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MARK BRODIE: In his State of the State address, Gov. Ducey talked about the opportunity for a "modernized gaming compact" in Arizona that he says would bring in more money for the state and tribal nations. The governor has told the Legislature he's negotiated such a deal as the current compacts, which voters approved in 2002, are set to expire. There have been efforts to allow sports betting in Arizona since the U.S. Supreme Court allowed it in 2018, but those efforts have so far not really gone anywhere. With me to talk about what a modernized gaming compact might look like in Arizona is Larry Roberts, professor of practice and executive director of the Indian Gaming and Tribal Self-Government programs at the Sandra Day O'Connor College of Law at ASU. And, Larry, what to you are some of the biggest changes or issues that could use some updating?
LARRY ROBERTS: Tribes generally are working with states to update compacts — sometimes compacts are unclear. Here you have the Arizona compacts being negotiated decades ago. And so in terms of addressing new technology, in terms of addressing things like sports betting, which maybe weren't contemplated in the original compacts, tribes and states are typically updating compacts to reflect current needs and current trends in the gaming industry. And so my guess is that with these new compacts, there'll be more clarity in terms of the rules around sports betting, if that's what the tribes and states have agreed to, in terms of how those will be offered by the tribes on their reservations.
BRODIE: How much of a wrinkle does the fact that the Supreme Court has legalized sports betting put in this? And I asked mostly because, you know, one of the arguments in favor of the current compact was that it would not expand gaming. Like, there wouldn't be new casinos in neighborhoods, things like that. And it seems as though adding sports betting could be adding a whole new set of opportunities for people who want to wager their money.
ROBERTS: Yeah, that you see a number of states since the Supreme Court decision in Murphy (v. National Collegiate Athletic Association) authorizing sports betting either through commercial casinos or through tribes. So, for example, in Michigan they recently passed state legislation that authorizes tribes to offer sports betting online throughout the state of Michigan. I think the authorization of sports betting as a new game, I think it's something that generally receives strong public approval as we're seeing a number of states move in that direction. And so I'm not sure that it's as contentious as it may have been, say, 10 years ago.
BRODIE: From your perspective, does it make sense to try to — if Arizona is going to allow sports betting and include it — does it make sense to wrap it into an entirely new gaming compact as opposed to sort of doing that part piecemeal?
ROBERTS: Yeah. So, you know, the legislation that was introduced in the state last year — and we'll see what legislation is is introduced in the coming year, could be in a matter of weeks — typically, tribes pay a percentage of revenues of their their gaming operations to the state in exchange for exclusivity. So the exclusive right to provide those games within the state. And so here with sports betting, it may make sense to include that in the compact itself in terms of a promise by the state that tribes would be the exclusive providers of sports betting within the state. And essentially what that does is it generates revenues for the state, for the tribe, and it does not impact the exclusive rights that tribes had bargained for previously.
BRODIE: So do you see, for example, like bars that are not part of Indian casinos being allowed to offer a sports book in the state? Or do you think that will be the sole right of tribes?
ROBERTS: Typically for Interior to approve any sort of payments to the state, any tribal payments to the state — say, for example, sports betting — tribes have to have exclusivity of those games. That's not to say that they could be developing a model in Arizona where tribes are the exclusive provider under state law and are able to put machines or kiosks in different bars and restaurants. And that would not violate exclusivity because the tribes would be operating those machines or those, those sports betting opportunities under state law.
BRODIE: How much urgency do you think Arizona does and maybe should feel in terms of the money aspect? As other states look to legalize sports betting and maybe even expand casino output in those states, does Arizona need to sort of get on this or risk falling behind and maybe losing out on potential revenue?
ROBERTS: Yeah, I think it's certainly an amenity that tribes are interested in offering. And I think it's something that the public is supportive of generally. And you see it expanding across a number of states relatively quickly. And so I do think that to remain competitive in the broader marketplace, that Arizona would be wise to address it now.
