PHOENIX, AZ (3TV/CBS5) -- Arizona could become the first state to legalize tribal sports gambling under a newly introduced bill that would also permit electronic sports betting kiosks off reservations in places like bars, clubs and stadiums.
The bill, introduced Wednesday by three Republican state lawmakers, would allow each federally recognized tribe with a state gaming compact to run a sports betting operation.
Under the proposed legislation, bars that only allow patrons over 21 inside could lease "kiosks or similar machines" from a tribe. Private clubs like Veterans of Foreign Wars and American Legion could also have kiosks.
Existing law caps the number of betting machines each tribe can operate, and the bill does not grant tribes additional machines.
"This is a great way for the state to get more revenue," said Republican state Senator Sonny Borrelli of Lake Havasu, one of the bill's sponsors.
Bets placed within casinos would be subject to the 8.5 percent revenue sharing agreement in the gaming compact, Borrelli said. Wagers at off-site kiosks would have a tax of 6.75 percent of adjusted gross receipts.
Revenue estimates vary widely. A 2017 Oxford study projected the state could collect $26.1 million a year based on a 10 percent tax rate. Another study released before the bill was introduced projected Arizona could generate between $486,000 and $2.3 million in annual revenue from sports gambling.
"If I had to bet, I would say this may not generate as much revenue as what's being projected," said ASU School of Public Affairs Director Donald Siegel.
Siegel said the state may collect some new taxes on bettors who would otherwise wager online but his research has found sports wagering takes away from spending on other taxable items like the lottery.
“How will sports gambling affect lottery revenue? How will it affect activity on other sin items that we know are consumed in conjunction with gambling like alcohol and tobacco?” Siegel said.
The structure of the bill could leave some off-track betting businesses without a sports wagering option. SB 1158 restricts sports betting kiosks to businesses with certain liquor licenses -- series 6, 7, and 14. Grocery stores and restaurants would not qualify for the kiosks.
“This keeps it away from families,” Borrelli said.
That means Armadillo Grill in Phoenix, which holds a restaurant liquor license but has operated off-track betting stations for 16 years, could be left without a sports betting kiosk under the bill's current language.
"I think the places that have off-track betting and are used to dealing with that kind of entity should be the ones that get it," said owner Brenda Lambrecht. "We know how to run our business and mix it with with everything else and we'd be very popular with it."
What kind of bets will be allowed? That will largely be up to the Arizona Department of Gaming.
SB 1158 defines sports betting broadly as "the placement of a wager on the outcome of a sporting event where a winning outcome is based on the score, point total, point spread or performance of a team or on the score, point total, point spread or performance of an individual athlete in a non-team sport."
The bill has an emergency clause meaning if it passes, it will immediately go into effect once signed by the governor.
Borrelli said he hopes to have sports betting up and running in time for Spring Training.