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The work group formed by the National Indian Gaming Association (NIGA) met Wednesday in Arizona, the first of what is expected to be a series of meetings intended to seek feedback from the approximately 250 tribes operating some 480 casinos in 29 states.
“We need to find out if Indian country is ready to move ahead if there is a full or partial repeal” of PASPA, said Debbie Thundercloud, NIGA chief of staff. “So far the reaction has been mixed.
“There are some tribes that aren’t supportive and don’t think it’s the direction to go. Others are careful because they know the internet piece is connected. That may be the wave of the future, no matter what any of us wants or thinks at this point.”
Unlike commercial casino companies, tribal governments operate under a myriad of federal and state laws and regulations that can make it difficult to operate new forms of gambling. Sports wagering can, in fact, create competition for tribal casinos that in some states share revenue with the state in exchange for statewide or regional exclusivity.
A US Supreme Court ruling on PASPA is pending in the New Jersey sports betting case, after which Congress may be left to regulate sports wagering or leave it to the states to decide. Several states – including California – have introduced legislation to permit sports betting in the event PASPA is wiped off the books.
But the potential for sports wagering in California – home to the nation’s largest Indian gambling market – fades as tribes threaten to sue Gov. Jerry Brown and card rooms they contend are violating state law and their constitutional exclusivity to offer casino-style gambling.
Attorneys for a coalition of six California tribes met Tuesday to firm up strategy to proceed with legal action against Brown and the card clubs.
More than a dozen of the 62 California tribes operating casinos generating some $8.4 billion a year will meet with Attorney General Xavier Becerra Tuesday seeking resolution of what has been a nearly six-year dispute over high-stakes table games being played at the clubs.
“There’s an opportunity to meet with [Becerra],” said Steve Stallings, chairman of the California Nations Indian Gaming Association, a group of 31 tribes. But Stallings and others are skeptical Becerra will put an offer on the table to satisfy the tribes.
Most clubs use third party proposition player (TPPPs) firms to bank what are known as “California/Asian” games, or high-stakes versions of blackjack, pai gow poker and similar table games. Unlike poker, which is banked by the players, the dealer/bankers bring tens of thousands of dollars to the game.
Many tribes and some industry legal experts contend the California/Asian games and use of TPPPs violate state law and a constitutional amendment giving tribes exclusivity to offer percentage and banked table games.
The California Gambling Control Commission under Brown and Bureau of Gambling Control under Becerra have been trying without success to get game rules and other card room regulations in compliance with state law.
Card room operators contend the games are legal.
“We’re going to be pretty prepared to go if we don’t get some satisfaction,” Stallings said of potential litigation. A tribal source said a lawsuit may be filed as soon as March.
California tribes wield a great deal of political clout, which they may use if a sports betting bill introduced by Assemblyman Adam Gray gains momentum in Sacramento.
The bill – which seeks a public referendum to amend the state constitution – requires a two-thirds vote of both the Assembly and Senate. It does not currently state who would be eligible to offer sports betting.
But the tribes are expected to push back if an attempt is made to allow some 75 licensed card clubs to offer sports betting, particularly in conjunction with high-stakes table games in facilities that include hotels and upscale restaurants.
“That would make them casinos,” said a tribal official.
“Tribes see this issue beyond the games currently being played in the card rooms,” Stallings said. “It’s a slippery slope kind of thing.”
“They are definitely related issues,” said a tribal attorney who requested anonymity.
The card rooms, however, also wield political clout, employing some 22,000 workers and generating millions of dollars in state and local taxes.
Card room sources contend strict adherence to gambling laws on rotation of the deal and use of banking firms needed to offer the California/Asian games could cripple the industry.
The Indian Gaming Regulatory Act (IGRA) of 1988 requires indigenous governments seeking to operate casino-style gambling to enter into tribal-state regulatory agreements, or compacts. The compacts and state laws limit what games tribes can offer.
IGRA also limits tribes to types of gambling otherwise legal in the states in which they are located.
Tribes in California and elsewhere would need to negotiate amendments to their compacts should they decide to offer sports betting. Negotiations could result in additional revenue sharing with the state.
“Most tribes are not really excited about this,” said a Minnesota tribal official who requested anonymity. “It’s not really profitable. Then there are the risk factors, technology and space issues. You still can make more with slot machines.”
Chris Stearns, a member of the Washington State Gambling Commission, said tribes will do well in states in which they have built political clout, such as California.
“Those tribes that have more pull in the statehouses will be better able to control the size, scope and location of sports betting,” Stearns said in an email.
Many tribal casinos are marginal operations on rural and often impoverished reservations. Sports betting – a stand-alone book or integrated into a restaurant and bar – can be a risky, labor intensive and expensive venture that industrywide generates a margin of less than five percent.
It’s difficult to anticipate how many tribes will seek to offer the amenity.
“It’s too early to predict,” Thundercloud said. “They have to do their market analysis.”
The wide range of legal and regulatory structures in the various states with tribal government gambling makes it difficult for Indian leaders to develop a cohesive strategy, she said.
Tribes need to come to some conclusions not only on sports betting, but other new and related forms of gambling such as internet wagering, online poker, daily fantasy sports and esports.
“That is a concern,” Thundercloud said. “It’s not just sports betting. It’s bigger than that.
“What we preliminarily discussed in our last conference call was the need to structure our meetings so that we can include a high-level overview of sports betting and how that is connected to internet gaming and all the forms of internet gaming.
“So many forms of internet gaming are moving ahead before many legal questions have been addressed,” Thundercloud said. “It is starting to be seen as a mechanism to drive people to the bricks and mortar sites. That’s more of where the business decisions are going to lie.
“Tribes can’t afford to be left behind.”