As in real estate, a key question for the future of tribal online gambling revolves around location, location, location.
A definitive ruling on exactly where a wager happens – the place a bettor lays the money down or the spot it’s accepted – could shape how tribes proceed with mobile sports betting and online casino gambling.
“That (decision) has the potential to be one of the more significant events in Indian gaming in a very long time,” said Jamie Hummingbird, chairman of the National Tribal Gaming Commissioners/Regulators organization.
Two recent developments give supporters hope that tribal operators can get on a more level playing ground with their commercial counterparts in terms of mobile gambling. In June, a federal appeals court in Florida upheld an agreement between the state and the Seminole Tribe, ruling that the tribe could accept mobile bets from anywhere in the state as long as computer servers processing the bets are on tribal land. Earlier this year, the federal Bureau of Indian Affairs solicited public comment on a proposal that would apply a similar “spoke-and-hub” approach nationwide. Neither action is final yet; Florida began legal online sports betting in early November, but two pari-mutuel companies quickly asked the state Supreme Court to stop it.
Matthew Morgan, chairman of the Oklahoma Indian Gaming Association, said the approach described in the Florida agreement and the BIA language could open “a new pathway for tribes” once either takes full effect. It could expand the reach of casinos in Oklahoma, where 35 tribal nations have gaming compacts with the state and operate more than 130 gaming facilities. However, only 44 of the state’s 77 counties overlap Indian country.
California, where voters last year rejected two competing sports-betting referendums that together generated more than $450 million in campaign spending, is unlikely to be among those looking at such a solution, said Richard Armstrong, a California lawyer specializing in federal Indian law and gaming law.
“What’s good for one state may not be as desirable for another,” he said, citing California’s gambling mix: 67 Class 3 gaming facilities operated by 64 tribes, no uniform state-tribal gambling compact, 82 commercial cardrooms, and an unregulated fantasy-sports skill-game market.
“Other states have similar nuances as well,” Armstrong added, because each decides on its own regulations. “It leads to a calico cat of regulatory, rules, and eligibility criteria and stakeholders,” he said. “Every state is different. Revenue numbers are substantially different, based on any number of factors.”
He said cooperation among stakeholders in mobile sports betting and igaming varies widely. He contrasted Arizona and Michigan, where tribes and commercial operators work as “bedfellows” in sports wagering, with California, where they were archenemies in the 2022 referendums.
Since the 1988 Indian Gaming Regulatory Act set up the framework for tribal gaming, operators have seen tremendous growth. In 1992, the federal Interior Department had authorized 34 tribal gambling facilities in nine states. In 2022, the Indian Gaming Association reported a record $40.9 billion in annual gross gaming revenue from 519 venues in 29 states. IGA breaks tribal operations into seven regions. Armstrong noted that the only region posting a lower GGR than 2021 was the one including California, which has no sports betting.
Morgan said tribal operators are at a disadvantage to commercial facilities in regards to mobile betting. “When (the Indian Gaming Regulatory Act) was passed in 1988, I don’t think most people foresaw the industry growing to what it is today. When tribes attempt to open or are opening new markets, it sometimes becomes both a political and legal battle.” In addition to considering how the addition of online gaming affects existing compacts with states, tribes also might have to seek regulatory changes from federal authorities or pursue court action to protect their interests, he said.
“This is not a single subject,” Morgan said. “It gets real complex real fast.” He said tribes recognize that sports betting attracts players, “but it has to make economic sense for them to be able to offer it.”
So far, only six states offer online casino gambling, with Rhode Island expected to launch it next year. Hummingbird said the key question about the expansion of online gambling isn’t so much whether more states will implement it, but how. In Oklahoma, for example, tribes have a universal compact granting them gaming exclusivity, so opening the state to commercial interests would require renegotiating the agreement. In California, tribes have a degree of exclusivity, but individual compacts with the state. He said some tribal operators could make a case to the state that they don’t need assistance from commercial companies for online gaming, while others might want it.
Morgan said some game developers are looking at how sports betting might be used as the basis for slot games in the same way bingo was adapted for Class 2 machines. That would remove the need to renegotiate compacts or require revenue sharing with the state. “They’re looking at different ways to move the technology and offerings forward,” he said.
Kelly Myers, director of government affairs for Gaming Laboratories International, said tribal regulators need to consider ahead of time how to approach any potential new form of gambling. “Even if it’s not something that they see happening right now, (they need) to prepare for it. As a regulator, you don’t want to be the one holding it up.” Robust cybersecurity measures, accurate geolocation procedures, and strong internal controls are essential, said Myers, who has 17 years of experience in tribal gaming regulation, including key roles on the Cherokee Nation Gaming Commission and Oklahoma Tribal Gaming Regulators Association.
A “healthy tension” is necessary in the relationship between operators and regulators, because neither side should hold sway. “Nothing can happen (for one) without the other,” she added. “The operator wants to move forward with something new. They can’t do it without the regulator, and the regulator can’t regulate something that the operator doesn’t want.”
Catherine “Cath” Burns, CEO of Anaxi, the igaming arm of Aristocrat, said an insistence on locating servers within specific boundaries overlooks the issue of cost. “That technology is getting expensive,” she said. Cloud-based servers have the same security as land-based equipment and offer a “more efficient, effective way to have technology and hold your data.”
Armstrong suggested that regulators examine other jurisdictions’ practices and the lessons they’ve learned. “Once we know what we have in front of us, we can fine-tune those regulatory elements to best serve the tribe,” he said. “Effective, strong, regulatory measures are going to best ensure that commercial and tribal sports-wagering platforms are successful in terms of providing games of integrity and games that are fair to consumers.”
Hummingbird said the ability to offer online gaming is essential for tribal operators. “The only way they will reach their full potential is being able to add that igaming element,” he said. “People will see that what they were doing before was good, but they’ll do much better once they add igaming.”
