will be an easier sell than some other proposals because it proposes giving Arizona’s gaming tribes exclusive rights to offer sports betting. This should, in theory, bypass some of the issues that have cropped up in other states pitting tribal gaming interests against other industry stakeholders.

So, what is SB 1158 all about?

Sen. Borrelli’s bill proposes authorizing Arizona’s tribes to take wagers at their casinos as well as through kiosks located off tribal land. Under SB 1158, bars and private clubs such as Veterans of Foreign Wars and American Legion would be able to lease space to the tribes for betting kiosks.

This arrangement would allow tribes to make money from sports betting, bars and clubs to make money by leasing space for betting kiosks and the state to get a cut of the action through a proposed 6.75% tax. In other words, everyone stands to make some money from AZ sports betting under the proposal.

According to the text of SB 1158, “Each federally recognized Indian tribe that has a tribal-state gaming compact… and that has tribal headquarters on Indian lands located in this state may operate sports betting as defined in section 13-3301. No other person or entity may operate sports betting.”

The bill does not discuss the types of bets that would be allowed in favor of having the Arizona Department of Gaming make that determination.

For all intents and purposes, the bill defines sports betting as “the placement of a wager on the outcome of a sporting event where a winning outcome is based on the score, point total, point spread or performance of a team in a team sport or on the score, point total, point spread or performance of an individual athlete in a non-team sport.”

Sen. Borelli has added an emergency clause to SB 1158 which means that should it pass, it will head to the governor’s table and once signed, will go into effect immediately.

New Sports Betting Bill is a “Win-Win” For All

Under Borelli’s proposed law, any federally recognized tribe in Arizona that has a tribe-state compact will be allowed to operate sports gambling. The Senator said he has met with tribes and other stakeholders to see if any changes needed to be made to SB 1158 before he introduced it, showing that he was serious about making sure that everyone was on-board with the terms.

“This is a great way for the tribes to make some money, a great way for the state to make some money, and for the adult-beverage industry to also make money,” he told AZCentral.com.

Borelli added that the bill doesn’t force anyone to do anything; it simply provides options. He said the bill respects the tribal compact and their sovereignty, and all tribes will have total freedom to opt in or out as they wish.

“It’s all permissive,” he told KtarNews. “If they do not want to put that kiosk in a local bar away from the casino, that’s totally up to them and, obviously, the bar owners. It’s a win-win for everybody.”

Borelli has also pointed to the benefits the bill promises for Arizonians, especially those in the more rural areas who would also like to get in on sports betting. He put it this way during a radio interview with KtarNews (92.3 FM):

“Those licensed liquor establishments would be able to have that kiosk in their establishment, so a patron could place a bet. Go bet 10 bucks on the Cardinals and instead of going 40, 50, even 100 miles to the nearest tribal casino, they could do it in their hometown.”

The Senator said that while he could, like many others do, drive across the border to Nevada to place a bet, he would rather see that money remain in Arizona.

Governor Open to Idea of Sports Betting

Like many other governors and lawmakers across the United States, Arizona’s Governor Doug Ducey watched closely when the US Supreme Court struck down the 1992 federal Professional and Amateur Sports Protection Act, ruling it unconstitutional in May of last year. The 6-3 decision gave individual states the right to regulate sports betting as they see fit.

Upon hearing the ruling, Republican Governor Ducey described it as “positive news”.

The ruling last May could not have come at a better time, as Ducey and the tribes were about to start renegotiating the original gaming compacts that were authorized by voters in 2002. With the compacts set to expire in 2022, the Governor is keen to see them modernized and see the state get a better share of the profits in return for giving the tribes exclusive rights over certain forms of gambling.

Ducey believes the Supreme Court ruling presents an opportunity to incorporate sports betting into a new compact, to expand gaming in Arizona and to balance the state budget.

The tribes also see the PAPSA scrapping as a positive opportunity. Steven Hart, an attorney who represents the Navajo Nation, told Tuscson.com last year that the tribe would be “very interested in sports betting and in finding ways to expand their casino offerings.”

Similar sentiments were echoed by Stephen Roe, the chairman of the Gila River Indian Community, who said that the tribe was looking forward to discussing with the state regarding how they could go about developing the opportunity, which could be a win-win for the state and its tribes.

At present, 16 Arizona tribes run 24 casinos, while another six have slot machine rights they are allowed to lease to other tribes. The current gaming compacts allow tribes to run up to 18,150 gaming machines in total across the state. Currently, 15,000 machines are in operation.

Arizona Attorney General Mark Brnovich was one of the many state AGs who backed New Jersey’s challenge of the federal PAPSA law. Brnovich, a former director of the Department of Gaming, said last year that legalizing sports betting was a decision for the governor and lawmakers to make. He said he was also not concerned that a change in Arizona’s laws would lead to a huge increase in sports betting for the simple reason that so much of it is already taking place.

He also poo-poohed the fears that a change to the federal law would see a greater prospect of cheating within professional and amateur sports leagues. “If someone’s going to compromise the integrity of an athletic contest, they, quite frankly, can already do it,” said Brnovich.

Tapping in on Sports Betting Revenue

Borelli wants to get his sports betting bill up and running as soon as possible as he believes the sooner Arizona taps into the growing industry, the sooner the state will be able to benefit from the extra revenue. In fact, he hopes to have the bill passed in time for Spring Training. This, however, doesn’t seem likely since the Arizona Department of Gaming would need time to adapt to the new law.

It is not yet clear how much Arizona would bring in as a result of Borelli’s law. In 2017, an Oxford study predicted that, based on a 10% tax rate, Arizona could make just over $26 million. On the other side of the spectrum, another study estimated the state would bring in no more than $2.3 million.

Donald Siegel, of the ASU School of Public Affairs, told AZFamily.com: “If I had to bet, I would say this may not generate as much revenue as what’s being projected.”