Tribes Scramble To Figure Out How Sports Betting Can Fit Into Indian Gambling Under Federal Law

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Tribes fit into sports betting

American Indians are scrambling to grasp the potential legal and regulatory impact the legalization of sports betting could have on the $31.2 billion tribal government casino industry, indigenous leaders and tribal officials said this week.

“It’s a dynamic that could shift the landscape of gaming in many states,” said Valerie Spicer, founding partner of Trilogy, a tribal government relations firm.

Meanwhile, the National Indian Gaming Association (NIGA), the industry lobby and trade organization, said it decided last week to join a coalition formed to repeal the Professional and Amateur Sports Protection Act (PASPA) to monitor the group, not advocate for sports wagering.

“NIGA has not taken a position on sports betting. The NIGA board voted to join the coalition just to be at the table,” a NIGA source said of the PASPA coalition formed by the American Gaming Association (AGA), the commercial gambling industry lobby and trade group.

“It’s a fine line to walk, joining an advocacy coalition without supporting the issue they are advocating for.”

A letter to NIGA members from NIGA Chair Ernie Stevens Jr., acquired by Legal Sports Report, further articulates the board’s thinking behind joining the coalition.

States, tribes eye legal sports betting

A pending US Supreme Court decision on whether to lift the federal prohibition on sports wagering has prompted a number of states – including California, New York, Connecticut, Michigan and Oklahoma – to introduce anticipatory legislation to allow sports betting.

Expanding the scope of legal gambling could impact 244 tribes in 29 states that operate under the Indian Gaming Regulatory Act (IGRA), which require tribal-state regulatory agreements, or compacts, for casino-style gambling.

Tribes in California, Minnesota, Arizona and elsewhere have meetings scheduled in the next two weeks in a hurried effort to discuss sports betting.

Many tribes support getting into the business. Others oppose it. But all question how it will impact a gambling industry that funds tribal government services.

“It doesn’t necessarily mean tribes are opposed to sports betting,” Spicer said. “They are concerned about the impact it may have on their current agreements.”

Every state is different for sports betting

Compact language varies dramatically among the states.

Several tribes have compact provisions granting them statewide or regional exclusivity to operate casinos. Compacts in at least ten states require tribes to pay the state a share of revenue in exchange for the exclusivity provisions.

Should states legalize sports wagering, the compacts could possibly be subject to amendments, impacting exclusivity or revenue sharing provisions. Some tribes may elect to seek new and separate compacts. Others may choose to engage in sports betting as a commercial business taxed and regulated by the state.

The legal and regulatory issues may run up against other unresolved aspects of expanded gambling under IGRA, such as internet gambling, daily fantasy sports and the legally clouded issue of accepting wagers from beyond reservation borders.

California, Arizona and Oklahoma – each with large tribal casino industries – are in preliminary talks or full negotiations on new tribal-state compacts which could be politically and economically impacted by the potential of sports betting.

California sports betting is particularly thorny

California has a particularly convoluted regulatory environment, with tribes enjoying constitutional exclusivity to operate casino gambling – meaning banked and percentage games – in a state with a lottery, card rooms and pari-mutuel wagering.

Assemblyman Adam Gray introduced legislation to amend the constitution to allow sports betting. The California Nations Indian Gaming Association (CNIGA), which has opposed expanded gambling in the state, is expected to push back against Gray’s legislation.

“We have to look at how expansion of gaming will impact our brick-and-mortar casinos, whether its sports betting or poker or anything else,” CNIGA Chairman Steve Stallings says of the 31-member tribal coalition, which includes casino and non-casino tribes. “That’s the issue.”

But a number of larger tribes California tribes privately support sports wagering. Their concern is how it can be done without eroding casino exclusivity.

The story in Oklahoma for sports betting

Oklahoma Rep. Jon Echols said his office “worked very close with the Chickasaw and Choctaws” in drafting legislation session that would have given Gov. Mary Fallin authority to negotiate sports betting amendments to state compacts in the event PASPA is lifted.

Echols said tribes also hope to introduce craps and roulette to the casino floors, games allowed in neighboring Kansas and Louisiana.

“We’re keeping that pretty close to the vest,” Sheila Morago, executive director of the Oklahoma Indian Gaming Association, said of tribal strategy about sports betting.

Tribes can introduce sports betting as a compacted game under IGRA if the PASPA prohibition is lifted, even if state officials don’t pursue sports wagering.

“If the state opts out, that shouldn’t preclude tribes from opting in,” Morago said. “We want to make sure the tribes have the opportunity to do what they want to do. That’s the important thing.”

Tribes under IGRA can request a state to enter into good faith negotiations on a compact to engage in sports betting. Tribes are precluded by a federal court ruling from suing states to negotiate an agreement. But they can seek a compact through secretarial procedures invoked by the Department of Interior, a political strategy likely to end up in court.

The lay of the land in other states

Arizona tribes are in preliminary discussions to extend tribal-state compacts scheduled to expire in 2026. Gila River Indian Community and Salt River Pima-Maricopa Indian Community have both expressed interest in sports betting.

The Mohegan and Mashantucket Pequot tribes in Connecticut support legislative efforts to introduce sports wagering. It is not clear if legislation would permit tribes to operate sports betting under an amendment to tribal-compacts or as a commercial enterprise.

There does not appear to be any movement in Michigan or Washington to embrace sports betting.

Twelve Michigan tribal casinos are in various throes of compact negotiations with no discussions about sports betting.

“I don’t think there is any effort by the tribes to engage in sports wagering at the state level,” consultant James Nye said the 12 casino tribes.

“There hasn’t been an appetite for expanded gambling that I’m aware of,” said Ron Allen, chairman of the Washington Indian Gaming Association, the trade group for 25 tribes.

Minnesota’s 11 tribes have compacts that extend into perpetuity with no revenue share to the state. There is no exclusivity clause in the agreements, but the state has not had the appetite to legalize casino gambling.

Should state officials move to legalize sports wagering, tribes would not likely consent to open up existing compact for amendments, but would instead seek out a new agreement under IGRA.

“To put the compacts they have in jeopardy on the come would be foolish,” said John McCarthy, executive director of the Minnesota Indian Gaming Association.

“If we go to the state of Minnesota and say we don’t want to renegotiate the existing compact – we want to negotiate a new compact – I don’t think they can turn us down.

“I think IGRA works in our favor. It will probably go to court. They would love to drag us back in and negotiate a new compact.

“I would assume the state will try to get all it can,” McCarthy said of a potential revenue share.

Supporting sports betting, or no?

NIGA officials were concerned at trade industry headlines that indicated their participating in the coalition was evidence the lobby supported sports wagering.

“Of chief concern to NIGA is to ensure that tribal interests are protected, particularly avoidance of any negative impacts on existing compacts and exclusivity clauses,” NIGA Chairman Ernie Stevens said in a statement.

“As one of the key stakeholders in these discussions we want to ensure that if legalized, our members have the opportunity to offer this activity as part of their overall entertainment package and as an additional source of revenue for tribal government gaming to promote tribal economic development, tribal self-sufficiency and strong tribal government.”