BRODIE: Do you have a sense of, when whatever the new compact looks like is unveiled, do you have a sense of if Arizona will be looking at roughly the same number of casinos and geographic distribution? I mean, can you see, for example, a larger number? Like, can you see tribes being allowed to open more casinos or expanded casinos in the state?
ROBERTS: My guess is that you will not see increased numbers of your traditional casinos, but that, again, based on the legislation that was introduced in the last year, what you may see are machines or terminals being placed in your bars and restaurants across the state. So I don't really foresee a broad expansion of traditional tribal casinos within the state as part of this compact process. I would view it more as perhaps the opportunity for expanded kiosks and opportunities to place sports bets across the state, off reservation.
BRODIE: All right. Larry Roberts is a professor of practice and executive director of the Indian Gaming and Tribal Self-Government programs at the Sandra Day O'Connor College of Law at ASU. Larry, nice to talk to you. Thank you.
ROBERTS: Great. Thanks for having me.


Mississippi Again Punts On Mobile Sports Betting Expansion.
Mississippi sports betting is staying offline.
Three bills aiming to expand MS sports betting to mobile platforms in the state died in committee this week.
Mississippi was one of the first states to launch sports betting in 2018 but continues to be restricted to retail sportsbooks. Multiple mobile betting bills have failed in the years following legalization.
A seismic shift?
Currently, mobile betting is allowed on a casino’s property in the state. None of the state’s commercial casinos are using the so-called “Mississippi mobile” option though.
The three failed bills would have altered the betting landscape by bringing sports betting in Mississippi online:
SB 2396 would have allowed each casino operator an online sportsbook. SB 2732 and HB 1042 proposed expanding existing legislation to carry online betting statewide.
Mississippi sports betting revenue hamstrung.
Since launching in August 2018, Mississippi has generated $103 million in sports betting revenue, and $12.4 million in taxes on $890 million wagered.
In 2020, the state’s wagering created more than $43 million in revenue and $5.2 million in taxes. Unless the state’s 24 casino operators can open up statewide mobile, a wealth of potential tax revenue will continue to go into the illegal market.
“Every day millions of Americans in 15 states have access to state-of-the-art mobile sportsbooks, allowing them to place bets on their favorite teams and leagues at home while fostering much-needed tax revenue,” Sen. Philip Moran said in a release introducing SB 2732. “Unfortunately, Mississippi law does not authorize online sports betting, but this bill seeks to change that. “Mississippi has been leaving money on the table by not authorizing online sports wagering, and it is time to modernize Mississippi’s gambling offerings and do what’s best for Mississippians.”
Maturing MS sports betting market.
Even without the extra betting mobile would bring, Mississippi is watching its monthly handle grow, hitting an all-time high of $61.1 million in October 2020.
The first half of 2020 was slowed because of COVID-19 . As sports returned in August, however, the state’s monthly handles continue to grow year-over-year.
Both November and December 2020 revenues more than doubled compared to 2019, drawing $8.1 million and $7.7 million respectively. Those numbers pale in comparison to markets with mobile wagering however.
Neighboring state potential.
Neighboring Tennessee launched mobile-only betting in late 2020, while Alabama and Florida offer untapped potential. Arkansas has retail betting and Louisana voters approved sports betting in November 2020.
In November and December, Tennessee brought in $5.4 million in taxes through its mobile betting.
The ability to draw potential customers from neighboring states is dwindling, however. Multiple states legislatures are looking at legalizing sports betting.


The Race To Legalize Online Sports Betting In NY: Cuomo Vs. State Democrats.
With New York facing a $15 billion budget shortfall from the coronavirus pandemic, online sports betting is viewed as one possible way to inject much-needed money into the state. New Jersey legalized online wagers in 2018, and earlier this month, Governor Andrew Cuomo included an online professional sports betting plan in his executive budget proposal that he claimed would raise $500 million in revenue for the state.
But many logistical hurdles remain. Cuomo’s proposal for legalization runs counter to what the Democratic supermajority in the state legislature is pitching. Some authorities are questioning the legality of the whole enterprise. And there are lingering concerns about gambling and addiction, particularly with the number of people sequestered at home and the opportunities that could be suddenly available to lose significant amounts of cash.
