Two lawsuits are making their way through the court system in Arizona as the rollout of sports betting in Arizona enters its final stages.

Arizona is planning to have sports wagering go live on Sept. 9 for NFL betting. The Tampa Bay Buccaneers, the defending Super Bowl champions, and Dallas Cowboys meet in the first regular-season game that night.

The lawsuits, brought by the Yavapai-Prescott Indian Tribe and Turf Paradise Racing, seek to upend the 2021 gaming compact, which established legal sports betting in the state. The ADG approved 18 licenses on Aug. 27, the day after the lawsuits were filed.

The tribal lawsuit surrounds the legality of Arizona House Bill 2772, which was signed into law by Arizona Gov. Doug Ducey on April 15, and the allocation of sportsbook operator’s licenses to non-tribal entities. A hearing is set for Thursday.

The Turf Paradise Racing suit argues that the Arizona Department of Gaming failed to follow its own rules when it denied the entity’s operator’s license application on the grounds that the facility did not meet the definition of an Arizona professional sports owner or venue. A hearing scheduled for Friday on the suit has been canceled, but could be rescheduled.

Bookies.com talked with Derrick Beetso, who serves as the director of the College of Law Indian Gaming and Self Governance at Arizona State University, on the lawsuits and their potential impact on the rollout of sports betting in Arizona.

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Setting Stage for Arizona Lawsuits

Bookies (BDC): Take us through your thoughts on the lawsuit brought by the ABA by Yavapai-Prescott Indian Tribe against the Arizona Department of Gaming. Do you think it has a chance of overturning the 2021 gaming compact?

Derrick Beetso: So, to set the stage a little bit: Tribes are required by the Indian Gaming Regulatory Act to negotiate with the state on different gaming compacts in order to game within the state.

A lot of that has been ongoing, over the past year or so, with several tribes in the state. And so, I guess (I’m) not surprised that something like this came up, because when you're dealing with 22 tribes in the state of Arizona, then you're also dealing with the Department of Interior.

And you're also dealing with the National Indian Gaming Council and then the state (Attorney General’s) office in the State Department of Gaming.

There's a lot of different varied interests. And if you look at the amended compact, you can kind of see all the varied interests that were at play with the different tribes, trying to get different provisions in there that benefited them.

And so, you have this lawsuit, and the Yavapai-Prescott Indian Tribe is sort of a rural tribe out there in Prescott. So, it's not around the metro Phoenix area. It's not around the Tucson area.

I think part of their grievances is this idea that rural tribes perhaps didn't fare as well as other tribes. And they also assert that they didn't have a lot of negotiation with respect to the compact leading up to it.

They were kind of asked to sign it with a “take it or leave it” type of proposal. And so, you see this lawsuit, where they’re trying to get some sort of a preliminary injunction that would stop the actual compact and of going into effect right away.

Well, the court reviews it. And then I think at the end of the day, they're seeking a permanent injunction which would basically invalidate the law and have it declared as unlawful.

What’s interesting to me is, the angle that they're taking is not federal, it's very much based on state law. And if you look at the kind of compact process itself, a lot of it from the tribes’ perspective, as far as securing their commitments to the compact, is federal.

And what I think the state brings to the table is promises that they've made in the compact. But I think a lot of those promises hinge on the passage of the state statute, Arizona House Bill 2772, which authorizes certain components that will be in play soon.

Really, what the Yavapai-Prescott Tribe is doing is they're looking at what the state brings to the table and saying that they didn't have the lawful authority to pass a statute.

They also cite constitutional prohibitions against special laws, they point to the kind of sports betting component of HB 2772, and how it basically allows for sports franchises to have certain licenses to be able to conduct these operations.

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And then there were 10 licenses available for the tribes. So, they're basically saying that singling out this special legislation for sports entities is something that violates the constitution as well.

They're also saying that when the legislature enacted this, they said that it was an emergency measure, which basically starts the clock or makes it effective, prior to when it would be effective if it wasn't an emergency measure.

So, they’re saying, ‘Why is it was an emergency measure? How is it impacting the public safety and the health and welfare of the community?’

They didn't put any substance to that iteration in the actual statute. And they also had the Equal Protection Clause basically saying that the law treats tribes and teams differently. And that that violates the Equal Protection Clause.

With respect to whether it will be successful? That's anybody's guess. I don't have a crystal ball.

