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Can Arizona afford to lose $100 million a year?

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Recent legislative action backed by fantasy sports interests signals an alarming trend toward undermining the state’s compacts with tribal nations. The Arizona Indian Gaming Association represents 18 member tribes, and we are charged with vigorously protecting the compacts, especially as it relates to tribal gaming exclusivity, for several important reasons.

First and foremost, the compacts have served the state and tribes well for nearly 20 years. Since 2002, more than $1 billion in revenue sharing contributions have flowed through the Arizona Benefits Fund to important state programs like education, tourism, trauma care, wildlife conservation and cities and towns.

Gaming operations statewide also employ more than 15,000 Arizonans, both non-tribal and tribal, making tribal gaming one of the top 10 largest employment sectors in our state.

Spicer, Valerie

Valerie Spicer

This economic impact also extends far beyond reservations. In 2014 alone, tribal governments generated more than $2.5 billion in estimated gross state product, including $1.6 billion in labor income and $271 million in state and federal taxes other than income taxes.

These long-term financial commitments to all Arizonans are precisely the reason why tribes hold the exclusive right to gaming, and why the poison pill provision looms large when anything threatens this exclusivity.

A bitter poison pill to swallow

The poison pill provision was always intended as a means of protection for both the state and the tribes, protecting tribal gaming exclusivity for tribes and the state’s goal of limited gaming.

This balance is struck because states and tribes each have sovereign powers to set the terms of gambling within their own jurisdictions. They cannot tax each other any more than Kansas can tax New Mexico.

For their part, tribal policymakers aim for reservation economic self-reliance and have done so since the onset of reservation life. The compacts also advance that goal by providing for intertribal device leasing and by setting the stage for Class III capital investment, among other things.

Because the compacts keep tribal gaming constrained when Arizona gaming is constrained, and loosens the constraints only if and when Arizona liberalizes gaming, and had not unduly compromised tribal sovereignty, revenue sharing was approved by the Secretary of the Interior.

With the passage of legislation or a vote of the people that expands gaming beyond what existed at the signing of the tribal-state compacts in 2002, the poison pill is invoked. Whether it is fantasy sports, or any other form of gaming – each tribe has the legal right to dispute this change in law and discontinue revenue sharing immediately. The limited gaming we sought to establish would also be non-existent.

Unlimited gaming in Arizona

If the state loosens its policies of limited gambling, the tribes will no longer be subject to limits or required to make the contributions. With an expansion in gambling policy, the compacts’ constraints on total slot machines per tribe and per facility will no longer bind. Moreover, the sliding-scale contribution obligations will be replaced by a flat, across the board contribution of 0.75% of Class III net win (Compact §3.h).

We encourage voters, the Legislature and benefits fund recipients to fully consider the complex implications for something as seemingly simple as fantasy sports.

Is there enough reward for the tremendous amount of risk to our economy, our employment base and our quality of life here in Arizona? Is there any reward at all, for that matter? There’s no proposed revenue sharing from fantasy gaming. Nor is there an agreement to support problem gambling or place limitations on the amount of gaming. Where are the regulations that are referenced in SB1515, and yet not spelled out in the bill?

A billion dollar gamble

The compacts provide countless benefits to many. Arizona gamblers see ample opportunity to play well-regulated games in competing facilities. Arizona taxpayers see millions of dollars added to state and local treasuries, with potentially a billion more to come.

Tribes produce benefits for their own reservation economies, local county economies, and the state economy. Thus, contrary to all-too-commonly circulated misperceptions that compacts are an unfair ethnic entitlement, they are the sensible result of intergovernmental negotiation that advances numerous state and tribal goals.

Finding a means to circumvent tribal compact language is putting at risk $100 million a year in state funding and is a practice that needs to be stopped here. The language of the poison pill and what it protects is far too important. Neither the state nor the tribes should have to exhaust countless dollars protecting its intent.

Arizona is counting on tribes and tribal gaming to help strengthen our economy. We are counting on legislators and elected officials to protect the compacts and to keep Arizona’s agreement with Arizona tribes.

Valerie Spicer is executive director of the Arizona Indian Gaming Association

 

4 comments

  1. Any state law prohibiting fantasy sports participation is illegal as it directly conflicts with federal law (Unlawful Internet Gaming Enforcement Act) irrespective of any compact between a state and a Native American tribe.

  2. I’m confused as for gambling make all this money in our state, why are we in debt so bad? They say we would lose 100 million a year cause of this bill?? I find that hard to believe that they split up 100 million a year and it goes to schools and other things in our state. That seems like a ton of money but we are still in debt

  3. Well what they are losing for sure is all tax dollars that the booming industry would generate. Seems like gaming casinos, in Arizona at least, are making the same mistakes the music and film industries originally made in trying to keep the product from being available instantaneously on an interconnected network until they finally woke up and created their own “napster”.

    On another note, why do we still have Reservations anyways? Seems pretty discrimitory to me; can’t we just get along?

