ADG Director Ted Vogt: Consolidation Expected in Arizona Sports Betting Industry

ADG Director Ted Vogt: Consolidation Expected in Arizona Sports Betting Industry
By Christopher Boan
Fact Checked by Michael Peters

It’s been more than nine months since Arizona sportsbooks launched, and the market isn’t slowing down.

With more than $3.4 billion in wagers since the state’s Sept. 9 launch date and the end of March, the Grand Canyon State has fast emerged as a top 5 market for operators.

For Arizona Department of Gaming Director Ted Vogt, the past calendar year since HB 2772 legalized wagering has been a labor of love, ensuring the state would be ready to hit the ground running on opening day.

It’s safe to say that’s been the case, with Arizona posting the second-fastest duration to $1 billion in wagers behind New York.

BetArizona.com chatted with Vogt about those topics and more, with a transcript of that conversation posted below, edited for brevity and clarity.

Vogt

Early Arizona Sports Betting Demand Impressive

BetArizona.com: After more than nine months with a legal and regulated sports betting market, how have things gone from the ADG’s point of view?

Ted Vogt: I think things have gone really well in this first nine months. Other than New York, we were the fastest state to hit a billion dollars in handle. I think if you look at the figures from September through March we've had almost $3.5 billion wagered in handle, we've had about $3.2 billion in payouts, and the state has garnered about $10.5 million, when it comes to the privilege fee.

So, the industry got up quick here. And it's been really impressive to see the demand be so high and sustained throughout this first year.

BetArizona.com: What’s been the biggest surprise/disappointment for you regarding Arizona sports betting?

Vogt: I think the biggest surprise is the pent-up demand. Again, Arizonans have been wagering a lot of money, as I just kind of went through on those figures there. I don't know if I'd say a disappointment, but when we were drafting the rules and getting everything ready to go for the NFL kickoff, I guess the fact that not everyone was ready to go in the state by Sept. 9 might have been a little bit of a surprise with the amount of excitement and kind of the lead time folks had to get prepared for that. But hey, the other operators have come online, we've got 18 of the 20 licenses being utilized. So, things have gone very, very well here in the state.

BetArizona.com: What’s the ADG’s plan regarding the final two mobile sports betting licenses for professional sports teams that have yet to be issued?

Vogt: Well, one of the licenses is tied up in litigation right now. So, we’re working through that process there. And I think once we've got a better idea on where the litigation is going to go, then we would look to go ahead and start the process to allocate those final two licenses. I don't really have a timeframe on that. But as we told the stakeholders, the department will give a lot of advance warning that, ‘hey, we're going to start taking applications on a date certain’ so that everybody has enough time to prepare their submissions to the department.

Limited License Holders Now Coming Online

BetArizona.com: Have there been any issues with Arizona sports betting apps the ADG has had to address?

Vogt: No, it has worked out very, very well. You know, our team has worked with operators to help them get up and operating as soon as possible and to comply with the laws and the rules. We are still in the process. There were 10 limited [Arizona] event wagering operator licenses, those went to racetracks or their OTB network. We're bringing those online right now, and most of them have started operations, but there's about three or four that are about ready to commence operation.

So, we're still early on. But fortunately, we haven't had any major issues. And the industry is really operating well and getting stronger as we move through this first year of sports betting in Arizona.

BetArizona.com: Are there any updates you can share about the settlement talks with the Yavapai Prescott Indian Tribe?

Vogt: So when it comes to litigation, the proceedings against the state and Superior Court are currently stayed pending resolution. The Yavapai Prescott Indian Tribe has signed the 2021 restated and amended compact, and the compact amendment that goes along with it. And those are just up at the Bureau of Indian Affairs waiting approval. So, I imagine once the federal government signs off on the compact and all that the whole matter will be wrapped up and resolved pretty quickly.

BetArizona.com: Why does it take so long for monthly revenue reports to come out? Arizona is more than a month behind every other state.

