Four years after Arizona first allowed payments to student athletes, a new law expands the ways universities and colleges can compensate sought-after sports stars and raise the money to pay them.

Gov. Katie Hobbs signed Senate Bill 1615, legislation that builds upon a 2021 law that first allowed student athletes in Arizona to receive compensation for the use of their name, image or likeness in commercials and other promotions, also called NIL.

Under the original law, universities and colleges were simply directed to allow student athletes to earn NIL compensation.

The new law, which went into effect immediately when Hobbs signed it on May 7, now explicitly allows universities and colleges to directly pay student athletes. It also allows the schools to work with third-party organizations to work out deals with student athletes.

Sen. T.J. Shope (R-Coolidge), who sponsored SB 1615 and the original NIL legislation, worked with the state’s universities on the new law.

Sabrina Vazquez, a lobbyist for the University of Arizona, told lawmakers in March the bill was needed to make up for a lack of federal NIL regulations.

“So what we're seeing now is states are putting in place their own laws and their own regulations, and we wanted to make sure that we had a clear statute here in Arizona, so that our students are not being put at a disadvantage from other student athletes and also our universities are not being put at a disadvantage when recruiting students,” Vazquez said.

Shope said the legislation would give Arizona schools “a competitive balance, if not advantage” over other schools.

The law prohibits student athletes from engaging in contracts that violate a team contract or a school’s “honor code.”

Vazquez said the law is designed to prevent student athletes from signing contracts with places like a marijuana dispensary or alcoholic beverage companies.

Some of the new law is in line with a proposed settlement between the NCAA and student athletes that’s pending before a federal judge.

Hobbs signed the new law as Judge Claudia Wilken considers a settlement that would pay out $2.8 billion in back pay and allow direct payments between schools and athletes.

But the new law goes beyond what’s in that proposed settlement.

For instance, under the new law, universities can now conduct so-called “50/50 raffles" to raise money to pay their athletes.

Those raffles, in which half of the money raised through raffle ticket sales are paid to a winner selected at random and the other half is paid to a pre-selected beneficiary, were already legal in Arizona. For instance, the Arizona Diamondbacks host raffle fundraisers at every home game to raise money for the team’s foundation.

“What we're trying to do here is say that the four universities can offer raffles now under this bill in a 50/50 context, and instead of the money going to a not-for-profit, it would go to the university for the purposes of paying athletes,” Mike Haener, a lobbyist representing Arizona State University, told lawmakers.

SB 1615 also exempts negotiations between a school and a prospective student athlete from Arizona’s Public Records Law, which makes most government documents accessible to the public.

Vazquez, the UA lobbyist, said that’s necessary to stop other schools from poaching athletes targeted by Arizona schools.

“So that another university from another state can't come in, [request] that information and now really offer them, sort of be able to compete on that offer,” she said.

The Arizona law doesn’t include a $20.5 million cap on payments by universities and colleges that’s included in the settlement. However, NCAA rules would require student athletes to disclose all NIL payments over $600 to its NIL clearinghouse, which would enforce the cap.

SB 1615 passed through the Arizona Legislature with bipartisan support and little opposition.

However, Rep. Alexander Kolodin (R-Scottsdale) said the legislation, which bans schools from using student fees to fund NIL payments, should have prohibited schools from using tuition dollars as well.

“The cost of college has already gotten high enough,” Kolodin said. “Inflation is a real problem in this state, and the fact that we're going to now compound that problem by paying what may be very significant, possibly multimillion-dollar salaries to student athletes and allow tuition money to be used for that, that's something I'm not so cool with.”

According to a statement by the NCAA, the cap on payments contemplated in the legal settlement is based on 22% of the average media, ticket and sponsorship revenues generated by the highest-profile Power Five conference schools.