“I don’t see the governor’s proposal as workable in New York,” said Assemblyman Gary Pretlow, the chairman of the Committee on Racing and Wagering.
Right now, you can place horse racing bets on your smartphone through an app run by the not-for-profit corporation that oversees horse racing in New York’s three major tracks. Mobile betting for professional sports could theoretically function in a similar way. Currently, the servers for horse betting are located at the racetracks.
In both Cuomo and the legislature's proposals, the servers for mobile sports betting would be situated at places where bets are already taken, like casinos. The major overriding question is how many operators, or “skins,” as they are called in the industry, there will be, and who will get to profit.
Under Cuomo’s proposal, which still needs to be fleshed out further, the New York State Gaming Commission would be directed to solicit bids for a small number of mobile sports wagering operators. The system would be akin to how the state-run lottery functions, with possibly only one or a small number of operators overseeing sports betting. A single operator runs online sports betting in New Hampshire, Oregon, Rhode Island and the District of Columbia. Overall, sports betting is now legal in more than two dozen states.
Robert Mujica, Cuomo’s budget director, said earlier this month that the advantage of the state proposal would be the ability to maximize tax revenue. “The fundamental question is: if you want to support the bottom line for casinos or New York’s students. And the governor’s proposal chooses students,” Mujica told the Wall Street Journal . (An identical statement was sent to Gothamist from Freeman Klopott, a budget spokesman for Cuomo.)
It’s not clear yet what Cuomo’s tax rate would be for his online betting model, though Mujica has asserted that it would be enough to raise $500 million a year. The state legislative proposal, co-sponsored by Pretlow and the chairman of the State Senate’s Racing and Wagering Committee, Joseph Addabbo, puts the number closer to $100 million annually.
At first glance, that would seem to make Cuomo’s proposal the better one, given the potential for serious state budget cuts without new forms of revenue. But lawmakers and some gambling industry insiders aren’t so sure. In New Jersey, which is generally viewed as a success given the number of people who place bets, there are as many as 17 legal online sportsbooks.
New York’s legislature is looking to take a similar approach, believing their proposal has a better opportunity for growth—more operators can lead to more options for consumers and more interest in placing bets. Addabbo calls his legislation “inclusive,” because it would also allow for Native American casinos, casinos on state property, and off-track betting sites to participate.
“Competition bodes better for our residents and will drive up revenues than being a narrow state-run lottery kind of system,” Addabbo argued. “New York finds itself in a very odd position not being a leader. We are outside looking in. New York right now is a three-wheeled car limping along in the right lane. New Jersey and Pennsylvania are speeding by us.”
Bennett Liebman is a government lawyer in residence at Albany Law School who previously advised Cuomo as the deputy secretary for Gaming and Racing. He said the difference between the two models is a question of what is being prioritized: more tax revenue, or a better model, long-term, for consumers and gambling interests?
“It all depends on what you want in your market. If you want what the governor is seeking, which the draft is very general, you are looking for maximum tax revenue, you will give it to one or two groups and you are going to tax them at a very high rate,” Liebman said. “If you are looking to create a robust market to help out casinos and consumers, then you go with, or you are more inclined to go with, the legislative plan.”
Liebman called the Cuomo administration’s $500 million revenue figure for online sports betting “very, very high,” and predicted a few operators would dominate the space in New York, like DraftKings and FanDuel have done in New Jersey. Casinos, racetracks, and online gambling in total generated a little more than $300 million in tax revenue for New Jersey in 2020.
Even if New York reached Cuomo’s projections—let alone the far smaller figure from the state legislature—online sports betting would represent only a minuscule fraction of a state budget that was $177 billion last year. One question hanging over the debate is whether the united front fighting for mobile sports betting in New York—the currently existing casinos, and operators like DraftKings and FanDuel—would crumble if only a small number of them were selected to make money from sports betting.
