Two items added to the draft set of Arizona sports betting rules filed by the Department of Gaming were at the center of debate during a Virtual Open Comment Session on Tuesday.
The ADG announced in late March it would be posting updated sports betting rules for public commentary. The public comment period ended April 3. The rules need to be finalized by April 15.
During Tuesday’s meeting to discuss the “Draft Final Rules,” the ADG’s decision to add language about revoking sports betting licenses if the responsible party ceases operation and its decision to remove language surrounding what constitutes a “professional sports venue” drew the most debate.
Tribal gaming agents on Tuesday’s call, including tribal affairs and gaming attorney Stephan Hart, Tohono O’odham Legislative Attorney’s Office Manager Mike Ehlerman, and Richard Verri, who represents the Tonto Apache Tribe, objected to some of the timelines for revoking a license.
Dealing With Sports Betting Partners That Close
A common theme during the comments from tribal gaming officials was concern about the advanced notice Arizona betting apps licensees are supposed to give the ADG if their sports wagering partner ceases operations.
“From the Navajos perspective, we have the license and we have a management services provider which I understand is a responsible party,” Hart said during Tuesday’s call. “And I would just hate to have some activity by a responsible party, a management services provider that the licensee either didn't know about or didn't have control over.
“And then we find ourselves having our license revoked. So, I wondered if it was really necessary to use the words 'responsible party' or if we could instead use language like 'event wagering operator' or 'designee,' that's my suggestion on that.”
The Navajo Nation is partnered with Hard Rock Sportsbook, which had its official launch in Arizona last week.
Warren Nichols, the ADG’s assistant director, defended the decision to add the 180-day deadline to rule R19-4-113C, saying such a timeframe would be necessary to ensure future wagers from patrons are honored.
“The reason for that we feel that is the adequate amount of time to deal with future wagers,” Nichols said. “With all of the accounts and distributions that will need to be made so that we can work together to sort of work on that winding down of operations with the responsible party and make sure everything is covered and tidied up before operations cease.”
Nichols’ comments drew fire, with Hart agreeing with the ADG’s thought process regarding player protection but saying 180 days seems like a long leadup time.
Both Hart and the speakers that followed, who included Verri, Ehlermann, as well as Bradley Bledsoe Downes of the Arizona Indian Gaming Association and Steve Titla of the San Carlos Apache Tribe, argued the finalized ADG rules should include much fewer days for licensees to notify the department.
“One hundred, eighty days seems like an awfully long time. And so, we would ask you to consider a reduced number,” Hart said. “Whether it’s 30 days, 60 days, something that would be shorter we think that makes sense. We point out that if the goal is player protection, and it should be, we respect that.”
Derrick Beetso, who serves as the director of Arizona State University’s College of Law Indian Gaming and Self Governance Programs, said in an email to BetArizona.com the tribes’ consternation around rules 105J and 113C stem from a lack of clarity and concern over the duration the department is asking of them.
“I think the (Rule R19-4-105J) issue might be because of its ambiguity,” Beetso said in an email. “I think the concern is that there might be circumstances, such as implementation of new tech or force majeure reasons, which should not constitute a 'failure to continue operations' such that it triggers a license revocation. It would be good for the ADG to speak more with tribes about how best to define what this means (e.g., through examples that are not exhaustive, through a definition developed by ADG in consultation with tribes and other license holders, etc.)”
Beetso added that the common request from tribes to receive a smaller window to report sports betting closures stems from a desire to protect their hard-earned licenses and to avoid putting themselves at a competitive disadvantage compared to the other nine tribes and eight pro sports teams that received mobile sports betting licenses.
"(The tribes) seem to want a smaller window, but the language says it's with respect to 'prior' notice of no less than 180 days before ceasing operations,” Beetso added. “I would think advanced notice would be good, especially given the contingency planning that needs to occur and the paying off of any liabilities, etc. They seem to think a shorter window of prior notice would protect their interests to stop taking bets immediately, but I think you can pinpoint that date to stop in your plans to cease operations, and the rule is just asking that you let everyone know of your intent to cease operations well in advance.”
Coyotes Challenge Removal of Stadium Language
The other point of consternation during Tuesday’s call came from Andrew Diss, the chief strategy officer of Meruelo Gaming, which runs SaharaBets and is the Arizona Coyotes sports betting partner.
Diss condemned the department’s decision to strike the updated language of Rule 106, regarding what constitutes a “sports facility."
In its first draft of new rules released in late March, the ADG proposed language that professional sports venues did not have to have a minimum number of seats, so long as they were approved by the department as a temporary home for the team.
“Use or operation of a Sports Facility that meets the definition of A.R.S. § 5-1301(18) is required for facilities operating retail event wagering under A.R.S. § 5-1304(D)(1). To maintain qualification to operate under A.R.S. § 5-1304(D)(1), the use or operation of a Sports Facility that meets the definition of A.R.S. § 5-1301(18) is required unless a different facility smaller than 10,000 seats is approved by the Department for temporary use pending the construction of a new Sports Facility or the remodeling of an existing Sports Facility, and the period does not exceed three (3) years,” the ADG’s preliminary rules stated.
That language has been eliminated from the current Draft Final Rules, meaning the Coyotes could violate the original rule when they move to Arizona State next season. The Coyotes have proposed building a new arena in the Tempe Town Lake Area, but there is no timeline on that project.
During Tuesday’s call, Diss cited the recent fire inside Denver’s Empower Field at Mile High, in addition to the Coyotes’ ongoing arena issues in Glendale, as reasons that the ADG should reinsert the updated language regarding stadium capacity.
“In a situation like that, where there's a catastrophic incident where they're going to have to do some work before you can utilize the full facility, or in a situation like us, where our lease was canceled and we have to temporarily play in a facility — having that language that was in there previously gives us a sense of comfort that our license allows us to continue doing what we're already licensed to do,” Diss said. “So, I'd like to formally request that that language you previously had in there, be put back.”
Nichols responded to Diss’ comments by pointing out the Coyotes failed to sign on in support of the preliminary language.
He also agreed to make any comments regarding licensing a matter of public record, so Diss and anyone else can see who signed onto what before the ADG submits its finalized rules for event wagering Friday.
“You know, the reason we took out the language is I don't think we got any party signing in support of it,” Nichols said. “We already feel everyone was kind of pointing out the department has the discretion to work with you. So, I don't think that the language that was in there, like I said, was pretty much roundly requested to be stripped out.”