I do know that the Maricopa County Superior Court has its hands full, and they're going to have some interesting issues here. This is a case where legislative issues being challenged in legislative process, sometimes courts will stay out of the way in those instances because they don't want to interfere with the process of passing legislation.

This is something that's been passed, and it's been signed by Gov. Ducey. And it's prepared to move forward. So, it's right for a legal review. I imagine the Superior Court, as any court would do, is going to take this issue before them seriously. And they have a lot of different issues to kind of unpack with respect to this.

… It is kind of one of these issues that raises some interesting issues, for sure.

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Will Sports Betting in Arizona Be Delayed?

BDC: Do you think the court will have enough time to make a ruling for sports betting to begin on Sept. 9, or will the rollout be delayed?

DB: I imagine all the parties at the table probably want an expedited hearing process, but like you said, with the necessary back and forth and a hearing process, four days is a short amount of time to hear different sides.

And so, it’s going to be tight. I could see if the court feels like there's merit to the claims the tribe asserted, it's very possible that you could see a short stay or temporary stay for a little bit.

I know that there's a lot of interest on either side, that would really hope for that not be the case. And I’m not a palm reader. I don't have a crystal ball in front of me. But when it comes to these cases with these tight timelines, the court needs to do its job. And one of the things that they have at their disposal is the ability to issue stays, and the circumstances and I would think that everybody wants to get it right at the end of the day.

BDC: If the judge decides to issue a stay or an injunction in one or both cases, what would that mean for the rollout of sports betting in Arizona?

DB: Typically, the way I've seen them in the past, it puts the whole process on pause. It will probably just be on hold until the dispute is resolved. One way or another.

And if it's resolved in favor of the defendants here, then sports betting would resume probably once the stay is lifted. And if it's resolved in favor of the Yavapai-Prescott Tribe, since we're just dealing with the kind of preliminary hearing stages, then it would go to the next stages of the trial process and play out.

And then we will probably be talking about, as the hearing goes on, you have a temporary stay, but sooner or later, I guess the question is, ‘Does that become permanent?’

Does this become a declaration by the court that says that the state went beyond its powers in issuing House Bill 2772? So that's still to come.

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BDC: Did the state expose itself to legal action by framing the 2021 compact the way it did, and by limiting the number of licenses to 10 each for professional sports teams and tribes?

DB: I think there's strong arguments to be made either way on this, I think it's tough. I mean, you have a bunch of different equities to try to wrap up in this huge scope and compact.

I would imagine that the current environment that we're in, a year-and-a-half into the pandemic, where everything is online, kind of creates this circumstance where the tribes and the state are kind of seeing this compact as kind of the wave of the future.

And I know that sports betting has been something that everybody's been looking into for a couple of years. You've had a ton of strong legal minds come together, thinking about the best way to move forward here.

And then also the tribes and the state are both trying to get a benefit of the bargain. It’s a novel argument. And I'm interested in watching it play out just like everybody else, I think this is one of those issues that could be huge. Or it could just be a bump in the road towards a future with sports betting, which may or may not be soon.

BDC: Do you think sports betting in Arizona will launch on time?

DB: It really depends on what the court thinks about the merits of this lawsuit. I could see the court looking at it, and on the one hand, saying, ‘Maybe it's a stretch what the tribe is arguing here’, and just moving forward.

And on the other hand, I could see them really taking a hard look at the constitution. Arizona is one of those states that really tries to make sure that their laws are enacted in a good way. And so, the duty of the court is to be that non-biased arbiter of these different types of issues.

So, I wouldn't be surprised if we had a temporary stay just to let the proceedings play themselves out. I would also not be surprised if we don't.

It's an interesting legal argument. I'm really kind of looking at this from the state law perspective and what this means for gaming issues at the state level.

BDC: Is there anything else that you think people should know about the lawsuits being filed? And anything else just regarding the state of gaming on Indian tribal land in Arizona?

DB: I would just say that on tribal lands, these gaming institutions are important, and (are) pieces of economic development, and they bring a lot of good fortune to tribal communities.

For a long time, we were struggling with poverty and social welfare issues. And so, tribal gaming works. I think this is a difficult position and that everybody was in trying to figure out a deal that works for everybody.

And my heart goes out to all the tribes that are really trying to make a difference through gaming.

In a perfect world, everything would work out great for all the tribes and everybody would get what they feel is a fair slice of the pie. But things like this happen and I'll be watching it and monitoring it and our program will be watching it as well.