Indian tribes; event wagering; other events

SB1777 - 572R - I Ver

REFERENCE TITLE:
Indian tribes; event wagering; other events

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1777

Introduced by

Senator
Gonzales

AN
ACT

amending sections 5-554 and 5-1301,
arizona revised statutes; relating to amusements and sports.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 5-554, Arizona Revised
Statutes, is amended to read:

START_STATUTE
5-554.

Commission; director; powers and duties; definitions

A. The commission shall meet with the director not
less than once each quarter to make recommendations and set policy, receive
reports from the director and transact other business properly brought before
the commission.

B. The commission shall oversee a state lottery to
produce the maximum amount of net revenue consonant with the dignity of the
state.� To achieve these ends, the commission shall authorize the director to
adopt rules in accordance with title 41, chapter 6. Rules adopted by
the director may include the following:

1. Subject to the approval of the commission, the
types of lottery games and the types of game play-styles to be conducted.

2. The method of selecting the winning tickets or
shares for noncomputerized online games, except that a method may not be used
that, in whole or in part, depends on the results of a dog race, a horse race,
any gaming activity conducted pursuant to the 2021 tribal-state gaming
compact amendments or any sports event or other event.

3. The manner of payment of prizes to the holders of
winning tickets or shares, including providing for payment by the purchase of
annuities in the case of prizes payable in installments, except that the
commission staff shall examine claims and may not pay any prize based on
altered, stolen or counterfeit tickets or based on any tickets that fail to
meet established validation requirements, including rules stated on the ticket
or in the published game rules, and confidential validation tests applied consistently
by the commission staff.�
No
a

particular prize in a lottery game may
not
be paid more
than once, and in the event of a binding determination that more than one
person is entitled to a particular prize, the sole remedy of the claimants is
the award to each of them of an equal portion of the single prize.

4. The method to be used in selling tickets or
shares, except that
no
an
elected
official's name may
not
be printed on the tickets or
shares.� The overall estimated odds of winning some prize or some cash prize,
as appropriate, in a given game shall be printed on each ticket or share.

5. The licensing of agents to sell tickets or
shares, except that a person who is under eighteen years of age shall not be
licensed as an agent.

6. The manner and amount of compensation to be paid
licensed sales agents necessary to provide for the adequate availability of
tickets or shares to prospective buyers and for the convenience of the public,
including provision for variable compensation based on sales volume.

7. Matters necessary
or desirable for the efficient and economical operation and administration of
the lottery and for the convenience of the purchasers of tickets or shares and
the holders of winning tickets or shares.

8. The licensing of authorized keno locations,
including the persons that control the business or other activity conducted at
an authorized keno location.

C. The commission shall authorize the director to
issue orders and shall approve orders issued by the director for the necessary
operation of the lottery. Orders issued under this subsection may
include the following:

1. The prices of tickets or shares in lottery games.

2. The themes, game play-styles, and names of
lottery games and definitions of symbols and other characters used in lottery
games, except that each ticket or share in a lottery game shall bear a unique
distinguishable serial number.

3. The sale of tickets or shares at a discount for
promotional purposes.

4. The prize structure of lottery games, including
the number and size of prizes available. Available prizes may
include free tickets in lottery games and merchandise prizes.

5. The frequency of drawings, if any, or other
selections of winning tickets or shares, except that:

(a) All drawings shall be open to the public.

(b) The actual selection of winning tickets or
shares may not be performed by an employee or member of the commission.

(c) Noncomputerized online game drawings shall be
witnessed by an independent observer.

6. Requirements for eligibility for participation in
grand drawings or other runoff drawings, including requirements for the
submission of evidence of eligibility within a shorter period than that
provided for claims by section 5-568.

7. Incentive and bonus programs designed to increase
sales of lottery tickets or shares and to produce the maximum amount of net
revenue for this state.

8. The method used for the validation of a ticket,
which may be by physical or electronic presentation of a ticket.

D. Notwithstanding title 41, chapter 6 and
subsection B of this section, the director, subject to the approval of the
commission, may establish a policy, procedure or practice that relates to an
existing online game or a new online game that is the same type and has the
same type of game play-style as an online game currently being conducted
by the lottery or may modify an existing rule for an existing online game or a
new online game that is the same type and has the same type of game play-style
as an online game currently being conducted by the lottery, including
establishing or modifying the matrix for an online game by giving notice of the
establishment or modification at least thirty days before the effective date of
the establishment or modification.

