When Arizona tribes in 2021 agreed to a sports betting framework that allowed an equal number of sportsbooks at professional sporting venues, there were rumblings throughout the nation from tribes who felt that their Arizona counterparts were giving up their monopoly on gaming. At the time, Arizona tribes said they were comfortable with the arrangement that allots 10 wagering licenses each to tribes and pro franchises, even though that left at least six gaming tribes out of the mix.
But 15 months after retail and digital betting went live, some tribal members are having second thoughts.
Most of the major operators in Arizona — including the three biggest by market share, BetMGM (Arizona Cardinals), DraftKings (TPC-Scottsdale), and FanDuel (Phoenix Suns) — partnered with professional sports venues. So far, only eight pro franchise licenses have been issued, as there are not 10 in the state that meet the criteria to be licensed.
In fact, four of the major operators partnered with somewhat unexpected pro franchises — Barstool Sportsbook with Phoenix Raceway, DraftKings with TPC-Scottsdale, BetRivers with the Arena League’s Arizona Rattlers, and Bally Bet with the WNBA’s Phoenix Mercury. Every operator partnered with a pro franchise will have a digital platform, though some will not have retail locations.
DraftKings breaks ground at TPC-Scottsdale
DraftKings just released renderings and photos of its first-of-its-kind facility at TPC-Scottsdale. So far, the only PGA facility licensed for mobile sports betting in the U.S. is Ohio‘s Muirfield Village Golf Club, which is partnered with Parx Interactive, but it has not announced a retail deal yet (and Ohio won’t launch legal wagering until Jan. 1).
DraftKings which launched its Arizona mobile platform on Sept. 9, 2021, along with six other operators, is poised to become the first to open a brick-and-mortar sportsbook at a professional golf facility. The company officially broke ground on the project Tuesday with a ceremony that included PGA Tour Commissioner Jay Monahan and DraftKings CEO Jason Robins.
The sportsbook will be located across the street from the Stadium Course Clubhouse and will feature 3,400 square feet of video walls and screens, an outdoor patio with video screens, VIP cabanas and fire pits, and the opportunity to wager at 40 kiosks throughout the facility and seven teller windows.
The facilities associated with professional sports franchises are not only state of the art, but offer unique experiences that the tribal casinos won’t be able to match, including the chance to be close to the live action while also enjoying the perks of a sportsbook. The bigger operators also have the massive advertising and promotional budgets needed to capture market share everywhere.
Tribes don’t have equal standing
There are more than 20 federally recognized tribes in Arizona. Six of them applied for wagering licenses but were denied during the competitive process. In February, six months after legal betting went live, one lawmaker filed a bill that would have allowed for every tribe to have access to a license and to open a sportsbook on commercial land, but it didn’t move.
“The addition of licenses for all tribes should have been something that was included in the original legislation, but proved the short-sightedness of the bill’s authors to think tribes should not have equal standing as teams in the state,” Las Vegas-based consultant Brendan Bussmann of B Global told Sports Handle at the time.
NEW: The inside story of how the sports betting industry tilted the playing field in its favor.
Lobbyists and lawmakers promised states would get a windfall from sports gambling. The reality often fell short. https://t.co/9NdGJJf35S
— Gerry Smith (@gerryfsmith) December 2, 2022
During the legalization process, some lawmakers said they weren’t privy to the compact negotiations, even though they were asked to sign off. But on the tribal side, Gov. Stephen Lewis of the Gila River Indian Community said at the time, “We’ve done our due diligence and we are proud of what we’ve brought to the table, and I can say that for my fellow tribal leaders who are at the table, too. We’re happy with the final product and especially with all of these aspects moving forward. My council has signed off on this.”
Gila River is the biggest gaming tribe in Arizona and has four retail locations, with a fifth in the works. When everything shook out, Gila River did not directly partner with a sports betting operator and did not apply for one of the 10 tribal licenses. Rather, it works with BetMGM through a deal that also includes the Arizona Cardinals.
Tribes landed smaller partners
Lewis’ enthusiasm was tempered by Gonzales, a member of the Pascua Yaqui Tribe. That tribe owns Casino Del Sol, but it does not have a wagering license.
“The tribes do want [new compacts and wagering ] and they’ve asked our leaders to vote for it, but you know how they’re doing it — with their hands behind their backs,” Gonzales said in a statement during the legislative process. “Because they need and want a new compact and the governor is holding this legislation to pass before he signs a new compact with them.”
