With tomorrow’s debut of the multi-billion-dollar sports betting industry in Arizona at stake, Gov. Doug Ducey urged a judge to throw out a legal bid to quash – or, at least delay – off-reservation sports betting.
Legal papers filed last week contend there is no basis for the claim by the Yavapai-Prescott Indian Tribe that allowing people to wager on professional and college sports violates a 2002 voter-approved initiative that limits gambling to reservations.
And during an unusiual Labor Day hearing, Superior Court Judge James Smith expressed skepticism about the tribe's complaint, though he promised a ruling by Tuesday – past AFN's print deadline –so that the losing side could appeal.
Hanging in the balance is whether people will be able to lay down bets beginning Sept. 9.At the heart of the legal fight is Proposition 202. Crafted by a coalition of tribes, the 2002 initiative was designed to have all casino-style wagering confined to reservations. In exchange, the tribes provide a share of their revenues to the state.
The legislation signed earlier this year by Ducey – the plan that was negotiated with most of the tribes – opens the door for on- and off-reservation sports wagering. That deal paved the way for what the governor called “modernized gaming compacts’’ which gives tribes the right to operate more games.
It also opened the door to sports franchises to take bets on college and professional games, with the state getting a share.
Legislative budget staffers estimated that would generate $34.2 million for the state, though some lawmakers have said the take would be much greater.
Attorney Heidi McNeil Staudenmaier, representing the governor, disputes that the wording of Proposition 202 provides tribes with the exclusive right to conduct gaming.
She also argues that the law was crafted in a way that anticipates there could be off-reservation gaming if the tribes got something in return.
In this case, Staudenmaier said, they got permission to operate more gaming machines, more types of gaming and their own right to take bets on sporting events.
While the tribe argued Monday that lawmakers must get voter OK to change the original 2002 law, Smith pointed out there is what has become known as a "poison pill'' in that original agreement.
It says that if the state violates the gaming exclusivity of any tribe, it is free to operate as many gaming devices as it wants. Now the Yavapai-Prescott Indian Tribe has a current limit of 936.
That verbiage also would allow the tribe to can operate as many types of table games as it wants.
And it would sharply reduce the amount of revenue the tribe is required to share with the state.
"With that language, how can I conclude that Prop 202 meant to be some sort of perpetual limit on in Arizona?'' Smith asked.
Staudenmaier also noted that 21 of the state’s 22 tribes have been negotiating a new gaming compact for five years while the Yavapai-Prescott tribe “opted not to participate.’’ That was followed by legislative hearings with no objections from the tribe.
“Without any justification YPIT waited to file this action until the 11th hour,’’ she said. And that, Staudenmeiar said, means the tribe purposely sat on its hands, creating this last-minute legal crisis.
Attorney Luis Ochoa, who represents the tribe, says the Voter Protection Act of the Arizona Constitution precludes lawmakers from altering what voters have approved unless it “furthers the purpose’’ of the original law.
He said the new gaming compact does not do that because it eliminates what he contends is the exclusive right of tribes to conduct certain forms of gaming.
Staudenmaier said the legislation allows the tribe and the state to share in gaming revenues while still limiting the scope of gaming in Arizona.
“Without this action, Indian tribes in Arizona face the risk that tribal casinos could be shut down, and plans to share Indian gaming revenues with the state and to create opportunities for non-gaming tribes to benefit from Indian gaming will go unrealized,’’ she said, quoting from the legislation.
And the governor’s attorneys also claim that Proposition 202 always anticipated the possibility that the state would decide to offer new forms of off-reservation gaming.
Their proof? A “poison pill’’ provision in the original law.
It says that if the state ever decides to allow off-reservation gaming, then the tribes are no longer bound by the original restrictions as to the number and type of gambling machines and tables they can have.
Ducey’s lawyers also reject Ochoa’s argument that giving 10 licenses to take sports wagers to franchises and an equal number to tribes violates the Equal Protection Clause of the U.S. Constitution.
Every sports franchise that wants to take bets got a license. By contrast, having only 10 licenses for more than 21 tribes means the odds are better than ever that any given tribe will wind up out of the running.
One tribe that actually lost its bid for an online license is the Gila River Indian Community, although it will run sportsbooks in all three of its casinos.
Staudenmaier said lawmakers had a reasonable basis to create separate
classifications for sports franchises and for tribes.
She said franchises are limited to taking wagers to a five-block radius around their facilities, though they also can accept bets online and by phone.
Ochoa claims that his tribe stands to lose money. But the governor counters that the court has to consider what a delay would mean in financial loss to others, including the sports franchises that have invested cash in setting up new gaming facilities.