With Tennessee Sports Betting In Doubt, Arkansas Poised For Sportsbook Outside Memphis

Arkansas voters approved casinos and sports betting, while the newly elected governor of neighboring Tennessee opposes sports betting.
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After a long fight, the state of Arkansas should finally have casinos.

On Tuesday, voters approved Arkansas Issue 4, which authorizes four casinos in the state, as well as sports betting at those properties. The state legislature will now be tasked with getting the industry on its feet through legislation in accordance with the amendment, and the Arkansas Racing Commission will be crafting regulations and issuing licenses.

Las Vegas-based Caesars Entertainment, which is one of the leading players in the emergent U.S. sports betting market, contributed funds in opposition to Arkansas sportsbooks.

With 98% of the precincts reporting in as of Thursday morning, 54% voted “yes” on amending the state constitution to allow casino-style gambling. More than 460,000 voted for the casinos. About 395,000 voted against the amendment.

Casino locations

Only four of the state’s 75 counties can have casinos under the amendment.

The Oaklawn Racing and Gaming racino in Garland County and the Southland Gaming and Racing racino in Crittenden County (on the state border, right outside Memphis, Tennessee), can both become Las Vegas-style casinos.

Casinos were also approved for Jefferson and Pope counties.

However, the casino in Pope County (northwest Arkansas) already faces some hurdles.

According to the Arkansas Democrat, Pope County voters approved a proposed ordinance requiring a local vote on a casino. There’s a good chance of litigation surrounding the issue in Pope County.

To potentially make matters even more complicated, the Western Cherokee Nation contributed to the pro-casino campaign so it could build on its tribal lands in Pope County. The Cherokees could circumvent a local vote under the federal Indian Gaming Regulatory Act.

Governor not thrilled

According to Ballotpedia, about $9.4 million was spent to pass the casino amendment, with about $154,000 spent to oppose it. Caesars, which has casinos in nearby Mississippi and Louisiana, spent $150,000 to oppose the constitutional amendment.

Despite the interest in Arkansas as a gaming market, the state’s Republican governor is still hesitant.

“I did not support this initiative, and I continue to have great concern over the immediate and negative impact on the state’s budget,” Gov. Asa Hutchinson said in a statement. “But the people have spoken, and I respect their will. Time will tell as to what this means for our state, and it remains to be seen as to whether the communities affected will consent to the gambling initiative.”

His comments indicate it might not be the smoothest of sailing for Arkansas sports betting.

State’s potential market

A legal Arkansas sports betting market could see $1.9 billion in annual handle, generating $126 million in gaming revenue. That assumes mobile adoption and a 10% tax.

Under the constitutional amendment, casinos would pay a 13% percent tax on gross gaming revenue on their first $150 million, and 20% on revenues on top of that.

A high-tax scenario could shrink the Arkansas market to $1.5 billion in handle and $115 million in taxable revenue.

But something is much better than nothing, as the casinos should keep a hefty sum of entertainment dollars from flowing to neighboring states. Driving Arkansas Forward, the political action committee that spearheaded the gambling initiative, predicts an overall casino gambling market approaching $1 billion in annual revenue.

According to the group’s website, 30% of Arkansans “regularly” travel out of state to gamble. About 1.1 million visits to Mississippi casinos by residents of Arkansas happened over the past year.

What’s next?

According to the amendment, it goes into effect on November 14.

Assuming there’s no local setback for the casinos, as the governor alluded to, the Arkansas Racing Commission will begin accepting applications for the casinos, and their sportsbooks, no later than June 1, 2019.

A casino license would cost $250,000. The amendment doesn’t stipulate that the properties would have to pay extra for sports wagering.

The amendment inscribes sports betting as no different than an offering like blackjack.

The two existing racinos will be first to the party, assuming no setbacks. Southland could capitalize on the Memphis Grizzlies of the National Basketball Association. The NBA has greatly warmed to legal sports betting in recent years, especially post-PASPA. It wouldn’t be surprising if there’s a partnership between Southland and the Grizzlies.

Good news for Arkansas, especially Southland, is that newly elected Republican governor of Tennessee, Bill Lee, opposes sports betting legalization. His reason — that regulation leads to organized crime — is nonsensical. The Democratic candidate in the Tennessee governor’s race said he would have approved sports betting.

Oaklawn, located near the center of the state, won’t enjoy the same geographical advantage. However, with just two brick-and-mortar sportsbooks in Arkansas right out of the gate, a partnership with a sports team for Oaklawn doesn’t seem unlikely.

The Dallas Cowboys, for example, recently partnered with the WinStar World Casino. The Oklahoma gambling facility is located about 85 miles away from AT&T Stadium.

Photo by Alexander Lukatskiy / Shutterstock.com

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