According to a constitutional amendment passed in 2013, sports wagering in New York is currently allowed only in physical portions of its four existing commercial casinos and other facilities operated by Indian tribes. Cuomo and supporters of online sports betting believe their proposal will meet the requirements of the state constitution by locating the servers for the betting websites at the physical casinos.
Neil Murray, an Albany attorney who has sued to oppose gambling in the state, said there was a “legitimate, serious question” about the constitutionality of online sports betting.
“The problem right now is the constitutional amendment that was passed several years ago does carve out exceptions for gambling at casinos. The operative word is ‘at’ and what does that mean?”
Murray argued the way the amendment was proposed—an economic stimulus for destination casinos that would prevent the proliferation of gambling statewide—contradicts the arguments made for mobile sports betting today. “If you allow online gambling and people can gamble from their living rooms, then of course that destroys the whole purpose on which gambling was authorized on a limited basis to begin with,” he said. “Everybody is counting on collective amnesia.”
Pretlow, the state assemblyman, contended that his bill met the requirements of the state constitution but Cuomo’s would not if it chose to operate like the state lottery. The lottery is regarded as a game of pure chance with no skill involved, allowing it to circumvent a longtime prohibition on gambling in the state.
“The lottery has to be 100 percent chance. The lottery is not gambling,” Pretlow said. “It’s flip a coin, heads or tails, nothing in the middle. I think if the lottery were to handle sports betting, it would lead to a constitutional question.”


Sports gambling could be the pandemic's biggest winner.
Credit: Getty Images/Hirurg.
Over the past 11 months, the coronavirus pandemic has wreaked havoc on state budgets. From massive losses in tax revenue to the substantial costs of fighting the virus and supporting those struggling with unemployment, states may need years to recover financially. A Wall Street Journal headline in October offered a dire warning: "U.S. States Face Biggest Cash Crisis Since the Great Depression."
In multiple states, one option has emerged to address this fiscal crisis: legalized gambling. In 2017, the Supreme Court ruled that states have the right to decide the status of sports betting for themselves. Over the past four years, more than two dozen states – from New Hampshire to New Mexico – have legalized sports betting, either online, at casinos or both.
The economic fallout of the coronavirus has sped up momentum for sports gambling. Voters in Louisiana, Maryland and South Dakota approved sports-betting ballot measures in November, while legislators in Virginia and Washington state enacted bills earlier last year. New York Democratic Gov. Andrew M. Cuomo recently reversed his opposition to online sports gambling due to the projected multibillion-dollar shortfall in his state's budget, and the pandemic has generated enthusiasm for legislation in California, Connecticut, Missouri and numerous other states. The Super Bowl is the country's largest sports-betting event of the year, and Sunday's big game may provide another impetus for states to try to cash in on gambling revenue.
The recent spread of sports betting is not surprising, as state governments have long turned to legalized gambling to address financial problems during economic crises. During the Great Depression and then again in the 1970s and 1990s, states went to the gambling well to address budget issues.
But the history of gambling offers a note of caution for legislators. While gambling revenue has obvious appeal, it can provide only a fraction of state income and should not stand in the way of more fundamental measures to address state fiscal problems.
At the turn of the 20th century, legalized gambling was on the run in the United States. Amid a surge of progressive moralism, many believed that betting harmed the poor, degraded the national work ethic and undermined Christian values. In the 1890s, Congress cracked down on the last state-chartered lottery – the notoriously corrupt Louisiana State Lottery Company – and a number of states banned betting on horse racing, one of the only forms of wagering that remained legal. Even Nevada, which had permitted gambling since 1869, banned it in 1909.
However, anti-gambling values were no match for the promise of tax-free government revenue, and the Great Depression led to a massive wave of gambling legalization. With the advent of pari-mutuel betting – which allowed players to bet against one another without the involvement of a bookkeeper – numerous states reauthorized horse-race betting, including 10 states in 1933 alone. Budget problems reached the point that four states even legalized slot machines, which one Kansas judge had only a few years earlier dubbed "the most vicious form of gambling." Nevada lifted its ban on legalized commercial gambling in 1931, setting the state on a path to becoming the nation's postwar oasis of legal vice.
