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How Supreme Court Decision Will Impact Indian Tribes Looking To Participate In Online Gaming

Tribes in states with substantial gaming exclusivity are best positioned to benefit from the US Supreme Court ruling.

Tribal Online Gambling
Photo by Shutterstock/Andrew Angelov
Matthew Kredell Avatar
9 mins read

The US Supreme Court’s decision not to take a case challenging the Seminole Tribe of Florida’s compact gives Indian tribes around the country better opportunity to control their entry into online gaming.

By denying West Flagler’s petition for writ of certiorari, SCOTUS leaves standing a DC Circuit Court of Appeals ruling validating that tribal-state gaming compacts can include statewide online gaming.

Combined with recently updated Department of Interior rules on compacting, tribes nationwide now have a blueprint to expand into online casino and sports betting under the Indian Gaming Regulatory Act (IGRA).

“This is a tremendous victory for the Seminole Tribe of Florida, but more importantly it’s a reaffirmation of the Indian Gaming Regulatory Act and the rights of states and tribes to enter into mutually beneficial agreements,” Indian Gaming Association Executive Director Jason Giles told PlayUSA. “The Indian Gaming Association thinks this serves as a great model for other tribes and other states as online gaming and sports betting continues to roll out on a state-by-state basis.”

However, not all tribes will find it easy to replicate the Seminole model. It works best in states where tribes have substantial exclusivity on gaming and a governor willing to work with them.

PlayUSA spoke with several tribal attorneys and representatives about what Monday’s SCOTUS denial means for Indian tribes.

“This is an important development for Indian tribes around the country,” said Joseph Webster, a Washington DC-based attorney at Hobbs Strauss who has represented the Seminole Tribe in negotiating and defending the compact. “By declining to review the DC Circuit’s decision from last June, the US Supreme Court has left in place legal precedent that provides an option for tribes seeking to participate in mobile gaming without giving up the rights and protections afforded by IGRA.”

IGRA interpretation needed to advance tribal gaming online

Congress passed the Indian Gaming Regulatory Act in 1988 to promote tribal-state cooperation for the benefit of tribal economic development. Federal oversight ensures that tribes are the main beneficiary of such arrangements.

However, until now, IGRA applied to Class III gaming at brick-and-mortar facilities on Indian lands.

So when SCOTUS overturned the Professional and Amateur Sports Protection Act (PASPA) that essentially gave Nevada a monopoly on sports betting in the US in 2018, tribes were put in a difficult position.

States not only were in a rush to legalize sports betting but most wanted to maximize revenues by putting it online. Tribes were still trying to figure out how they could enter online gaming while maintaining their sovereignty and protecting their brick-and-mortar investments.

“The PASPA ruling nailed tribes’ feet to the floor,” said Victor Rocha, a Pechanga tribal member in California and conference organizer for the Indian Gaming Association. “We weren’t going to be allowed to be part of it as quickly as other people. Now FanDuel and DraftKings own the industry.

“The 2022 initiative [Prop 27 proposed by online operators in California] would have put us under the thumbs of the Sports Betting Alliance, pushing us into their framework. We always land back on a compact because it’s a way better deal.”

Tribes feel more comfortable operating under IGRA

Before the Seminole compact, tribes wanting to participate in statewide online gaming had to enter into commercial agreements with the state.

Tribes in Michigan and Connecticut felt comfortable entering commercial arrangements with their states for online casino and sports betting.

But many tribes either watched as their states moved forward with online sports betting or held their states back from legalizing while they waited for more clarity.

The Seminole compact was the first tribal-state agreement under IGRA submitted to the Department of Interior to include internet gaming. With the Supreme Court decision, tribes know they can include online gaming in a compact under IGRA.

“The highest court in the land has given its imprimatur to the principle that online sports wagering can be governed under IGRA,” said Jacob Mejia, vice president of public affairs at Pechanga Development Corporation. “This is consequential with implications for California. This decision bolsters the position of tribal leaders that online sports wagering in California must be conducted under IGRA.”

