History made with federal approval of Arizona tribal gaming compact amendment

History made with federal approval of Arizona tribal gaming compact amendment

  • John L. Smith, CDC Gaming Reports
May 26, 2021 11:43 PM
  • John L. Smith, CDC Gaming Reports

A proud Arizona Gov. Doug Ducey last month called the legislation amending the state’s compact with tribal casino operators historic, and it certainly was that.

It was, in fact, something that many believed would never happen. More cynical observers might have thought that it should never happen: Any plan to reopen the compact could lead to more trouble than profit.

But all parties appear satisfied with the updated tribal agreement, which was approved this week by a U.S. Department of the Interior led by Secretary Deb Haaland, a member of New Mexico’s Laguna Pueblo.

For his part, Ducey had a lot riding on the updated compact, which enables tribal casinos and the state’s professional sports franchises to offer legalized sports betting and opens the door to the online sports gambling giants. A failure to find common ground would have substantially set back a potential tax-revenue generator for Arizona as most of the rest of the nation embraces legal sports books.

Telling, at least from my perspective, was Ducey’s statement during an elaborate ceremony in April announcing the success of the legislation.

“I can’t overstate the impact the tribal-state gaming compact amendment and its associated legislation will have on our state,” the governor said in an Indigenous-friendly setting at the Heard Museum in Phoenix. “Gaming employs thousands of Arizonans and it generates millions in tax revenue that benefits areas like K-12 education, conservation, and treatment centers. Today’s signing is a culmination of years of partnership and engagement among many diverse stakeholders — and we did it by bringing everyone to the table, pushing individual agendas aside, and putting Arizona first.”

Bringing everyone to the table. That’s what it took. Giving sovereign governments an equal voice in a decision that figures to have a substantial long-term impact on their casino operations was precisely what tribal operators deserved, and no less.

With 18 tribal nations involved in gaming in Arizona, the importance of casino income to their quality of life can’t be overstated. The casinos when operating at full capacity provide more than 38,000 jobs.

If all goes according to plan, the modernized compact will only grow the market. And that means more revenue for the state and the tribal nations. It also renews compacts that were set to expire in a few years and extends them for two decades. That will surely come as a relief to some tribes.

Off tribal land, the compact authorizes event wagering, fantasy sports and mobile gambling, all of which could potentially erode play at casinos. That’s a challenge and revenue projections often come up short, but this change was likely to occur eventually.

If it compels tribal casinos to up their game even as it enables them to add to the variety of the games themselves, this change might mark a new era. (For more background and details on the modernized compact, check out this presentation.)

The new compact won’t change the tribes’ responsibility for sharing their net win from Class III gaming to fund the state’s regulatory costs. The tribe won’t have unlimited freedom in operating the gaming machines, which will still be limited according to the compact. Nor will they be allowed unlimited expansion.

Frankly, some observers, who have seen the economic benefits of tribal gaming in Arizona and elsewhere, would like to see them continue to diversify their real estate holdings as other nations have done.

Interior’s Bureau of Indian Affairs was the last hurdle for the state’s updated compact legislation. That approval now means professional teams will need to get state-issued licenses before setting up their bookmaking operations.

Will the 2021 NFL season be the start of something big for Arizona bettors?

Ducey last month called the agreement a “once-in-a-generation milestone for tribal nations, their communities, and the entire state of Arizona.”

And with the state’s economy clicking again and the interest in legalized sports betting by fans and sharps alike only likely to increase with time, there should be plenty of revenue to go around for the state and the sovereign tribes.

As long as everyone remains at the table.