E. The commission shall maintain and make the
following information available for public inspection at its offices during
regular business hours:

1. A detailed listing of the estimated number of
prizes of each particular denomination expected to be awarded in any instant
game currently on sale.

2. After the end of the claim period prescribed by section
5-568, a listing of the total number of tickets or shares sold and the
number of prizes of each particular denomination awarded in each lottery game.

3. Definitions of all play symbols and other
characters used in each lottery game and instructions on how to play and how to
win each lottery game.

F. Any information that is maintained by the
commission and that would assist a person in locating or identifying a winning
ticket or share or that would otherwise compromise the integrity of any lottery
game is deemed confidential and is not subject to public inspection.

G. The commission, in addition to other games
authorized by this article, may establish multijurisdictional lottery games to
be conducted concurrently with other lottery games authorized under subsection
B of this section. The monies for prizes, for operating expenses and
for payment to the state general fund shall be accounted for separately as
nearly as practicable in the lottery commission's general accounting
system. The monies shall be derived from the revenues of multijurisdictional
lottery games.

H. The commission, in addition to other games
authorized by this article, shall establish special instant ticket games with
play areas protected by paper tabs designated for use by charitable
organizations.� The monies for prizes and for operating expenses shall be
accounted for separately as nearly as practicable in the lottery commission's
general accounting system.� Monies saved from the revenues of the special
games, by reason of operating efficiencies, shall become other revenue of the lottery
commission and revert to the state general fund, except that the commission
shall transfer the proceeds from any games that are sold from a vending machine
in an age-restricted area to the state treasurer for deposit in the following
amounts:

1.
Nine hundred thousand dollars
$900,000
each fiscal year in the internet crimes against
children enforcement fund established by section 41-199.

2.
One hundred thousand dollars
$100,000
each fiscal year in the victims' rights enforcement
fund established by section 41-1727.

3. Any monies in excess of the amounts listed in
paragraphs 1 and 2 of this subsection, in the state lottery fund established by
section 5-571.

I. The commission or director shall not establish or
operate any online or electronic keno game or any game played on the internet,
except for the electronic keno game and the mobile draw game authorized in
subsection J of this section.

J.
From and after the date on which
the conditions prescribed in sections 5-1213 and 5-1321 are met,

The commission or director, in addition to any other game authorized in this
section, may establish and operate a single electronic keno game and a single
mobile draw game on a centralized computer system controlled by the lottery
that allows a player to place wagers, view the outcome of a game and receive
winnings over the internet, including on personal electronic devices.

K. An electronic keno
game conducted pursuant to subsection J of this section may be operated only
within an authorized keno location. If the electronic keno game is
authorized to be played on personal electronic devices, players shall be
geographically restricted by means of geofencing to authorized keno
locations. Electronic keno game draws may not be conducted more
frequently than once every four minutes. The number of authorized
keno locations may not exceed the number published annually by the director,
which is equal to the total number of establishments licensed by the department
of gaming to allow wagering on live horse races and simulcast wagering pursuant
to section 5-107, plus the total number of class 14 liquor licenses that
the department of liquor licenses and control issued to fraternal organizations
or veterans' organizations as of January 1, 2021. The total number
of authorized keno locations shall be automatically increased by two percent
every two years.

L. A mobile draw game
conducted pursuant to subsection J of this section may offer players multiple
game play styles and wagering options.� Players of the mobile draw game may not
play or win a prize more frequently than once per hour.

M. An electronic keno
game or mobile draw game conducted pursuant to this section may not present the
player with a user interface
depicting

that
depicts
spinning reels or that replicates a slot machine, blackjack,
poker, roulette, craps or any other casino-style game other than traditional
keno or a traditional lottery draw game.

N. Except as provided in subsections J, K, L and M
of this section, the commission or director shall not establish or operate any
lottery game or any type of game play-style, either individually or in
combination, that uses gaming devices or video lottery terminals as those terms
are used in section 5-601.02, including monitor games that produce or
display outcomes or results more than once per hour.

O. The director shall print, in a prominent location
on each lottery ticket or share, a statement that help is available if a person
has a problem with gambling and a toll-free telephone number where
problem gambling assistance is available.� The director shall require all
licensed agents to post a sign with the statement that help is available if a
person has a problem with gambling and the toll-free telephone number at
the point of sale as prescribed and supplied by the director.

P. For the purposes of this section:

1. "Additional wagering facility" has the
same meaning prescribed in section 5-101.

2. "Authorized keno location" means a
physical facility located at least five miles from an Indian gaming facility
that is licensed by the director in the same manner as licenses issued pursuant
to section 5-562 but only to a fraternal organization or veterans'
organization or to a racetrack enclosure or additional wagering facility where
pari-mutuel wagering on horse races is conducted.