Scott Crowell, a longtime tribal attorney with experience representing tribes in California and Arizona, believes the decision will spark a wave of tribes looking to enter agreements with states to move gaming online under IGRA.

“We have to let the dust settle. But I do think within the next year we will see a number of tribes in different states initiate the process of pursuing compacts or compact amendments, particularly in states where tribes have exclusivity or substantial exclusivity over gaming.”

IGRA model works best in states with tribal gaming exclusivity

The Indian Gaming Regulatory Act guarantees tribes are the major beneficiaries of gaming arrangements.

Under IGRA’s primary beneficiary rule, no less than 60% of net revenues in any tribal gaming arrangement must be income to the tribe.

“When you look at agreements major operators have been able to do with tribes through commercial agreements, they say let us take full advantage of your license and we’re going to give you 2, 3, 5, maybe 7% of the net revenue while you sit on the sidelines and let us take care of everything,” Crowell said. “That model is to DraftKings’ and FanDuel’s benefit. Under IGRA, any sports wagering activity would have to be compliant, which means a minimum of 60% to the tribe.”

Operating under the IGRA model provides leverage for tribes with substantial exclusivity over gaming. This includes tribes in California, Washington, Oklahoma, Minnesota, Wisconsin and New Mexico.

How Supreme Court decision affects California tribes

The primary beneficiary rule makes the Seminole model particularly appealing to tribes in California. California Nations Indian Gaming Association Chairman James Siva explained:

“The Seminole compact being upheld is a positive outcome for all of the tribal gaming industry but especially for California tribes. In conjunction with the new DOI rules, California tribes now have a platform that would allow tribes to continue to protect our exclusivity as operators in the state.”

In the commercial agreements offered by online operators in Prop 27, the top operators would have had leverage in negotiating deals with the many tribal options in the state. Under IGRA, tribes have the leverage with commercial operators.

Recent California talks have focused on online operators being platform providers for California tribes.

Siva continued:

“The diverse nature of California with the number of tribes and number of gaming operations necessitated a unique approach to any expansion of gaming. By potentially utilizing the model laid out in the Seminole compact, California tribes may have the path forward as we continue to work toward a sustainable solution for sports betting in California.”

California tribes still need to figure out how to share online gaming revenue so that all 110 federally recognized tribes in the state benefit.

But resolving the federal challenge of the Seminole compact with more than a year before filing season for 2026 ballot initiatives increases the chances of a California tribal sports betting option in the next election cycle.

“The Seminole compact provides a role model for tribes that might work in California for online sports betting, so this decision puts it firmly on the table,” Rocha said. “Thus far, I think a lot of us in California have looked casually at what the Seminole compact means for us. Now we’ll have to take a deeper dive. Theoretically and hypothetically, it’s very good for 2026.”

Decision won’t affect tribes in states with online sports betting

IGRA’s primary beneficiary rule can be a double-edged sword when tribes have to compete with commercial interests in their states.

In states such as Massachusetts or Iowa where tribes have watched commercial online sports betting launch, they wouldn’t be able to enter the market through a state compact under IGRA and expect to compete.

In states with established online sports betting markets, the best online operators platforms already operate in the state.

In Texas, where sports teams have led the push for online sports betting, working under an IGRA model would price tribes out of the market. Operators would be able to cut a much better deal with a team.

“I think there’s some fudge room around the edges, but if the state model is in the single digits versus the IGRA model at 60%, there’s not enough fudge room to get them closer together,” Crowell said.

Also, tribes need a willing partner in the state to make an IGRA model work. Florida Gov. Ron DeSantis worked with the Seminoles.

Oklahoma tribes might eventually be able to use the Seminole model as a blueprint. But current Gov. Kevin Stitt is a roadblock.