  4. Written on the fly, forgive any typos or errors…

    I believe that 2002’s Prop 202, which ceded poker and all future forms of gambling (including fantasy sports) to the tribal leaders that crafted the initiative is not only unconstitutional, but may also have come about thru illegal conspiracy. The tribes in 2002 were facing a hostile State that was threatening not to renew gaming compacts in the wake of federal court decisions (2) that said States do NOT have to negotiate for Class III gaming compacts with tribes if they do not want them. Arizona never wanted tribal gaming, and certainly not the type of Class III gaming such as the most addictive, predatory gambling devices known to man: slots.

    It’s unconstitutional and illegal because:

    * There’s NO WAY the compact can be “negotiated” between the tribes and the State, as was the IGRA intent when written by Congress in 1988. There’s NO WAY the compact can be negotiated and executed between the Governor and the collective tribes as intended by the AZ State legislature.

    * Using the citizen’s initiative process to effectively “write their own compact” creates an “all or nothing” proposal, at best, an “initial offering”, subject to counter proposals and true “negotiation” on all the key points. Prop 202 did far more than “continue Indian Gaming in the face of a hostile state”. It added blackjack tables, it included exclusivity over poker (traditionally a Class II game), and all future forms of gambling. It privatized the “State” gaming department, and gave them a conflicted mission: Oversight of tribal gaming by a police force that is privately funded by the casinos they are tasked with overseeing. The AZ constitution says that a citizens initiative address but “one topic”. Prop 202 covers one topic “related to Indian Gaming”, about the same way as ANY initiative covers on topic “related to Arizona laws”. It’s ridiculous, especially when one realized the AZ Supreme Court has ruled the legislative salaries and per diems constitute two separate issues. It should be easy to extract the poison pill clause from the 2003 standard compact. A real no-brainer. The poison pill clause abrogates the State’s rights, it limits law makers ability to enact to gambling laws, or amend existing laws, without imploding the clause. That’s unconstitutional too.

    * The initiative process is reserved for registered Arizona voters. The tribes, as a government entity, cannot utilize the initiative process. Is it lawful for an Arizona citizen, such as the 16 tribal leaders who signed Prop 202 initiative in 2002, to conspire for a way around the STate’s prohibition on gambling, blackjack, slots, and even poker (yes, the ADG issued cease and desist orders to the tribes regarding their poker rooms in the late 90s, which the tribes dutifully ignored). The issue over poker was in active arbitration when Prop 202 passed! The tribes were really under the gun to get around the STate’s desire to end tribal gaming. Instead, the tribes masterfully played on a basic human flaw: a propensity for gambling, and by passing Prop 202 created the tribal oligopoly on all forms of gambling not regulated by 2002. HOW CAN PRIVATE CITIZENS propose direct legislation that benefits their group/class/race to the exclusion of all other voting state citizens? As the initiative process is reserved for voting state citizens, the tribes should, lawfully and constitutionally, waive any semblance of sovereign immunity from suit (certainly the tribal leaders can be sued, regardless). The tribes waive their “rational basis only” analysis for equal protection claims in this case, because no where in the initiative is this basis explained. This basis says “of course lawmakers will be creating special laws and agencies for Native American tribes. It’s unavoidable, due to the nature of their existence.” Here’s the kicker though… Arizona is home to about 350,000 Native American citizens. Prop 202 in 2002 passed by a mere 20K votes. To call those votes the Indian vote would be neither inappropriate nor inaccurate, in my opinion.

    But the gist of the matter is that the poison pill clause is unconstitutional, it’s a “second subject” without a doubt. It should be extracted from the passed initiative, which will pave the way for lawmakers to pass legislation to make daily fantasy sports, online casinos, online poker, brick and mortar cardrooms, etc. a reality for Arizona citizens.

    Interestingly, in a Freedom of Information Act request (and subsequent appeal based on the fiscal vs. calendar year language) in 2013 revealed that the collective tribes with poker rooms reported an aggregate revenue from their poker operations of a little over $30M in 2011. This means that the “voluntary tithe” made by the tribes to the euphemistically named “Arizona Benefits Fund” amount to about $1.3-1.7M in 2011. If Arizona, adjusted for population/market saturation, simply mirrored California’s cardroom framework (CA has had cardrooms since before Statehood and before tribal gaming), the State would see over $21M in GENERAL FUND revenue generated very quickly.

    Poker in particular is an industry that isn’t going away, and a quasi-state, conflicted, privatized gaming department continues to force poker underground, where the criminal element thrives. We’ve seen over a dozen gray market cardrooms prosecuted under ADG’s watchful eye in the past 10 years. Over 64 document cardrooms have come in gone in that span of time, and today few, if any, exist. And yet, the United States Chess Federation’s 116th US Open Chess Championship, with it’s $200 entry fee and $40K guaranteed cash prize pool projected to $50K with 500 entries, seriously! Gets a free pass from ADoG after they investigated it in 2015? Please. If chess tournaments can be conducted as amusement gambling, then so too, can poker tournaments. As federal judge Jack Weinstein’s 120 page opinion in the DiCristini case on Long Island tells us, “Poker players draw from an array of talents, including mathematics, human psychology, deception, acting, and more.” Poker has even been inducted into the international mind sports hall of fame (2010).

    Keep on the watch for “Real Poker LLC”… coming in the next 6-12 months.

    Because we CAN and SHOULD! 😀

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