Arizona Attorney General Concludes Historical Horse Race Betting Would Trigger Exclusivity Provision in Amended Tribal-State Gaming Compact

By Heidi McNeil Staudenmaier and Amanda Z. Weaver, Ph.D.

In late February, 2024, Arizona Attorney General Kris Mayes issued a formal opinion (“Opinion”) regarding the 2021 Amended Tribal-State Gaming Compact and the effect of its exclusivity provision on historical horse race (“HHR”) betting. See Opinion No. I24-003. The Attorney General concluded that pari-mutuel wagering on HHR machines was subject to the Arizona Tribal-State Gaming Compact’s exclusivity provision.

HHR betting relies on the “use of an electronic device or terminal to place bets on completed horse races in which the bettors do not know the race’s outcome.” Id. Specifics are removed so that bettors cannot identify the specific time and place of the race’s original running, or the horse’s identity; however, some statistical data regarding the horses are provided.

In her analysis, Attorney General Mayes noted that device technology has evolved on HHR machines, such that their “appearance, graphics, animation, and sound . . . is nearly identical to traditional slot machines and similar gaming devices that rely on random number generators.” Id. (internal quotation marks and citation omitted). However, while traditional slot machines use a random number generator, HHR machines have a “game path predicated on a type of pari-mutuel wagering.” Id. 

The Opinion’s analysis of the 2021 Amended Tribal-State Compact in Arizona, which governs gaming on tribal lands pursuant to the federal Indian Gaming Regulatory Act (“IGRA”), addresses the three classes of gaming under the IGRA. Class III, per the Opinion, includes pari-mutuel horse wagering and “any electronic or electromechanical facsimiles of any game of chance or slot machines of any kind.” Id. (quoting 25 U.S.C. § 2710(d)(1)).

The Arizona Tribal-State Compact provides for tribes’ exclusive right to conduct certain types of gaming activities on tribal lands, as well as tribes’ contribution of a portion of their revenue from gaming activities to the State, and limitations on the scope of permitted gaming. The Compact also provides that the State not permit any non-tribal entity from engaging in certain types of gambling, including Class III gaming. If the Arizona Legislature permits a non-tribal entity from engaging in these forms of gaming, then tribes “may be released from certain of the Compact’s gaming limitations and may reduce their contributions to the State.” Id.

The Attorney General’s office was previously asked to opine on whether non-tribal entities engaging in HHR betting would trigger the Tribal-State Compact’s exclusivity provision. Id. The exclusivity provision is triggered, in relevant part, where a non-tribal entity operates “any form of Class III Gaming not authorized under the Compact, other than gambling authorized by state law as of May 1, 2002.” Id. (citing A.R.S. § 5-112). The Attorney General concluded in a 2018 opinion that HHR machines did not constitute a legal form of pari-mutuel wagering authorized as of May 1, 2002, and if HHR machines were authorized, the Compact’s exclusivity provision would be triggered.

In 2021, the State of Arizona entered into an amended Tribal-State Gaming Compact with the tribal nations in Arizona, which, among other changes, provided additional exceptions to gaming activity that could be conducted without triggering the exclusivity provision, including (1) off-reservation event wagering; (2) off-reservation fantasy sports; (3) lottery keno; and (4) lottery draw games. HHR devices were not expressly included within these exceptions. The Opinion reconfirmed the 2018 opinion’s analysis that HHR devices would trigger the exclusivity provision, and they did not fit into any of the new exceptions to the exclusivity provision under the 2021 amended Compact.

HHR devices have been gathering attention in other states as well. For example, a court in Louisiana issued a ruling on February 27, 2024, that a law passing HHR betting was unconstitutional and could not be conducted in any parish of the state until voters in such parish “approve such gaming by a majority vote . . .” under the Louisiana Constitution. Fremin, et al. v. Boyd Racing, LLC, et al., Docket No. C-725,007 (19th Judicial Dist. Ct., Parish of E. Baton Rouge, La.,  Feb. 27, 2024), available at Legal Sports Report, https://www.legalsportsreport.com/wp-content/uploads/2024/02/Deputy_Clerk_of_Court.pdf.