US tribal casino operators urged to get online strategies in place

The publication Indian Country reports that gambling experts have an urgent message for tribal casino operators and leaders: Federal laws to legalise online gaming are coming, and if you want to protect Indian country interests, you need to get your strategy in place now.

The article notes that the critical period for a legalisation bill in Congress will be in the weeks after the November presidential elections, when the ‘lame duck’ sessions in Congress present good opportunities.

Interestingly, the report claims that this was the window chosen by Sen. Harry Reid in his abortive legalisation attempt back in 2010;  the piece claims that only the opposition of the National Congress of American Indians prevented that initiative from being successful.

Tom Rodgers of Carlyle Consulting told Indian Country that the online gambling legalisation question is still very much a live issue in Washington DC. Describing the apparent lack of activity on the initiative as “the quiet before the storm,” Rodgers urged tribal leaders to be prepared.

“If you’re not prepared, if you’re not informed and if you haven’t done your due diligence and worked through all the permutations, unintended consequences and the collateral damage, then you haven’t done your job,” he warned, adding that tribes could possibly be shut out of the market if they aren’t ready to negotiate.

Once a clear strategy is formed, tribes must be prepared to engage in the political process to protect their interests, Rodgers says, opining that success is best achieved through large tribal organisations like the NCAI and the National Indian Gaming Association (NIGA).

The latter has set out a list of guiding principles on internet gambling, which asserts that any legalised system must:

• Protect the right of sovereign Indian governments to operate, regulate, tax and license Internet gaming without subordination to any nonfederal authority;

• Uphold the right of Indian governments to authorize Internet gaming to customers anywhere that such gaming is not criminally prohibited;

• Protect federal law and policy exempting tribal revenues from taxation;

• Respect existing tribal government rights under the Indian Gaming Regulatory Act (IGRA) and tribal-state compacts;

• Protect IGRA from being opened for amendments;

• Provide positive economic benefits for Indian country.

Rodgers has some controversial points that he says should be raised in the internet gambling conversation:

• Tribes should have the right to offer online gaming even if a state “opts out” of the federal regulatory scheme;

• Should tribes support the National Indian Gaming Commission as their continuing partner in regulating Indian gaming rather than another agency that’s unfamiliar with tribal gaming?

• There should be a common start date for online gaming for commercial and Indian gaming so that no operator gets the unfair advantage of being first in;

• Internet cafes should be prohibited from online gaming;

• How will revenue from Internet gaming be allocated?

• How will revenues be allocated if a tribe enters a partnership with a big commercial gaming brand?

• What are the implications for world trade and its regulations in terms of taxes and revenue sharing if a tribe partners with businesses off shore, in Europe or beyond?

• How will tribal-state compacts play into online gaming regulations?

Joe Valandra, president of VAdvisors LLC, and a former chief of staff of the National Indian Gaming Commission, told Indian Country that the online gambling issue became more urgent from the end of last year, when the US Department of Justice abruptly abandoned its long-held contention that online casino, lottery and poker activity was prohibited by the 1961 Wire Act.

The about-turn policy change triggered a rush of interest in online gambling by individual US states…and presents the choice of a consistent federal legalisation across all states that wish to legalise, or a patchwork of differing state legal regimes regulating intrastate activity.

“I believe it was hoped that this would be enough to push federal legislation over the top – using the floodgates argument – very similar to that used to produce the Indian Gaming Regulatory Act,” Valandra said.

Kathryn Rand and Steve Light, the founders and co-directors of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota School of Law, said some states may not wait until after the presidential elections to enact legalisation laws

“Legalization will happen—it’s just a matter of when, and most folks believe nothing will happen at the federal level until the election sorts out,” they say. “We think federal legalization is likely to be best for tribes, because of uniformity and more likely respect for sovereignty.

“But states may not wait for the presidential election.… The pressure here is economic.”

However, the duo warned, neither federal nor state legislation will focus on tribes or tribal sovereignty.

“Instead, the likely main focus will be regulation and taxation. That spurred our encouragement to tribes to think about how online gaming could serve tribal policy goals.” And not all tribes are poised to take advantage of the looming legalisation, they said.

“Those with recognizable brands and technological and regulatory capacity are in the best position, leaving behind the same tribes that have modest brick-and-mortar operations.”

NIGA chairman Ernie Stevens Jr. told Indian Country that so far legislative proposals on internet gambling have not met tribal requirements and imperatives.

“[We] continue to be disregarded to a large extent – and then they wonder why we stand in opposition to their proposals. We’re not opposed to progress, we’re not opposed to technology and helping our economies, but as long as people make proposals without the appropriate respect to tribal governments, we have a huge problem with that,” Stevens warned.

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