Tribal Gaming Sports Betting Dilemma: Is There A Solution?

Gaming tribes have long resisted the allure of online gambling, but the repeal of PASPA and the ongoing pandemic has tribes rethinking their online strategy.

Unfortunately, the situation is more complicated than a change of heart. The stumbling blocks are numerous, from tribal compacts and exclusivity rights to strained relationships with state governments and the unresolved issue of online gambling and IGRA.

In an effort to sidestep the above issues, some locales have taken the path of least resistance. That path is to license tribal operators as commercial online gambling operators. That is how Michigan created legislation that complied with tribal compacts, state and federal laws, and was amenable to commercial and tribal casinos. The Michigan model was copied by other states, including Arizona and Connecticut.

Of course, while noncontroversial, that model places regulation in the hands of the state, not tribal governments. And as noncontroversial as it is, it’s not entirely devoid of issue, evidenced by the legal developments coming out of Arizona.

Alternative Models Create a Bumpier Ride

Three of the country’s four biggest states all have tribal and commercial gambling, and efforts in these states have eschewed the path of least resistance. Tribes find themselves in a damned if they do and damned if they don’t situation, as they either join the mobile sports betting fray as commercial operators or act as retail operators and let the commercial gambling industry corner the market on online betting. The other alternative is to open the can of worms that is IGRA and online gambling.

Because this article focuses on the underlying structure of these proposals, details like tax rates and approved games fall outside its scope.

New York Leaves the Door Open to Legal Challenges

In New York, the legislature decided to sideline tribes as it crafted legislation bringing online gambling to the state via commercial operators. The state is using a bidding process to select no less than two platforms and four skins, and proposals merely receive bonus points for including tribal operators.

As such, if a tribe is included in a selected proposal, it would function as a subsidiary of a commercial operator. If a tribe is not included in the final approvals, it has a powerful argument that the new law violates its exclusivity.

The New York model is both an interesting and unnecessarily overcomplicated workaround to the online-tribal issue. Whether this model faces a legal challenge is likely dependent on what proposals the state selects, something we won’t know for a while.

The specific details of the New York mobile sports betting law can be found on our state guide.

Three Paths to Choose in California

In California, tribes are backing a sports betting referendum that would legalize retail sports betting at tribal casinos and race tracks, thereby avoiding the thorny issue of IGRA and online gambling. This effort is already approved for the 2022 ballot. And while far from a complete expansion of sports betting, the proposal is on a solid legal footing as it avoids mobile and online betting.  

Since the tribal initiative was first unveiled, two competing efforts have emerged.

The first, propped up by the state’s cardrooms, takes the foundation of the tribal initiative and expands upon it by including cardrooms, sports teams, and online operators.

The second is an effort introduced by several cities and backed by major online operators that is a “complementary” add-on to the tribal initiative by bringing online betting to the state via partnerships with tribal casinos. 

Interestingly, the three efforts take care to distance tribes from online operations, avoiding IGRA complications. An IGRA conflict is precisely what the final state on this list has in its future.

Florida Is a Ticking Time Bomb

In Florida, the situation is far murkier. After forging a new compact with the governor, the legislature passed enabling legislation to allow tribal operators to offer online sports betting. The state and Seminole tribe argue that a bet takes place at the server location, and as long as the servers are located on tribal lands, everything is copacetic.

The US Department of Interior approved the compact by neither approving nor disapproving it. Unsurprisingly, a lawsuit has already been filed, and as is the case in California, an alternative effort has popped up.

Suppose the effort to bring mobile sports betting to Florida continues. In that case, it could have implications for tribal gaming across the country as it requires a final resolution to the “where does a bet take place” question, which Betting USA delved into previously.