Arizona Historic Horse Racing Bill Not Considered by Committee

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Robert Alexander/Getty Images. Pictured: Arizona flag

An Arizona Senate committee didn’t take up a historic horse racing legalization bill originally on its Tuesday meeting schedule, leaving a major potential gaming bill in limbo the day before a separate Senate committee is expected to reconsider a sweeping sports betting and daily fantasy bill.

A diverse alliance of gaming stakeholders support the sports betting bill, which would allow Native American tribes to open sportsbooks. But the tribes oppose possible historic horse racing legislation, which could alter the trajectory of legalized gaming in Arizona.

What is Historic Horse Racing?

Historic horse racing (HHR) terminals allow players to wager on previously conducted horse races. The terminals give information customers can use to handicap a race, but they can also have a winner picked for them, creating an experience more akin to a slot machine.

The slot-like nature has made these machines controversial. Only a handful of states — including Arkansas, Oregon, Virginia and Wyoming — currently allow HHR. Kentucky’s Supreme Court last year ruled the terminals violated the state constitution. Idaho voters rejected a 2018 ballot measure to legalize the machines.

Arizona’s bill would allow HHR terminals at horse tracks and off-track betting facilities. Customers could play these games on any day the tracks were open, not just live race days, and a percentage of each wager would go back to state horse racing organizations. The law would cap the total number of eligible machines at the greater of either 7,500 or 15% of the aggregate positions allotted under the tribal-state gaming compact.

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The measure is supported by state racing interests such as the Arizona Horsemen’s Benevolent & Protective Association and Save Arizona Horse Racing, which projects HHR terminals would generate more than $100 million in new tax revenues and create nearly 4,000 jobs. The bill is sponsored by Sen. David Gowan, the former state speaker of the house and chair of the Senate Appropriations Committee.

Native American gaming stakeholders including the Arizona Indian Gaming Association, Navajo Nation, Colorado River Indian Tribes and the Hualapai Tribe have all publicly opposed the measure. As with other HHR proposals in states such as Idaho, tribal gaming entities are working against expanded, slot-style gaming options at competing horse tracks.

Sports Betting in Arizona

The HHR bill comes as the tribes are finalizing a complex renewal of the overarching gaming compact with Gov. Doug Ducey. The updated compact, which grants the tribes exclusive gaming rights in exchange for a portion of gaming revenues, would allow the tribes expanded gaming options including sports betting, but could be jeopardized by HHR terminals at the tracks.

Without tribal support, the compact — and sports betting — would likely remain illegal.

The governor’s office said the tribes and government have agreed “in principle” to renew the compact. Both the tribes and governor have also supported legalized retail and online sports betting as part of the negotiations, and both groups testified in favor of a sports betting bill earlier this month.

Top sportsbook brands including DraftKings, FanDuel and BetMGM have also testified publicly in favor of the bill, which would allow as many as 20 operators to enter the market. The state’s professional sports teams are also behind the bill, which would allow them to open retail books at their facilities.

This support helped a House committee pass the stakeholder-backed sports betting last week with minimal opposition. A Senate committee was expected to pass the companion bill a day later, but lawmakers punted discussion for a week as it awaited action on the HHR proposal.

Sports betting backers fear historic horse racing could fracture the fragile coalition.

Next Steps

The Senate Commerce Committee, which was originally scheduled to discuss the bill last week, is still scheduled to do so again Wednesday. It remains to be seen how they will proceed without any further action on historic horse racing.