3. "Charitable organization" means any
nonprofit organization, including not more than one auxiliary of that
organization, that has operated for charitable purposes in this state for at
least two years before submitting a license application under this article.

4. "Electronic keno game" means a house
banking game in which:

(a) A player selects from one to twenty numbers on a
card that contains the numbers one through eighty.

(b) The lottery randomly draws twenty numbers.

(c) Players win if the numbers they select
correspond to the numbers drawn by the lottery.

(d) The lottery pays all winners, if any, and
collects from all losers.

5. "Fraternal organization" has the same
meaning prescribed in section 5-401.

6. "Game play-style" means the
process or procedure that a player must follow to determine if a lottery ticket
or share is a winning ticket or share.

7. "Matrix" means the odds of winning a
prize and the prize payout amounts in a given game.

8. "Mobile draw game"
conducted
pursuant to subsection J of this section,
means a lottery draw game
offered to players over the internet, including on mobile devices, in which:

(a) A combination of numbers, symbols or characters
is selected.

(b) A computer system authorized by the lottery
randomly selects a winning combination of numbers, symbols or characters.

(c) A computer system validates any prize awarded to
the players.

9. "Other event" has the
same meaning prescribed in section 5-1301.

9. "Other event":

(
a
) Means a
competition of relative skill or an event that is authorized by the department
of gaming under chapter 11 of this title.

(
b
) Does not
include any electronic game that is offered to players over the internet through
websites or on mobile devices with a user interface that depicts spinning reels
or that replicates a slot machine, blackjack, poker, roulette, craps or any
other casino-style game.

10. "Sports event" has the same meaning
prescribed in section 5-1301.

11. "Veterans' organization" has the same
meaning prescribed in section 5-401.
END_STATUTE

Sec. 2. Section 5-1301, Arizona Revised
Statutes, is amended to read:

START_STATUTE
5-1301.

Definitions

In this chapter, unless the context otherwise requires:

1. "Adjusted gross event wagering
receipts" means an event wagering operator's gross wagering receipts,
excluding voided bets, minus winnings paid to authorized participants and any
federal excise tax. A deduction from adjusted gross event wagering
receipts equal to the value of free bets or promotional credits redeemed by
authorized participants may be taken as provided in this paragraph.� The
deduction under this paragraph for free bets or promotional credits is limited
to the first five years following
the effective date of this
section

April 15, 2021
as follows:

(a) For years one and two, a deduction not to exceed
twenty percent of an event wagering operator's gross wagering receipts.

(b) For year three, a deduction not to exceed
fifteen percent of an event wagering operator's gross wagering receipts.

(c) For years four and five, a deduction not to
exceed ten percent of an event wagering operator's gross wagering receipts.

(d) For year six and each year thereafter, a
deduction of free bets is not allowed. January 1 following the year
in which the event wagering operator begins event wagering operations is
considered the first year of event wagering for the purposes of this
paragraph. An event wagering operator may deduct up to twenty
percent of an event wagering operator's gross wagering receipts during any
period that the operator conducts event wagering before January 1 of the first
year of event wagering operations.

2. "Department" means the department of
gaming.

3. "E-sport
event
"
means an organized, multiplayer video game competition, particularly between
professional players, individually or as teams.

4. "Event wagering":

(a) Means accepting wagers on sports events or other
events, portions of sports events or other events, the individual performance
statistics of athletes in a sports event or combination of sports events or the
individual performance of individuals in other events or a combination of other
events by any system or method of wagering, including in person or over the
Internet through websites and on mobile devices.

(b) Does not include a fantasy sports contest as
defined in section 5-1201.

5. "Event wagering employee" means an
employee of an event wagering operator, sports facility, management services
provider or limited event wagering operator who is directly involved in the
management or control of the conduct of event wagering under this chapter in
this state.

6. "Event wagering facility" means a
facility at which event wagering is conducted under this chapter.

7. "Event wagering operator" means either:

(a) An owner or operator of an Arizona professional
sports team or franchise, an operator of a sports facility in this state that
hosts an annual tournament on the PGA tour or a promoter of a national
association for stock car auto racing national touring race in this state, or
the designee of such an owner, operator or promoter, who is licensed to offer
event wagering under this chapter.� If an owner, operator or promoter that
qualified for an event wagering operator license appoints a designee, the designee
will be considered the event wagering operator and the licensee with respect to
the applicable license for the purposes of this chapter.

