Can Arizona afford to lose $100 million a year?

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.

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