‘It’s a little scary’: Tribes fear losing grip on Arizona’s hot sports betting market

The National Indian Gaming Association recently came to Fort McDowell to celebrate a historic year in the state for tribal gaming – but it also raised concerns the honeymoon could be over soon.

The association, a federation of more than 250 officially recognized tribal nations, held their annual semi-annual conference at the We-Ko-Pa Casino Resort November 14-16. The event attracted some of the biggest names in gaming, including hedge fund investor Soo Kim, who owns burgeoning casino brand Bally Sports; Thomas Reeg, CEO of Las Vegas giants Caesars Entertainment; and Brett Calapp, CEO of Desert Diamond Sports.

Casino executives enjoyed a sumptuous lunch, smiling and cracking jokes in the resort’s impressive Vasaya Conference Center. Out-of-town leaders marveled at the breathtaking views of the Red Mountains and Sonoran Desert, while gamblers played cards and slots right outside the door.

But the topic of conversation quickly turned somber. Native American tribes fear they are losing sight of the red-hot sports betting market in Arizona, the largest sports-betting state in the West.

A year has passed since sports betting debuted in Arizona, with 20 licenses spread across both commercial and tribal gambling establishments, ushering in a new era of competition in the state. One big question remains: How are the tribes in Arizona holding up?

According to Maxwell Hartgraves, a spokesman for the Arizona Department of Gaming, they’re holding up well for now, having carved out some of the $5.4 billion wagered in the state in its first year of legal betting.

But some tribes are concerned about the end of a honeymoon period as they stare down the reality of not being able to compete forever with commercial sports betting giants in Arizona. Instead, they will try to use it to attract traffic to their casinos.

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Arizona players have wagered more than $5.4 billion, according to Maxwell Hartgraves, spokesman for the Arizona Department of Gaming.

Elijah Weiss

So far, so good

Tribes donated a record $123.6 million to government agencies this year, according to a recent report from the Arizona Department of Gaming. Each tribe contributes between 1 and 8 percent of its revenue to local, state, and state governments, with nearly 90 percent of that contribution going to the gaming department.

“It’s safe to say that 2022 was a historic year for tribal gaming in Arizona,” said Ted Vogt, director of the Arizona Department of Gaming. “I am thrilled to see the highest level of tribal contributions to the state following the Amended Tribal-State Gaming Compact signed by the Governor [Doug] Ducey last year.”

Although the treaty puts restrictions on casinos, it gives the tribes exclusive ownership of Arizona casinos. As a result, tribes are the only entities that can own and operate casinos in the state. But that’s not the case in the country’s burgeoning sports betting market.

While tribal donations this year were the highest ever, some tribal leaders said the government is the only one celebrating. Tribal sports betting platforms generated $208 million in revenue and returned $30 million to the state in privilege fees alone, according to the state gaming department. It’s not a sustainable model as commercial competition continues to creep into the state’s sports betting market.

“The big fear now is losing exclusivity,” said Jason Giles, executive director of the National Indian Gaming Association. “Gaming is the only thing that has ever worked for us. It’s the only thing that has worked since Columbus landed in 1492. That’s why we fight so hard.”

The contract, which Ducey signed in April 2021, allowed for 20 sports betting licenses – 10 for tribes and 10 for professional sports teams. But there are 22 state-recognized tribes in Arizona, many of which applied for licenses only to be turned down by the state, leading to lawsuits. There is less competition for the 10 licenses for the sports teams that mostly partner with third-party sportsbooks and marquees gaming company.

Arizona casinos are reservation-only, but off-reservation sports betting thrives in bars, arenas, and on millions of cell phones across the state.

“It’s about losing that exclusivity and competing in a commercial gambling market. Our feet are nailed to the ground here on the reservation,” Giles said.

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Jason Giles, executive director of the National Indian Gaming Association, wants to use sports betting to attract visitors to his casinos.

Elijah Weiss

tribes “left behind”

In 2002, Arizona voted overwhelmingly against a ballot initiative that would allow gambling at slot machines and table games at horse racing facilities. That same year voters passed Proposition 202, the Indian Gaming and Self-Reliance Act, which established the framework for gambling in Arizona.

Since then, tribes have been able to cash out transfer agreements — those with a plethora of machine rights can lease their spinning wheels and slot machines to urban tribes who need them on the casino floor. According to Tribe Attorney Stephen Hart, the Navajo Nation rakes in $10 million a year from the deal.

But tribes need sports betting to stay afloat, some industry leaders have argued, and they’re worried about increased competition.

“We underestimated the number of commercial operators who came here seeking tribal partnerships,” said Charlene Jackson, an attorney representing the Hualapai tribe near Kingman and a judge on the Maricopa County Superior Court. “A wave of competition is coming in. It’s a bit scary for us.”

Tribes can’t compete with capital held by commercial operators like Caesars, BetMGM and FanDuel, Jackson said. While the Bigwigs of Las Vegas were dishing out billions of dollars in splashy bait to attract new Arizona sportsbooks, the tribes were struggling to get licenses and find affiliates.

“Honestly, we were left behind,” Jackson said. “The numbers reflect that.”

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A player enjoying slot machines at We-Ko-Pa Casino Resort.

Elijah Weiss

“Only the first inning”

Jackson argued that 10 licenses for 22 tribes were appropriate. If the state granted each tribe a sports betting license in addition to what has been negotiated with professional sports teams, there would be more than 30 licenses. “We didn’t know the market would hold that. If a tribe went to the market and closed their doors, it would be worse,” she said.

Still, Jackson said she doesn’t expect Tribes to make big bucks from sports betting. Hart disagrees, but with one caveat.

“How have tribes evolved since the advent of sports betting? Really really good. That’s the reality,” he said. “But we are moving from a monopolistic environment to a competitive environment. You can lose money. Many of these entities are being turned on their head.”

According to Giles, the solution is to maintain casino exclusivity and use sports betting as a bargaining chip to drive casino traffic toward reservations — not as a cash cow.

“The amount of money generated in sports betting is not a lot. It’s not worth it,” he said.

Arizona’s new sports betting market has its issues but still offers opportunities, Giles added.

“In the rush to get to sports betting, we must recognize that sports betting is a convenience to lure people to our casino hotels. It’s only the first inning,” he said.


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