Judge allows gaming expansion, sports betting to continue

Arizona Cardinals quarterback Kyler Murray (1) during the first half of an NFL football game against the Kansas City Chiefs, Friday, Aug. 20, 2021, in Glendale, Ariz. (AP Photo/Rick Scuteri)

Arizonans can start laying down bets beginning Thursday for or against the Cardinals — or any other professional or collegiate team.

Maricopa County Superior Court Judge James Smith late Monday denied a claim by the Yavapai-Prescott Indian Tribe that the law approving off-reservation gambling was illegally enacted. His ruling, unless overturned on appeal, means there is no reason that sports wagering cannot start on schedule.

Smith specifically rejected arguments that HB2772, enacted earlier this year, violates the Voter Protection Act.

That constitutional provision prohibits lawmakers from altering anything approved at the ballot. Attorney Nicole Simmons, representing the tribe, argued the new law and its sports wagering runs afoul of Proposition 202, a 2002 voter-approved measure which limited casino-style gaming to reservations. What that means, Simmons told Smith, is that the change negotiated by Gov. Doug Ducey could take effect only if voters ratify it.

Smith wasn’t buying it.

“Nothing (in Prop 202) hints at forever limiting gambling to certain table games and machines at tribal casinos,” he wrote.

And there’s something else.

The judge pointed out during oral arguments earlier in the day that there is what has become known as a “poison pill” in that original 2002 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 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.

Under HB2772, beginning Thursday, both tribes that sign new gaming compacts with the state as well as various sports franchises can accept sports bets. Those can deal with not only the outcome of events but also the ability to make specific “prop bets” on things like yardage per game or even the number of times a player will strike out.

And with online wagering and technology, that can occur in real time, even as a game is in progress.

The judge also noted that the tribe’s bid to enjoin the new law requires him to determine whether not just that it is likely to succeed but also the possibility of irreparable harm.

In this case, Smith said, the tribe’s claim was that allowing other forms of gambling in Arizona would result in less revenues. What’s lacking, the judge said, was evidence.

“The tribe did not present a meaningful analysis of its revenue decreasing if other venues exist for event wagering,” Smith wrote. “After all, tribal casinos offer other types of gambling that event wagering cannot offer.”

On the other side of the equation, Patrick Irvine who represents state Arizona Gaming Director Ted Vogt told Smith during the hearing there’s an even greater financial harm to the state which stands to share in all that sports wagering. More to the point, he said the lawsuit comes months after the measure was approved, after the licenses were granted and the companies that have paired with the sports franchises to operate the gaming have invested a lot of money.

“If you listen to the radio when you drive, you’ve probably heard advertisements for them,” Irvine said. Any delay, he said, will cost the state “in the millions per month, really starting from this week.”

Smith also noted that the tribe waited until late last month — just two weeks before sports wagering is set to start — to file suit. Yet negotiations took place for about five years and the measure was debated for weeks at the legislature before being signed by the governor in April.

Gubernatorial press aide C.J. Karamargin emphasized that point in cheering Monday’s ruling.

“The legislation and compacts signed by Gov. Ducey in April were the culmination of a multi-year effort to modernize an industry that has become a critical component of the state’s growing economy,” he said in a prepared statement. “This ruling means that work will be allowed to continue.”

Monday’s order is not the last word. While Smith denied the injunction it does not preclude the tribe from continuing to challenge the legality of HB2772.

And there are issues.

During the hearing the judge had questions about exactly what Ducey negotiated and what lawmakers approved.

Of particular note is that there are 20 licenses to take sports wagers, half to tribes that were selected by the Gaming Department and half to sports franchises, of which there are fewer than 10. So the Cardinals automatically got one, as did the Diamonbacks, the Coyotes, the Phoenix Mercury and even the Professional Golfers Association tour and NASCAR racing.

Smith wondered why wagering had to be tied to those particular events.

“You couldn’t be tied to a different type of professional sporting event as a venue?” he asked.

Anni Foster, the governor’s chief legal counsel, conceded that’s the way it is now. For example, she said that Turf Paradise, which operates horse racing in Arizona, has been denied the ability to take wagers on other professional sports because it “wasn’t necessarily delineated specifically in the statute as an option.”

But Foster insisted that the statute does anticipate other kinds of sports teams being able to apply and potentially get wagering rights.

“We don’t know what that would necessarily be in the future,” she said.

“Is that professional fighters like MMA?” Foster said, referring to mixed martial arts. “Or is that other drag-racing types of things?

That decision, she said, rests with the Department of Gaming.

Smith, however, isn’t the only one who has raised the question of whether Ducey crafted a special favor for certain team owners.

During debate on the measure, Sen. Michelle Ugenti-Rita, R-Scottsdale, complained the only people eligible to get a license to take off-reservation wagers on sporting events are the owners of the existing sports franchises.

“We are going to reward people with monopolies with more monopolies,” she complained. She asked that the process be opened up so anyone can bid to operate one of the 10 off-reservation gaming operations.

But her colleagues agreed to accept the deal as Ducey negotiated it with the teams and the tribes and then presented it to lawmakers as a take-it-or-leave it package.