“While this decision does not directly affect the potential for sports betting in Oklahoma, it should remind us all of what may be possible when governmental leaders sit across the table to work toward respectful, lawful and solution-oriented agreements,” Oklahoma Indian Gaming Association Chairman Matthew Morgan said. “We remain prepared to work together to strengthen our partnership with the state and keep the tribal governmental gaming industry strong.”

Online gaming doesn’t have to be on tribal lands

The Seminole Tribe wrote the compact with the state to place online gaming servers on tribal lands. That way, the tribe and state could argue that bets took place on tribal lands even if they were coming from people located throughout Florida.

In invalidating the compact, US District Court Judge Dabney Friedrich said the court could not accept the fiction that all sports betting occurs at the location of the tribe’s servers.

However, the DC Circuit said it didn’t matter. While compacts under IGRA can legally authorize a tribe to conduct gaming only on its own lands, not every activity in the compact must be on Indian lands. The tribe and state can include other aspects as long as they are valid under state law.

This aligns with arguments submitted by Crowell in an amicus brief submitted to the DC Circuit. Crowell pointed out that compacts had allowed tribes to offer off-track betting since the early days of IGRA.

“My view is you don’t need that language in the compact deeming the wager occurs at the location of the server on tribal lands,” Crowell said. “That’s not required under IGRA or the DC Circuit analysis. For the Seminole compact, I think it was a way to reinforce the legality of what they were doing at the time, which was entering unchartered waters.”

Florida state case won’t affect tribes nationally

West Flagler may turn once again to state court to challenge that the compact violates Amendment 3 of the Florida Constitution that any expansion of gaming must start with the voters.

Even if successful, that would only affect online sports betting in Florida. Tribes nationally can still move forward with the Seminole model under IGRA.

“That litigation does not threaten the national impact of today’s SCOTUS decision,” Crowell said. “Moreover, even if cardrooms would prevail in state court action, any adverse judgment could be cured by a statewide election on a compact that brings billions of dollars into Florida’s state treasury.”

Challenging any part of online gaming being allowed in tribal-state compacts under IGRA following the DC Circuit ruling and SCOTUS decision figures to be a long process that is unlikely to be successful.

Online casino is where decision will have the biggest impact

Online sports betting markets already are established in 30 states. Only six states have online casino, with tribes only participating in two online casino markets.

That leaves a lot more potential for tribes to use the IGRA model in online casino negotiations. Online casino also offers much higher margins than sports betting, which could make IGRA’s primary beneficiary rule viable for more tribes.

Crowell explained:

“I think everyone has been viewing this expansion of mobile sports wagering as a stepping stone to statewide mobile casino gambling. Today’s decision really strengthens the tribes’ hand to make sure they will be active participants in those emerging markets as they continue to expand across the country.”

Crowell is based in Arizona, where tribes entered a commercial agreement with the state over online sports betting. The state set aside 10 online sports betting licenses each for tribes and sports teams. However, when FanDuel and DraftKings each partnered with sports teams, tribes were left a small percentage of the market.

By going through a state compact under IGRA, Arizona tribes can ensure that doesn’t happen with online casino.

“There’s a lot of buyer’s remorse among Arizona tribes from the last round of compact amendments,” Crowell said. “Tribes have a bitter taste in how sports betting came down. Whether naively or not, they believed if there’s only 20 licenses and tribes get half of them, there would still be substantial revenue for tribes. It didn’t turn out that way. This provides them a model to go through their next round of compact negotiations for iGaming and maintain tribal exclusivity over casino gaming.”

Matthew Kredell Avatar
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Matthew Kredell serves as senior lead writer of legislative affairs involving online gambling at PlayUSA. He began covering efforts to legalize and regulate online gambling in 2007 and has interviewed more than 300 state lawmakers around the country.

View all posts by Matthew Kredell

Matthew Kredell serves as senior lead writer of legislative affairs involving online gambling at PlayUSA. He began covering efforts to legalize and regulate online gambling in 2007 and has interviewed more than 300 state lawmakers around the country.

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