Can an Arkansas casino licensee outsource its online sports betting to a vendor who keeps most of the revenue?

Plain-English summary

Senator Jonathan Dismang asked whether a casino licensee in Arkansas would violate Constitutional Amendment 100 by contracting with a third-party vendor to assist with a casino-gaming function, such as an online sports pool, where the vendor keeps a majority of the revenue. Attorney General Leslie Rutledge concluded that the amendment does not address such contracts.

The opinion drew on a baseline principle: the Arkansas Constitution is a limiting document, not a grant of enumerated powers. Where Amendment 100 says nothing about a particular contractual arrangement, it neither blesses nor prohibits it. The amendment defines casino gaming and casino licensees but does not regulate the licensee's commercial relationships with vendors or the revenue split.

For the separate question about the terms of a casino gaming license, the AG said Amendment 100 and the Arkansas Racing Commission's casino gaming rules did not address the described arrangement. The General Assembly had not enacted legislation on the topic. The opinion therefore does not give a separate approval under a particular license's terms.

Currency note

This opinion was issued in December 2021 and describes the commission's rules and legislation at that time. Check current rules, statutes and the terms of the license before using it to assess a proposed agreement.

What this means for you

If you operate an Arkansas casino

Amendment 100 itself did not prohibit the arrangement described to the AG, even where the vendor retained most of the revenue from a gaming function. Before signing a contract, check current Racing Commission rules and your license terms. The AG did not decide whether a particular agreement satisfies those terms.

If you are a sports-betting platform operator

The AG's answer covers a vendor that assists a casino licensee with a gaming function, with an online sports pool given as the example. It says Amendment 100 does not prohibit the described revenue split. Ask the licensee to check its current license and the commission's current rules before relying on the opinion for a deal.

If you are a state legislator considering legislation

The AG noted that the General Assembly could legislate on this topic under Amendment 100, § 3(c), and had not done so when the opinion was issued. The opinion did not recommend a specific legislative approach.

If you advise gaming clients

Separate the two questions the senator asked. The AG answered that Amendment 100 does not prohibit the described contract. On whether it violates a casino gaming license, the AG said the amendment and then-current commission rules did not address the arrangement.

Common questions

Q: What does Amendment 100 actually do?
A: The opinion quotes Amendment 100's definitions of casino gaming and casino licensee. The gaming definition includes "accepting wagers on sporting events." The opinion does not review the amendment's other provisions.

Q: Does Amendment 100 specify who can run sports betting in Arkansas?
A: The opinion quotes the definition of a casino licensee as an entity holding a license issued by the Arkansas Racing Commission to conduct casino gaming at a casino. The AG said the amendment is silent about contracts with vendors who assist with a gaming function.

Q: Why does silence in the constitution mean a contract is allowed?
A: The AG called the Arkansas Constitution a limiting document, rather than a grant of enumerated powers. Because Amendment 100 does not address the described contract terms, the AG could not say they violate the amendment. Footnote 1 cites Jones v. Mears, 256 Ark. 825, 510 S.W.2d 857 (1974), for the limiting-document principle.

Q: Could the Racing Commission change the rules to prohibit majority-revenue-keeping by vendors?
A: The AG did not decide whether the commission could adopt such a rule. She said its casino gaming rules did not address the described arrangement as of December 2021, and the General Assembly had not enacted legislation on the topic.

Background and statutory framework

The opinion quotes Amendment 100, § 2(c), which defines casino gaming to include games played with cards, dice or devices for value, as well as accepting wagers on sporting events. It also quotes § 2(f), defining a casino licensee as an entity holding an Arkansas Racing Commission license to conduct casino gaming at a casino.

The AG said the commission's casino gaming rules did not speak to the described vendor arrangement. Footnote 2 cites Amendment 100, § 3(c), for the General Assembly's ability to legislate on the topic.

The opinion addresses the arrangement in the senator's question: a third-party vendor assists with a gaming function and retains most of the revenue generated from that assistance. It gives no findings about how such contracts are usually structured or whether a specific license permits one.

Citations and references

Constitutional provisions:

• Ark. Const. amend. 100, § 2(c) (definition of casino gaming)
• Ark. Const. amend. 100, § 2(f) (definition of casino licensee)
• Ark. Const. amend. 100, § 3(c) (legislative authority to implement)

Cases:

• Jones v. Mears, 256 Ark. 825, 510 S.W.2d 857 (1974) (Arkansas Constitution as limiting document, not grant of enumerated powers)

Regulatory references:

• Rules of the Arkansas Racing Commission, Casino Gaming (then-current version, hosted at dfa.arkansas.gov)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2021-096
December 30, 2021

The Honorable Jonathan Dismang
State Senator
P. O. Box 475
Beebe, AR 72012

Dear Senator Dismang:

This is in response to your request for my opinion regarding Amendment 100 to the Arkansas Constitution. Your request states that Amendment 100 defines casino gaming as "dealing, operating, carrying on, conducting, maintaining, or exposing for play any game played with cards, dice, equipment, or any mechanical, electromechanical, or electronic device or machine for money, property, checks, credit, or any representative value. Casino gaming shall also be defined to include accepting wagers on sporting events." Amendment 100, § 2(c).

Your request further sets out the amendment's definition of a casino licensee as "any individual, corporation, partnership, association, trust, or other entity holding a license issued by the Arkansas Racing Commission to conduct casino gaming at a casino." Amendment 100, § 2(f).

In light of the foregoing, you have asked the following questions:

1. Is it a violation of Amendment 100 for a casino licensee to contract with a third-party vendor to assist in the operation of a certain function of casino gaming, such as an online sports pool, wherein the third-party vendor retains a majority of the revenue generated from assisting in the operation of casino gaming?

2. Would a revenue share agreement wherein a third-party vendor retained a majority of the revenue generated from assisting in a certain function of casino gaming violate the terms of a licensee's casino gaming license to conduct casino gaming in the state?

RESPONSE

With respect to your first question, the answer is "no." Amendment 100 is completely silent regarding such contractual arrangements. As to your second question, neither Amendment 100 nor the rules promulgated by the Arkansas Racing Commission on casino gaming address the scenario you have outlined in the question.

DISCUSSION

Question 1: Is it a violation of Amendment 100 for a casino licensee to contract with a third-party vendor to assist in the operation of a certain function of casino gaming, such as an online sports pool, wherein the third-party vendor retains a majority of the revenue generated from assisting in the operation of casino gaming?

No, Amendment 100 is silent about such contracts or contractual arrangements. It is well-established that the Arkansas Constitution is not a grant of enumerated powers or an enabling act, but instead is a limiting, restraining document. Because Amendment 100 does not speak about, much less prohibit, the kinds of contracts or contractual terms you have described, I cannot say that they would violate Amendment 100.

Question 2: Would a revenue share agreement wherein a third-party vendor retained a majority of the revenue generated from assisting in a certain function of casino gaming violate the terms of a licensee's casino gaming license to conduct casino gaming in the state?

Again, Amendment 100 is silent about such agreements. Moreover, the General Assembly has not enacted any legislation on the topic, as it clearly may do. Nor do the rules promulgated by the Arkansas Racing Commission speak to this issue.

Sincerely,

LESLIE RUTLEDGE
Attorney General

1 See Jones v. Mears, 256 Ark. 825, 510 S.W.2d 857 (1974).

2 Ark. Const., amend. 100, § 3(c) (Repl. 2019).

3 Rules of the Arkansas Racing Commission, Casino Gaming, found at https://www.dfa.arkansas.gov/images/uploads/racingCommissionOffice/ArkansasCasinoGamingRules.pdf (last accessed December 12, 2021).