The Arizona Department of Gaming confirmed Wednesday that it will be possible for event wagering operators to have two digital platforms in certain situations, meaning that instead of the 20 online sports betting sites or apps initially expected, there could be as many as 40. Some stakeholders are opposed to the idea and were vocal about it at the ADG’s third stakeholder input meeting on its draft event wagering rules.
That topic got the most discussion during the meeting, the third hosted by the ADG as it massages proposed rules in hopes of having a final draft available for approval sometime this month. Several sports franchises came down squarely on the side of allowing only one digital site per event wagering operator license, while representatives from the San Carlos Apache Tribe argued for two. Operator representatives did not appear passionate in terms of the discussion, but definitely sought clarification.
The new Arizona statute allows for statewide mobile and retail wagering and 10 event wagering operator licenses each for professional sports franchises and tribes. The application process has not yet opened, so stakeholders asked questions assuming they will be licensed in the state. So far Bally’s (WNBA Mercury), Caesars (MLB Diamondbacks), DraftKings (PGA TPC Scottsdale), FanDuel (NBA Suns), Kindred (Quechan Tribe), and WynnBET (San Carlos Apache Tribe) have market access.
The hour-long meeting was broken into sections, and stakeholders offered comments on everything from licensing fees and official league data requirements to reserves and bank accounts. But the key question that lingers is whether an event wagering operator will be entitled to more than one digital site.
CoyotesBet and RoadrunnersBet possible?
The NHL Phoenix Coyotes have a second sports property in Arizona — the AHL Tucson Roadrunners. Coyotes representative Andrew Diss asked if under a Coyotes event wagering operator license, the team might then have one digital site called CoyotesBet and a second branded RoadrunnersBet, as long as both run on the same event wagering system, as defined in the rules.
The answer was telling: “That is potentially something you could do,” said the ADG’s Jim Stipe.
No operator asked a similar question — such as whether Caesars could offer two digital sites through its partnership with the Diamondbacks. Caesars currently offers digital wagering through its partnership with William Hill, but it also owns the Harrah’s brand, so could it potentially have two digital properties? The same question could be asked by FanDuel, which already has its FanDuel-branded and FOX Bet-branded digital sites operational in multiple states.
ARIZONA:
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Following the meeting, an ADG spokesperson shared with Sports Handle via email the agency’s answer to the question: “Yes, that could be a possibility. The draft rules allow for an Event Wagering Operator (e.g. an AZ Sports team) to partner with one Designee (e.g. Sportsbook operator) to operate one event wagering system and may offer up to two event wagering platforms. That said, the second platform is not automatically granted and responsible parties will have to submit a written request to the Department justifying that second platform.”
Multiple stakeholders also share this interpretation, including the San Carlos Apache Tribe, which last week announced a partnership with WynnBET.
“We believe that the legislation is clear to allow for multiple skins, but there is a little bit of confusion on the definition of the words platform and system,” said attorney Sara Dalsheim, representing the tribe.
Platforms, skins, and systems
Stipe did take some time to review the terminology in both the draft rules and the statute as they relate to mobile sites.
“We do not use the word ‘skins,'” Stipe said. “It might have appeared in the [draft rules] before, but we deliberately removed that, so please, whatever you thought a skin was before in other jurisdictions, please leave that behind. We use the terminology from the statute: event wagering system and event wagering platform.
“Everyone will have one platform to start with and can apply for a second platform. From Section 5-1303 (in the statute), operators ‘may use more than one’ platform.”
The law requires that if there are two platforms, they must run on the same event wagering system, which essentially means the platforms must run on the same hardware.
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Some local sports franchises, led by the Arizona Diamondbacks, consider this an unfavorable interpretation.
“We are OK with the idea of co-branding,” said Diamondbacks Vice President of Government Affairs Amilyn Pierce. “So, Caesars plus the Diamondbacks [on one site], but we’re not OK with multiple skins.
“In discussions for the legislation, the multiple platforms was meant to mean one for mobile and one for retail. It was NEVER to allow more than one mobile platform — we’ll continue to raise concerns.”
Pierce said she was also representing NASCAR and the PGA Tour on this issue.
Clarity needed around official league data, fees
While the question of how many platforms will be allowed was a key discussion point, there were others:
- Both pro sports teams and operators sought clarification with relation to the use of official league data, though the questions were different. Pierce advocated heavily for the use of official league data to settle in-game wagers, saying the data is “tied to the integrity of the game” and that’s a top priority for the Diamondbacks. Andrew Winchell of FanDuel, Kevin Cochran of DraftKings, and Jerry Limun of BetMGM said operators would like a more clear definition of what “commercially reasonable” rates of data will be.
- Dalsheim of the San Carlos Apache asked if the ADG has made progress on how the 10 licenses designated for tribes will be allocated. Lawmakers left the ADG to figure out how to allot those licenses among the 15 tribes operating 22 casinos. The ADG promised an answer soon, saying, “We can’t give you a time frame right now, but it won’t be too long.”
- Operators spent the first part of the meeting going back and forth with ADG representatives to understand the application, licensing, and renewal fees. Some of the confusion may be because the rules don’t use the word “renewal” but do use “annual license fee.” The application fee is set at $100,000 with a $750,000 initial licensing fee and a $150,000 annual license fee. It appears operators will pay the $100,000 application fee, and if licensed, then will pay $650,00 (for a total of $750,000). These fees cover the first five years, and beginning year six, operators will pay $150,000 per year to stay current.
- Operators are also seeking changes to language and requirements surrounding geofencing, cloud storage, reserves, bank accounts, and accounting standards.
The ADG took public comments until 11:59 p.m. Wednesday, but the most recent comments aren’t yet available. From here, the agency will likely revamp the rules again, seek input, and ultimately settle on a final draft with an eye toward launching operators on Sept. 9, the first day of the NFL season.
