Arizona Department of Gaming Reopens Licensing Window

Arizona Department of Gaming Opens Licensing Window Again
Fact Checked by Evans Roy

Arizona sports betting is set to expand once again as the Arizona Department of Gaming announced that it will start issuing licenses in July to boost the market before the football season begins.

The ADG regulators will choose up to four new operators to join the state’s sports betting market, which currently has 16 out of 20 available licenses already taken.

The state is in search of a new sportsbook to replace the soon-to-be-closed Unibet Arizona Sportsbook, which is scheduled to permanently shut down later this year.

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AZ Licensing Start and End Dates

The ADG issued a press release on Friday, providing information on the latest expansion of sports betting licensure in Arizona. The announcement included the application window’s start and end dates, as well as the eligible parties for licensure in this round.

In July, the Arizona Department of Gaming (ADG) will begin accepting applications for event wagering licenses. ADG will consider applications for at least one license for Arizona Tribes and one for Arizona Sports Franchises, as outlined in A.R.S. § 5-1301(7). Interested applicants should review the materials on ADG’s website to fully understand the application process and requirements, as detailed in ADG’s announcement.

The application period for event wagering licenses will begin on July 8, 2024, and end on July 19, 2024, at 5 p.m. All applicants must submit their completed applications during this time to be considered for a license. ADG will thoroughly review all applications in accordance with the State’s event wagering regulations and laws.

What experts within the industry are saying

Even though the Arizona betting market has exceeded expectations by reaching over $16.4 billion in handle since its inception in September 2021, with a new record set in March 2024, operators have not experienced steady success.

Over the last year, Arizona has seen online operators like WynnBET and TwinSpires shut down, with Unibet expected to do the same in the near future.

However, the ADG has recently given approval to two well-known national brands, Bet365 Arizona Sportsbook and Fanatics Gaming, to be added to the list of authorized mobile sportsbooks in the state. With Unibet ceasing operations, the total number of mobile operators in the Grand Canyon State now stands at 16.

Brendan Bussmann, managing partner of B Global, and other industry insiders have observed a lack of continuity in Arizona. Bussmann is concerned that the Arizona Department of Gaming (ADG) will struggle to find applicants who are dedicated for the long term.

Bussmann told yengols.com that they are revisiting the process of applying for open licenses in Arizona. He recommended considering a partnership with a tribal entity as the easiest option, due to his uncertainty about how sports licenses will work with the current setup of teams. The structure of the division has presented challenges from the beginning.

Bet365 and Fanatics Arizona Sportsbook are establishing themselves in the Arizona sports betting market, prompting regulators to explore other specialized brands like Betr and Circa. Despite multiple attempts, yengols.com was unable to reach Betr or Circa for comment before the deadline.

Additionally, established DFS companies like Underdog Sports are potentially looking into entering the market. Although Underdog Sports recently launched a sports betting platform in North Carolina, a spokesperson for the company has not confirmed if they intend to apply for a license in Arizona.

According to experts like Bussmann, new entrants who receive licenses in the current round will face a difficult path ahead, but there is still potential for circumstances to change in Arizona.

Bussmann elaborated that due to the presence of well-established competitors in the market, any potential newcomers would probably be smaller or independent brands aiming to enter the sports betting industry. He proposed that although the distribution of licenses is expected to remain the same, granting additional licenses to tribes could provide more opportunities for these communities instead of letting licenses go unused.

Having studied the state’s business environment for years, experts such as Arizona State University teaching associate professor Daniel McIntosh recognize that the recent licensing adjustments do not change the difficult economic conditions that have caused the shutdown of specialized gambling companies in recent years.

McIntosh pointed out that WynnBET, TwinSpires, and Unibet (along with Fubo) have exited the market, while FanDuel and DraftKings maintain their stronghold, controlling approximately two-thirds of the market share. Traditional physical casinos such as MGM and Caesars are close behind. There were expectations that Phoenix Rising FC would finalize an official partnership in the previous cycle, and it wouldn’t be unexpected to see them make a bid in the current period, particularly after their victorious 2023 USL Championship win, which may draw in more fans and market attention.

McIntosh suggests that the state’s operations have been ongoing for more than two years, causing a decrease in the effectiveness of tax-exempt free bets. Consequently, operators must explore innovative strategies to boost their market shares across all sectors.

In the Arizona sports betting market, niche brands seeking a mobile license must rely on creativity to stand out and overcome competition from larger companies, which could pose challenges to their success in the state.

McIntosh states that hold percentages have remained consistent at around 8%, with overall free bet percentages hovering at 3% since January 2022. ESPN Bet and Bet365 have implemented a strategy of offering higher free bet rates of 6%, double the average, in order to grow their market presence. However, this approach has impacted their hold rates, which have decreased to approximately 6%. Consequently, their market shares have currently dropped to approximately 4% and 3% respectively.

In summary, free bets and sign-up bonuses do not result in consistent profits and do not seem to enhance customer loyalty over time.

Who is eligible to apply in Arizona?

The Phoenix Rising Football Club, Tucson Roadrunners, and Tucson Sugar Skulls are the only unlicensed sports teams in Arizona, with only the Phoenix Rising Football Club publicly discussing their future plans for betting.

Bobby Dulle, President of PRFC, confirmed to yengols.com through email that the club is persisting in its quest for a mobile sports betting license. Despite previous rejections, including in the 2021 licensing round, the club is unwavering in its determination.

Dulle expressed Phoenix Rising FC’s enthusiasm in providing sports betting options to their fans in Arizona, where choices are currently limited. The team is actively looking for a suitable sports betting partner and plans to submit an application by July.

Vincent Francia, general manager of Turf Paradise horse racing track in Phoenix, is currently exploring potential sports betting partnerships for the upcoming event.

Since 2000, Jerry Simms, the chairman of the track, has announced to yengols.com that the Phoenix horse racing establishment is currently in search of a new wagering partner to replace Unibet, the previous operator of the facility’s limited wagering license.

Simms stated that Turf Paradise may not seek a full wagering license this summer because of limitations on what qualifies as a “professional sports franchise” under current laws. Nonetheless, the track is satisfied with any wagering options available in 2024 and beyond.

Simms has expressed interest in finding a partner who complies with the law, but has not yet found one. He noted that they are restricted to obtaining a sports betting license under the current legal regulations.

Additionally, he noted that Turf Paradise officials have not been contacted by the ADG or any other state agency about potentially loosening regulations to permit the track to provide casino mobile and retail wagering outside of the racing season moving forward. He also mentioned that the track has recently secured a three-year extension with the state’s horsemen association, guaranteeing that the facility can continue operating without immediate concerns.

Simms pointed out that the recently signed three-year contract with the horsemen is advantageous for both parties involved, including the staff.

In compliance with Arizona sports betting regulations, ten tribes and ten professional sports teams in the state are eligible to apply for betting licenses, with eight licenses already allocated to each group. New customers can access online promotions for Arizona sports betting through different casino apps.

It is unclear whether the ADG will choose to fill the remaining four slots, but one of the largest sports betting markets in the country is preparing to welcome interested operators.

Image credit: Steven Bisig, USA Today

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Author

Peterson Christopher

Peterson Christopher has over seven years of experience covering sports and sports betting in Arizona for publications including ArizonaSports.com, the Tucson Weekly, and the Green Valley News. He now holds the position of lead writer at yengols.com.

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