A public hearing will be held on July 7 with industry stakeholders

Arizona regulator releases draft sports betting license fees, tax rates

The Arizona Cardinals, Arizona Coyotes, and Phoenix International Raceway are expected to partner up with companies for sports betting licenses.
Reading time 2:55 min
The second draft of rules released Thursday proposes an 8% tax on retail wagers and a 10% tax on mobile wagers. Application fees are set at $100,000, licenses fee at $750,000, and a $150,000 annual renewal fee for pro sports teams and tribal casinos. The Joint Legislative Budget Committee estimated sports betting will bring about $15 million in annual revenue to the state general fund.

According to the second draft of rules that the Department of Gaming posted last Thursday, Arizona's professional sports teams and tribal casinos will pay $750,000 to apply and get a sportsbook license from the state and another $150,000 annually to hang on to it.

Sports betting is estimated to draw $3 billion in wagers and about $200 million in annual revenue to sportsbooks once it kicks off in the state.

Lawmakers approved a sports betting bill this year that should allow the first wagers placed in the state by Sept. 9 for the opening of the professional football season. The legislation also paved the way for expansions at the state's tribal casinos, including new table games not previously allowed.

The Department of Gaming is writing the rules for the new sportsbooks and fantasy sports betting allowed under the bill, and filled in important financial details in the latest draft. It will cost $100,000 to apply for a license and, if approved, that money can be credited toward the $750,000 initial license fee.

The sportsbooks also will pay 8% of their revenues in fees to the state from the brick-and-mortar venues that are planned in or near sports stadiums, and they will pay 10% of revenues from mobile betting, according to the latest draft rules, reports The Arizona Republic.

The Joint Legislative Budget Committee (JLBC) at the Arizona Legislature, which analyzes the financial impact of proposed laws, estimated sports betting will bring about $15 million in annual revenue to the state general fund in taxes and fees for sportsbook licenses. The estimate is based on sports betting in Iowa, Indiana, Pennsylvania, and West Virginia.

The JLBC estimate was based on a $150,000 annual license fee, so the higher initial fee proposed by the Gaming Department would bring in more revenue in the first year, and employees at sportsbooks will need a $250 license that costs $125 every two years to renew.

Arizona lawmakers left the task of setting up sports betting rules up to the Arizona Department of Gaming(ADG), and that group is looking for public comment and opinion as well. On Wednesday, July 7, there will be another public hearing, and industry stakeholders will be able to share their thoughts. The ADG accepted public comment on the first draft of the rules, but that will not happen this time around.

The subject of how many "skins" or platforms a license holder can use to take bets has also been on the debate.

The teams and tribes are partnering with national sports-betting companies to run their sportsbooks, and the question boils down to whether they can offer more than one online sportsbook from different operators. The latest draft rules say that each operator can use two platforms with special permission from the department.

Already, teams have announced plans to use specific vendors. In the latest partnership, the Phoenix Mercury announced a deal for a sportsbook run by Bally's Corp. Meanwhile, the Phoenix Suns are going with FanDuel Group, the Arizona Diamondbacks are working with Caesars Entertainment and the PGA Tour is planning a sportsbook run by DraftKings Inc. at the TPC Scottsdale course.

Phoenix Rising has asked the Department of Gaming for clarification that it can apply for a sportsbook license as a part of the United Soccer League.

The only official tribal announcement came last Friday from the San Carlos Apache Tribe, which said it will pursue a sportsbook license with Las Vegas-based WynnBET.

Representatives from the Diamondbacks, NASCAR, and PGA Tour said they believe each sportsbook should only have one skin.

The law also allows for 10 "limited" sportsbook licenses for horse tracks and off-track betting parlors and there are more potential applicants for those than licenses available. The latest draft rules call for those licenses to cost $5,000 for the application, and $25,000 for the license if approved plus $5,000 for an "annual fee," although it's unclear if they will need to pay that every year or every five years.

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