(b) An Arizona Indian tribe or an entity fully owned
by an Arizona Indian tribe, or its designee, licensed to operate only mobile
event wagering outside the boundaries of its Indian lands and throughout this
state if it has signed the most recent tribal-state gaming compact and
any applicable appendices or amendments. If an Indian tribe that
qualified for an event wagering operator license appoints a designee, the
designee will be considered the event wagering operator and the licensee with respect
to the applicable license for the purposes of this chapter.

10.

8.
"Licensee"
means a person that holds an event wagering operator license, limited event
wagering license, supplier license or management services provider license.

8.

9.
"Limited
event wagering operator" means a racetrack enclosure or additional
wagering facility that holds a permit issued by the division of racing to offer
wagers on horseracing and that is licensed under this chapter.

11.

10.
"Management
services provider" means a person that operates, manages or controls event
wagering authorized by this chapter on behalf of an event wagering operator or
limited event wagering operator, including developing or operating event wagering
platforms and providing odds, lines and global risk management, and may provide
services to more than one licensed event wagering operator or licensed limited
event wagering operator.

9.

11.
"Official
league data" means statistics, results, outcomes and other data related to
a sports event or other event obtained pursuant to an agreement with the
relevant sports governing body or an entity expressly authorized by the sports
governing body to provide such information to licensees that authorizes the use
of such data for determining the outcome of sports wagers on sports events or
other events.

12. "Other event"
:

(
a
)
Means
a competition of relative skill or an event authorized by the department under
this chapter.

(
b
) Does not
include any electronic game that is offered to players over the internet
through websites or on mobile devices with a user interface that depicts
spinning reels or that replicates a slot machine, blackjack, poker, roulette,
craps or any other casino-style game.

13. "Person" means an individual,
partnership, committee, association, corporation
,
or
Indian tribe or an entity fully owned by an Indian tribe,
or any other organization or group of persons.

14. "Professional sport" means a sport
conducted at the highest level league or organizational play for its respective
sport and includes baseball, basketball, football, golf, hockey, soccer and
motorsports.

15. "Prohibited conduct" includes any
statement, action or other communication intended to unlawfully influence,
manipulate or control a betting outcome of a sports event or other event
or
of any individual occurrence or performance in a sports
event or other event in exchange for financial gain or to avoid financial or
physical harm.

16. "Prohibited participant" means:

(a) Any individual whose participation may undermine
the integrity of the wagering
,
or
the
sports event or the other event.

(b) Any individual who is prohibited from placing a
wager as an agent, proxy or because of self-exclusion.

(c) Any individual who is an athlete, coach,
referee, player, trainer or personnel of a sports organization in any sports
event or other event overseen by that individual's sports organization who,
based on information that is not publicly available, has the ability to
determine or to unlawfully influence the outcome of a wager.

(d) An individual who holds a position of authority
or influence sufficient to exert influence over the participants in a sporting
contest, including coaches, managers, handlers and athletic trainers, such that
their actions can affect the outcome of a wager.

(e) An individual with access to exclusive
information on any sports event or other event overseen by that individual's
sports governing body that is not publicly available information or any
individual identified by any lists provided by the sports governing body to the
department.

17. "Sports event" means a professional
sport or athletic event, a collegiate sport or athletic event, a motor race
event, an e-sport event or an olympic event.

18. "Sports facility" means a facility
that is owned by a commercial, state or local government or quasi-governmental
entity that hosts professional sports events and that holds a seating capacity
of more than ten thousand persons at its primary facility, one location in this
state that hosts an annual golf tournament on the PGA tour and one location
that holds an outdoor motorsports facility that hosts a national association
for stock car auto racing national touring race.

19. "Sports governing body" means an
organization headquartered in the United States that prescribes final rules and
enforces codes of conduct with respect to a sports event and participants in a
sports event.

22. "Supplier" means a person that
manufactures, distributes or supplies event wagering equipment or software,
including event wagering systems.

20. "Tier one sports wager" means a sports
wager that is determined solely by the final score or final outcome of the
sports event and that is placed before the sports event has begun.

21. "Tier two sports wager" means a sports
wager that is not a tier one sports wager.

23. "Wager":

(a) Means a sum of money or thing of value risked on
an uncertain occurrence.

(b) Includes tier one and tier two sports wagers,
single-game bets, teaser bets, parlays, over-under bets, moneyline bets,
pools, exchange wagering, in-game wagering, in-play bets, proposition
bets, straight bets and other wagers approved by the department.
END_STATUTE