Arizona Looks To Get Out Ahead Of Sports Betting Tournaments In First Draft Regulations

Written By Derek Helling on June 16, 2021

The Arizona Dept. of Gaming looks like it’s still on track for a Sept. 9 retail sportsbook launch. It got its first Arizona sports betting draft regulations out to the public almost in accordance with its own timeline. There are several interesting items in the proposed regs.

Among those are guidelines for betting tournaments offered by future licensees. If this part of the draft rules survives into the final regulations, Arizona will be among the first jurisdictions to explicitly govern these contests.

What’s all in the Arizona sports betting draft regulations?

The pending rules are comprehensive in some ways but still lacking in others. For example, the regs address the matter of whether sportsbook license holders will have to use official league data to settle bets. That answer is in the affirmative for all wagers.

The rules do allow licensees to ask the Dept. for exclusions to that requirement, however. They also mandate a response to those requests within seven days. There are some areas in which the regulations currently remain silent, however.

For potential license applicants, these to-be-determined matters are quite significant. The current draft does not specify license application or license renewal fees for event wagering operators or managed services providers. In AZ, examples of parties that are expected to apply for those types of licenses include the Phoenix Suns and FanDuel Sportsbook.

Also of great relevance to those same parties is a tax rate on sports betting revenue. The current draft literally says that figure is “TBD.” That section of the rules does specify that licensees have to report their previous months’ revenues to the Dept. by the 25th of each month, though.

Why did the Dept. leave out exact figures on such crucial items? It could be fishing for feedback from the market during the now-open public comment period. That period runs from now through June 21, barring any extension.

An extension is possible because the Dept. posted the draft rules a day late. However, there’s no official word on that yet. Another possibility is that the Dept. doesn’t want to finalize a tax rate until it has conferred with tribal casinos on that matter. Non-tribal license holders would probably balk at paying a higher rate.

Perhaps the most unique aspect of the rules involves what they call event wagering tournaments. To date, AZ is the first and only state to address these licensee contests with such specificity.

Specific governance for betting tournaments

Sportsbooks in jurisdictions across the country routinely hold wagering tournaments. Essentially, those are competitions between bettors. The competitors with the most success in wagering on sporting events within the set parameters win prizes like cash and site credit.

In all current jurisdictions with legal sportsbooks, the operators are mostly free to run these contests as they wish and don’t have to inform regulators prior to their beginning. These AZ rules would deviate from those norms.

The rules would not only require sportsbooks to notify the Dept. prior to holding such tournaments but limit the inclusion of events to only those the Dept. has already approved for wagering as stand-alone events. So, for example, if tier 2 soccer leagues aren’t approved for action on their own in the course of normal wagering, sportsbooks wouldn’t be able to include those events for their betting tournaments, either.

To be clear, the rules don’t state the sportsbooks must get prior approval to offering these tournaments. They only mandate prior notification. Also, they don’t specify how far in advance an operator must notify the Dept.

Over the course of the next week, interested parties have an opportunity to weigh in on this section and all others in the rules. What this section looks like in the final regs could shape other jurisdictions’ policies moving forward.

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Derek Helling

Derek Helling is a lead writer for PlayUSA and the manager of BetHer. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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