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After the Depression ended, the spread of legalized gambling — except for charitable bingo — slowed. Gambling fell out of favor in the aftermath of the 1950-1951 Kefauver Committee investigation that revealed the mob's ties to illegal betting. According to Sen. Estes Kefauver (D-Tenn.), who led the committee, gambling was not just an activity that corrupted individual participants – as the progressives of the early 1900s had alleged — it was also the source of organized crime's influence across American society.
Yet, as postwar economic growth began to slow in the 1960s, states once again turned to gambling, this time hoping to finance the combination of generous public services and low taxes that citizens had come to expect. By the 1970s, population growth, coupled with rising inflation and competition from rebuilt overseas economies, led to budget problems for state governments. Deficits rose and surpluses shrank or disappeared. Lawmakers were forced to reckon with enacting unpopular tax increases or even less popular cuts to government programs. Massachusetts state legislator Anthony Scibelli declared in 1972 that the commonwealth was "on the brink of financial disaster."
That year, rather than address citizens' unrealistic expectations for the state budget, the Bay State began selling tickets for the nation's fourth state-run lottery. Lotteries embodied legislators' and taxpayers' hopes that the postwar low-tax/big government arrangement could continue despite shifting economic conditions. Expectations were high. A "lottery operated by the state could raise enough revenue to permit reducing taxes," a West Belmar, New Jersey, resident wrote to the local newspaper in 1964. "New Jersey could have larger and better schools, better hospitals, and provide senior housing and medical care for the senior citizens."
Unsurprisingly, lotteries could not come close to meeting these lofty goals. Few proponents had considered that actual net profits for the state represented only a fraction of gross sales, at the time around 45%, and today about 27%.
In most states, lotteries accounted for about 2% of total revenue, a significant sum, to be sure, but hardly enough to offset a tax reduction and meaningfully bolster government expenditures. New Jersey's lottery commissioner confessed in 1971: "I don't think lotteries will solve the financial woes of the states, nor are they the salvation of the taxpayers. They simply don't generate enough money."
The lottery disappointment did not dampen public enthusiasm for legalized gambling as a quick solution to budget problems. In the 1980s and 1990s, high poverty rates and rampant unemployment on tribal lands led to the construction of casinos on Native American reservations. For select residents of certain tribes and for specific tribal governments, reservation casinos provide perhaps the only example of gambling revenue actually meeting expectations as a tool of economic development.
Starting in the 1990s, states sought to replicate the tribal model, gradually enabling non-reservation casinos to promote stagnant economies. Rather than invest in job-training programs or provide aid to communities hurt by deindustrialization, cities like Detroit, Gary, Indiana, and Bethlehem, Pennsylvania, became the sites of new casinos and riverboats. While gambling created jobs and raised state revenue, a federal commission wrote in 1999 that the expansion of gambling had created "walled-off oases of prosperity surrounded by blighted communities."
Gambling is not a panacea, and, as history reveals, it never has been. The profits are small relative to states' overall income, and while many bettors play casually, the improved access that comes with state approval can also lead to an increase in problem gambling. Some games – especially lotteries – appeal disproportionately to less educated, lower-income and non-White players.
While legalized gambling has seen ebbs and flows over the course of American history, no state has enacted a major gambling prohibition in more than a century. The coronavirus pandemic –and the inevitable headlines about the total amount bet on Sunday's Super Bowl – probably will prompt even more legislators to take a close look at sports betting.
But while the possibility of new, creative sources of revenue is appealing, fixing budget deficits also requires addressing underlying issues, such as ensuring the wealthy pay their fair share in taxes. After all, states have bet big on betting and, in most cases, are still waiting for the long-shot wager to pay off.
Jonathan D. Cohen, who received his PhD in history from the University of Virginia and is completing a book on the history of American state lotteries, wrote this piece for The Washington Post.
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