Vogt: Well, I think if you take a look at our rules, that kind of outlines the reporting structure for operators, who have to report the numbers no later than the 25th of each month for the preceding month. So, I think that was holed up at the end of last year, but we're getting ready to roll out the April numbers.

And again, this has all been a learning process for everybody, the department, and the operators as well. So, I think that people will see them timelier, but we're sticking to the reporting structure in our rules.

BetArizona.com: How does the ADG handle unexpected issues with operators, such as TwinSpires decision to shutter its mobile sports betting operation?

Vogt: We expect that there will be consolidation in the industry. And, as we start seeing some of these operators, whether they decide to leave the market or they are getting acquired or whatever; our main concern is making sure that if somebody's going to wind down operations, here in the state that they wind down responsibly.

We did put a portion in our rules before we made them final about what is required from operators, regarding how they're going to wind down operation. So, again, we're very involved with working with the operators. And so, we consult with them on a daily basis. Our biggest concern in areas like that is consumer protection. And I think that as we work through this and work through these first experiences in the state, we're very committed to making sure that the consumer doesn't get left hung out to dry.

BetArizona.com: How can second and third tier operators stay alive in Arizona for the long-term?

Vogt: Most of those ones that are maybe probably in the second and third tier came online a little bit later than that first bunch that was ready to go out there. I think it's going to be a while until we really know how the market settles out.

In the legislation that enacted sports betting in the state of Arizona, the operators have about five years’ worth of free bet credits that they're utilizing, to kind of lower the cost of starting up their business in the state.

So, we haven't even completed the first year of event wagering here in the state. We are seeing operators utilize these free bet credits, which means they are signing up new players. So, I think as we tend to move through these next couple of years, we'll get a better idea of how the market is going to shake out here in the state.

Coyotes Retain Betting License in Temporary Arena

BetArizona.com: How does the Arizona Coyotes arena situation impact their right to continue offering mobile and retail sports betting in the state?

Vogt: We work with all the stakeholders, and we're working with the Coyotes to make sure that they can continue to operate. Again, this is a temporary move to their stadium that they're going to be utilizing over the next couple of years with Tempe.

So, we're working with them, we're working through the issues again. This is a unique experience for them. They’re not going to be out in [Glendale] anymore. And as long as they're able to comply with the rules and the laws, they should be [licensed]. But, the department's here to help and make sure that they're able to operate, but they're doing it within the restrictions set out by the legislature.

BetArizona.com: What’s next for sports betting in the next three months as the state nears its one-year anniversary?

Vogt: Well, I think during the summer, we are expecting sort of a dip in the wagers placed, just because we kind of get into that long sort of, I'll say sort of sports drought before the real kickoff of the football season.

Football season is really what drives a lot of this industry. But I think we're really excited. We're going to be hosting the Super Bowl in February. That's the first time the Super Bowl is going to be held in a jurisdiction where event wagering is allowed. And we're also starting to see a lot of the physical sportsbooks come online — the Diamondbacks just opened up their sportsbook, right next to Chase Field. And we're going to start seeing more of these physical sportsbooks come online.

So, it's very exciting. I have to almost remind people, we're not even a whole year into this yet. And so, the market is really developing, and we're really putting the pieces in place.

That's really going to set the growth for this industry for the next five years. People are going to want to visit Arizona because it's a great place to visit. And I think some of the big sporting events that we're going to be hosting over the fall and in the winter, we're really going to see growth in this industry.

BetArizona.com: What’s your parting shot on sports betting in Arizona?

Vogt: Arizona has always been a great place to visit. And now for the sports enthusiasts they have just more options available to them. So come to Arizona, watch spring training, watch a Cardinals game, and bet safely and responsibly and legally here in the state.

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Contributors

Christopher Boan is the lead writer at BetArizona.com after covering sports and sports betting in Arizona for more than seven years, including stops at ArizonaSports.com, the Tucson Weekly and the Green Valley News.

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