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With the US Supreme Court opting not to review a legal challenge of the Seminole Tribe’s compact with the state of Florida, Indian tribes in states around the country have a model to move forward with online gaming.
Tribal gaming attorney Scott Crowell and California Nations Indian Gaming Association (CNIGA) Chairman James Siva this week joined Indian Gaming Association (IGA) Executive Director Jason Giles and IGA conference chair Victor Rocha for a webcast discussion presented by IGA on the aftermath of the Supreme Court decision.
All four previously participated in PlayUSA’s explanation of how the Supreme Court decision would impact Indian tribes looking to participate in online gaming.
In Michigan, Connecticut and Arizona, tribes entered into commercial agreements with the state and operators to enter online gaming.
By expanding online through compacts with their states under the Indian Gaming Regulatory Act (IGRA), tribes can ensure their online entry isn’t controlled by commercial operators.
“The problem I have is with the major operators, who basically have used the state-law models to create a rent-a-tribe scheme,” Crowell said. “We’re going to give you some crumbs but we’re going to take the majority of the revenue. … This is a far better model, and I hope the reality sets in with the operators that this notion that they come in … and rent a tribe’s license and have the tribe sit over on the sideline, that’s not going to happen.”
Supreme Court decision reinforces California tribes
Online commercial gaming operators tried to enter California in 2022 through a ballot initiative. Prop 27 would have required operators to partner with a California tribe to gain entry into the market.
However, with 110 federally recognized tribes in California, commercial companies were in position to dictate their terms. California tribes banded together to spend more than $200 million to defeat Prop 27, which only garnered support from 17.7% of voters.
“We had a number of issues for why it didn’t move forward in California, but the approach of those large, billion-dollar corporations who essentially wanted to leave crumbs on the table for tribes and take the majority of revenue out of the state was never going to be something that worked for us,” Siva said. “And now we have this kind of lawful path under IGRA that would allow tribes to keep the majority of that revenue here in the state.”
In the past year, FanDuel has made several hires with tribal connections and had executives speak at tribal events about a desire to work with tribes in a unified approach.
Siva believes the Supreme Court decision puts California tribes in a position to hold operators to those pledges.
“We’re hopeful that this now will force these big corporations to continue to listen to us. Because I know that there’s been a couple of companies that have really tried to do a 180 on this and come to the table. … And I hope that this will put some force behind that, that we’ll see some action and not just some words when they realize that the models they’ve used in the past aren’t going to be the same models that work in California.”
Siva did caution that the Supreme Court decision doesn’t necessarily move up the time frame for California tribes to pursue online sports betting. He wouldn’t commit to tribes having an initiative for the 2026 election cycle. All he would say for sure is that it definitely won’t happen in the 2024 election.
“I know there is a lot of excitement about this decision. I think it was the right decision. But I think a lot of people anticipate this means we’re going to have a push for a new initiative immediately. … We’re going to continue the same path that we’ve been doing the last few years. We’re going to move carefully, methodically. This opens up some new avenues for us to utilize and look at as potential opportunities, but our timeline remains the same, even with this decision.”
The addition of sports betting and possibly California online casinos down the road would be a huge boost to the US gaming industry. Estimates suggest that potential California online casino revenue alone could generate a massive $1 billion per year.
Other states where tribes may look to expand gaming online
Crowell spoke about other states in which tribes may look to replicate the Seminole model by entering into a state compact for online sports betting.
By utilizing an IGRA model, tribes can ensure that at least 60% of online gaming revenues go toward their tribal governments.
Minnesota
For the past two years, Minnesota tribes have sought to enter a commercial agreement with the state to have exclusivity over online sports betting.
But the model would allow commercial operators free-market reign to negotiate the best deals possible with the 11 Minnesota tribes.
Crowell said he believed Minnesota tribes should take a serious look at the Seminole model and pursuing online sports betting under IGRA.
“The legislation that almost passed in Minnesota would have been more akin to Michigan than a state-law model. To have the protections of IGRA, I don’t represent any Minnesota tribe but I think they should take a very serious, hard look at an IGRA model for expanding sports wagering in Minnesota.”
New Mexico and Wisconsin
In New Mexico and Wisconsin, tribes currently offer sports betting in-person at tribal casinos.
Crowell could see them soon seeking to move sports wagering online under IGRA.
“Those are two situations where you have reasonably friendly state governments and tribes already having substantial exclusivity and excellent track records in terms of regulating the gambling industry in those states. I would think those would be two excellent candidates where the tribes, preferably working together, would be able to approach the governor to adopt a Seminole-type model.”
States where tribes face challenges expanding online
Oregon
The Oregon Lottery reached a deal with DraftKings to be the sole proprietor of online sports betting in the state. The state collects a 51% tax rate, but that’s only if DraftKings remains the state’s lone sportsbook.
Per the lottery’s contract with DraftKings, if one tribe begins offering sports betting than the operator’s tax rate goes down to 15%. If all Oregon tribes enter the market, DraftKings’ tax rate goes down to 5%.
“That may be a poison pill that DraftKings and the state of Oregon will have to swallow, in a large part because of this decision,” Crowell said. “ … Whoever negotiated that contract with the Oregon Lottery either set out to punish the Oregon tribes or was so completely ignorant about the impact it would have on the tribes.”
Massachusetts
If the Mashpee Wampanoag Tribe wants to enter the Massachusetts online sports betting market at this point, Crowell said it will have a difficult time doing so under IGRA.
“Massachusetts has already authorized so many of these non-tribal commercial mobile sports wagering licenses that the tribe coming in with the 60% requirement, why would the major operator go with the Mashpee Wampanoag for 40% when they go can go with a tavern or a sports franchise for 95%? So it’s going to be difficult for tribes in those types of circumstances to compete under in IGRA model.”
Arizona
Arizona tribes agreed to split online sports betting licenses with sports teams in the state. But all the major operators partnered with sports teams, leaving Arizona tribes roughly 5% of the online sports betting market.
While Crowell said Arizona tribes can’t put the genie back in the bottle on sports betting, they could use the IGRA model to obtain a better deal on online casino.
“This may be a lesson for Arizona tribes, if and when the Arizona market expands into online casino gaming, to use an IGRA model for that.”
PlayUSA will update all future online casino legislation in Arizona and other states with our online casino bill tracker.
