It behooves American Indian tribes to reach consensus on Internet gambling in the face of rapidly changing market demographics and pending legislation on sports wagering, daily fantasy sports and iPoker, the chairman of the California Nations Indian Gaming Association said Wednesday.
“The Internet looms large in the future of gaming, therefore our future,” CNIGA Chairman Steve Stallings told delegates to the association’s annual meeting at Harrah’s Resort Southern California near Valley Center.
“Whether it’s iPoker, daily fantasy sports (DFS) or sports wagering, we are going to have to face this digital monster,” Stallings told the group’s 32 member tribes.
“My hope is that we can find a way to be unified on this new political battlefield.”
Tribes to meet with Gray over DFS
Stallings’ remarks preceded a scheduled meeting on February 11 between leaders of several of the state’s 60 casino tribes and Assemblyman Adam Gray, sponsor of three pieces of legislation to regulate and tax sports wagering, DFS and iPoker.
The DFS bill (AB 1437) passed the Assembly and is awaiting action in the Senate.
Online poker split
About a dozen of California’s politically powerful tribes are split over proposed legislation to regulate online poker in California with a group of eight tribes opposing any bill that would license race tracks as poker website operators.
The coalition opposing the tracks, led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians, also wants “bad actor” language excluding Amaya / PokerStars. Most of the coalition tribes are not members of CNIGA.
An opposing group of five tribes led by the San Manuel and Morongo bands of Mission Indians and three Los Angeles area card rooms have formed a lobby partnership with Amaya/PokerStars and is not opposed to licensing tracks.
Where tribes stand on daily fantasy sports
While the points of contention are clear on iPoker, it is difficult to gauge where tribes stand on DFS, which many believe has gone through the Assembly process faster than tribes expected.
“I think the big question is whether there’s an opportunity for tribes,” said attorney Stephen Hart, a specialist in Indian law. “They’re trying to understand it and trying to see if there’s an opportunity.
“I think the emphasis with tribes in California right now is to get the iPoker bill moving.”
Concerns about AB 1437
It does appear, however, that most tribes are opposed to the DFS legislation as currently outlined in AB 1437.
San Manuel Chair Lynn Valbuena and Morongo Chairman Robert Martin, in similar letters to Gray, expressed opposition to licensing a form of wagering that some experts believe violates California’s penal code and the Gambling Control Act.
California Penal Code 330 to 337a prohibits “pool selling or bookmaking.” And Section 19801 (d) of the Gambling Control Act states, “no person in this state has a right to operate a gambling enterprise except as may be expressly permitted by the laws of this state.”
“As such, our members are very concerned that a retroactive approval of a form of gaming that is otherwise illegal, simply because it is popular, is a very dangerous precedent,” Martin said in his letter, a copy of which was obtained by the Sacramento Bee.
Tribal officials at the CNIGA conference expressed concern that AB 1437 lacks a tax structure and specifics on how the industry would be regulated.
Some contend tribes should unite in an effort to block DFS in California for fear “tweaking” the penal code will allow competing forms of wagering that would encroach on the tribes’ constitutional guarantee to operate casino-style gambling.
“The tribes should be enormously concerned about unintended consequences and how changing the penal code may allow other products to surface in competition with tribal gaming,” a veteran regulator who requested anonymity told Pechanga.net.
Attorney General Kamala Harris, a U.S. Senate candidate, has backed away from issuing an opinion from her Department of Justice (DOJ) on whether DFS violates state law.
Racing industry to weigh in soon
Robyn Black of Eclipse Government Affairs, a lobbyist for horse owners and breeders, said the racing industry, like the card rooms has yet to weigh in on Gray’s legislation.
“Up until now a lot of tribes have been sitting back and trying to understand daily fantasy sports,” Black says. “And so have we. We’re close to having a response.”
The racing industry has had the exclusive right to offer Internet wagers since 2001, Black says, and expanding online wagering to tribes and card rooms could cut into racing industry revenues.
“Our big growth market has been with the Internet,” she says. “For us it’s a potential loss.”
Merging online initiatives
“I kind of feel like we need to look at all three bills together; sports wagering, daily fantasy sports and Internet poker,” Black said.
Martin and Valbuena, according to the Sacramento Bee, suggested that DFS and iPoker could be combined into one i-gaming bill because they raised “many of these same questions.”
Assemblyman Marc Levine said the state Legislature does not have authority to enact legislation that would, in effect, violate the penal code. He contends what is needed is a voter initiative to amend the state constitution.
“These sites should cease and desist operations until they are expressly permitted in California,” Levine said. “We should not debate regulations while betting goes on unregulated.”
Gray regards AB 1437 as a work in progress.
“We need to crack down on illegal and unregulated online gaming and replace it with a safe and responsible entertainment option for adults, which includes safeguards against compulsive and underage gambling, money laundering, fraud, and identity theft,” Gray said.
“We can only do so by bringing this industry out of the shadows and mandating enforceable consumer protection.”
Looking to the next market
Stallings, in his speech and a later interview, said millennial gamblers are focused on sports, mobile and skilled gambling devices rather than the random number generator slot and video machines on most casino floors. Tribes need to adapt to meet the changing customer profile.
California tribes united on a set of principles and goals on Internet issues can be effective in Sacramento, as was proven when tribes joined together in 2000 to get passage of Proposition 1A, the ballot initiation that launched compacted Indian casinos, Stallings said.
“The tribes don’t have to reach total consensus, but clearly that is where we win,” he said.
The lobby behind FanDuel and DraftKings include professional sports franchises, television networks, Comcast and Google.
“There are powerful, powerful figures behind daily fantasy,” Stallings said. “That power may move things faster than we want.”
“The Internet is bigger than us, has more political clout, and is the playground of choice for the next generation of recreational gamblers,” he told conference attendees.