Of the 10 operators partnered with tribes, only Hard Rock Digital (Navajo Nation) and WynnBET (San Carlos Apache) have a national footprint, and their market share is tiny compared to the approximately 42% that FanDuel captured nationwide in the third quarter of 2022. DraftKings and BetMGM also claim double-digit market share, leaving little of the wagering pie for the remaining operators to share.
Six of the eight other operators are either boutique entries like SuperBook Sports or Golden Nugget, or European companies trying to make headway in the U.S., like Betfred or Betway. Both Fubo Sportsbook (Ak-Chin Indian Community) and TwinSpires (Tonto Apache Tribe) have announced that they are shuttering their platforms nationwide. Fubo ceased operations in Arizona last month, while TwinSpires remains live, though it has shut down platforms in other states, including Michigan and New Jersey.
.@SuperBookSports fans! Join us in our friends and family launch and be one of the first to wager with SuperBook Arizona 🌵
— SuperBook Arizona (@SuperBookAZ) December 17, 2021
By agreeing to compacts and a law that allows commercial competition, even if it is only on the sportsbook side, Arizona’s tribes are beginning to notice that they cannot compete and that their decision may be one step on the road to losing the monopoly granted them by the federal government’s Indian Gaming Regulatory Act (IGRA).
“The big fear now is loss of exclusivity,” Jason Giles, executive director of the National Indian Gaming Association, said a recent tribal convention, according to Phoenix New Times. “Gaming is the only thing that has ever worked for us. Since 1492 when Columbus landed, it’s the only thing that has worked. That’s why we fight so hard.”
Exclusivity at stake
Under IGRA, tribes across the country have been able to create jobs; develop educational, elderly, and social programs; and pull their people from poverty. In most states, Indian Country vigorously fights against allowing commercial operators even the tiniest slice of the pie. But as sports betting has been legalized across the country, tribes in some states, including Arizona, have agreed to terms that cut into that monopoly, and ultimately, the tribes’ ability to remain sovereign and financially solvent.
In Michigan, tribes agreed to completely give up exclusivity and be regulated by the state. But with only three commercial casinos, many of the tribes were able to partner with major national companies. In Connecticut, tribes agreed to allow the state lottery to operate a platform and 15 retail sportsbooks. But the two tribes partnered with the two biggest operators, DraftKings (Mashantuket Pequots) and FanDuel (Mohegans), before that agreement was made. Negotiations to get to that deal were slow and often contentious.
Connecticut joining the sports betting party like pic.twitter.com/j5L9aaTmVQ
— FanDuel Sportsbook (@FDSportsbook) October 19, 2021
Goal still traffic at retail casinos
In Arizona, an inequitable law not only left some tribes out, but appears to be creating a situation where the tribes will have to shift focus from bringing in big paychecks from online sports betting to using wagering as a way to bring people into their brick-and-mortar locations.
“In the rush to get to sports betting, we need to realize that sports betting is an amenity to draw people into our casino hotels,” Giles said.
That has been the tribal blueprint all along, in Arizona and around the country. While there are likely hundreds of millions of dollars to be made in the digital marketplace, tribes are more focused on keeping those in Indian Country in the workforce. To do so, they must maintain retail exclusivity and use digital gaming to drive customers into the restaurants, shops, theaters, spas, and hotels that comprise their casino properties.
In California, the fight to preserve exclusivity was beyond bitter, with the biggest tribes pouring $250 million into a campaign to keep commercial operators from having the power or, for now, from entering the state at all. The proposition to legalize digital wagering in the state resulted in one of the worst defeats in the history of ballot measures anywhere in the United States. Tribal leaders there repeated their mantra over and over again: They will not give up the monopoly, and they will continue to find a way to legal sports betting that creates jobs and expands their economic footprint.
Only 16% of Californians voted for legalizing internet sports betting. I find this bizarre, as I sense zero popular moral valence about sports betting.https://t.co/14RwWXLOGz
— Eric Falkenstein (@egfalken) December 2, 2022
So while the major operators in Arizona continue to battle it out for online dollars, the tribes are at a point where they will have to look back to their root goals to avoid their biggest fear: being left behind.
“We underestimated the number of commercial operators who came here and sought out tribal partnerships,” said Charlene Jackson, an attorney representing the Hualapai Tribe near Kingman and a Maricopa County Superior Court judge, during the IGA winter meetings. “A competitive wave is coming in. It’s a little bit scary for us.”