Tribes across the United States have tribal state gaming contracts. The Supreme Court recently decided not to take a case challenging the Seminole Tribe’s compact. This is not only a victory for the tribe but a reaffirmation of the Indian Gaming Regulatory Act (IGRA) of 1988. This federal law authorizes tribes to build and operate casinos on tribal lands and requires the establishment of tribal-state gaming compacts.
The recent DC Circuit Court of Appeals ruling validates that tribal-state gaming compacts can include statewide online gaming. It gives tribes around the country more opportunity to control their entry into online gaming.
Tribal-state gaming compacts
According to tribal-state gaming compacts,the tribes can only offer games already legal in the states. In states like Delaware, Pennsylvania, New Jersey, Nevada, and West Virginia, online gaming is legal. However, they don’t have tribes with gaming compacts.
Michigan was the sixth state to legalize online gambling and it has many tribes and tribal casinos. Gun Lake Casino in Michigan is an example of a tribal brick-and-mortar casino that also operates a successful online casino. Online slot games are very popular at its gambling website.
Tribal participation in gaming
Tribal gaming plays a significant part of overall gaming in the U.S. In recent years, tribal gaming has generated almost 45% of all gaming revenue in the U.S. Currently, there are more than 500 tribal casinos of varying types in the U.S. Oklahoma is the state with the most tribal casinos and has one of the largest tribal casinos, the Seminole Hard Rock Casino and Hotel in Tampa. Other large tribal casinos are the Mohegan Sun in Connecticut and the Winstar World Casino and Resort in Oklahoma.
What does the Supreme Court decision mean?
The U.S. Supreme Court has left in place legal precedent for tribes who want to participate in mobile gaming without giving up the rights and protections the IGRA offers them. Tribes want to maintain their sovereignty and protect their brick-and-mortar investments while entering online gaming.
Before the Seminole contract, tribes wanting to participate in statewide online gambling had to enter into commercial agreements with the state. Tribes in Michigan and Connecticut felt comfortable doing so but others wanted more clarity.
The Seminole Contract was the first tribal-state agreement under IGRA submitted to the Department of Interior that included online gaming. Tribes now have clarity that they can include online gaming in a compact under IGRA. This is beneficial for them if they want to stay ahead of the competition. It could spark tribes wanting to enter into agreements with states to move online gaming under IGRA.
The primary beneficiary rule in IGRA
The IGRA model works best in states with tribal gaming exclusivity. Under the model’s primary beneficiary rule, the tribe must get no less than 60% of net revenues in tribal gaming arrangements. Commercial agreements with major operators usually result in tribes getting net revenue in the single digits.
The primary beneficiary rule is particularly appealing to tribes in California. In conjunction with new Department of Interior rules, they can continue to protect their exclusivity as operators in the state. The recent decisions give weight to the position of tribal leaders that online sports wagering should be conducted under IGRA.
By going through a state compact under IGRA, tribes can ensure that they aren’t at a disadvantage when it comes to the online gaming market. This was the case in some commercial agreements relating to online sports betting. Now they have a model to use for iGaming compact negotiations.
