The momentum for getting tribal approval for sports betting regulation is stronger now than it has ever been, but the lobbying wars between them and commercial brands will also carry on.
The National Indian Gaming Association conference that took place in Las Vegas last week in many ways was a momentous occasion – for the tribal gaming community, of course, as it announced its largest-ever attendance, but also, and more broadly, for the U.S. gambling sector as a whole.
Indeed, the Indian Gaming Tradeshow & Convention event was the first major in-person gambling trade show to take place in the U.S. since the start of the pandemic, and there is no doubting the sense of relief and simple joy that those present felt at seeing industry contacts and having face-to-face meetings once again.
The feedback on the event has been overwhelmingly positive, and although there was some confusion as to who should be wearing face coverings, or whether any should be worn at all, one can imagine the sense of anticipation many of the delegates and attendees must have felt.
IGRA decider
On the regulatory front, Summer 2021 is another key moment, and while tribes, whether in Florida, Arizona, California or Michigan before them, are broaching the issue of betting regulation in their own specific ways to ensure their interests and members are protected, the direction of travel when it comes to sports betting getting regulated in an increasing number of states seems clear; even if there are likely to be many legal bumps and challenges along the way. Events have also moved one and contrast with the responses some tribes gave CDC last year when asked about further regulation.
Currently many eyes are trained on Florida, where the Seminole tribe that runs the Hard Rock casino signed a gaming compact with State Governor DeSantis back in April, giving it exclusive rights over sports betting in the state. As a harbinger of what is likely to happen in California and other states with strong tribal presence, it is being sued by two of the state’s pari mutuel operators, who claim the compact violates federal law and the Indian Gaming Regulatory Act (IGRA) by authorizing mobile betting beyond tribal lands.
How IGRA is interpreted will go a long way towards deciding whether the compact holds, while commercial brands are funding lobbying efforts to have statewide mobile betting on a referendum ballot for next year’s midterm elections.
It’s common knowledge that there is no love lost between the tribes and the likes of DraftKings, who the tribes believe have little interest in the welfare of tribal communities; although of course tribes also stand to gain from agreeing any licensing deals with those commercial brands.
Stephen Crystal, founder and CEO of SCCG Management, has worked with tribes extensively and says all have specific focuses and different approaches. Many will be guided according to how developed their product offerings are, while some don’t have the sports betting expertise either on- or offline and “will partner with commercial brands to acquire players and manage the whole system, while they can rely on a minimum income guarantee,” he says; others will have aggressive commercial ambitions and won’t be shy in going after them.
Casino priority
The priority for the tribes is also to preserve their brick-and-mortar casino revenues. Industry analyst, publisher and entrepreneur Chris Grove says, “For many, if not most tribes, the priority is going to be protecting and expanding their retail gambling revenue. I’d expect most discussions to happen through that frame.”
When it comes to whether they might support regulation, Grove adds that the “tribes are not homogenous, some are very open about their bullishness when it comes to online gambling. And I suspect there are some other, smaller tribes that may quietly view online gambling as a path to a financial windfall or as a way to level the competitive landscape with larger competitors.”
Stephen Crystal adds that tribes have become a lot more corporate in how they function over recent years and the large ones will keep on growing, either through online-igaming ventures or by simply moving into Las Vegas, while many will look at the deals the Michigan tribes have struck with commercial brands and try to emulate them.
Crystal also points out that although the statewide market is growing and constantly developing, “native American tribes play a very important role culturally and economically,” which goes a long way to explaining why their regulatory efforts are so focused on preserving the revenues from their casino businesses.
The court case in Florida and interpretation of IGRA will be key in determining how tribes respond to further regulatory efforts, but recent reports have also highlighted the potential for cannibalization of land-based casino revenues by online operators. While this concerns the casino vertical, which the tribes have always been less likely to agree to regulate online, it provides further ammunition to any stakeholder wanting to oppose or out the brakes on any regulatory project in their state.
In the meantime, the lobbying efforts from the commercial brands will continue, and it seems like there will be little opportunity for compromise from them either.
As Chris Grove concludes, commercial operators will aim to try to open as many states as they can, “if they can work with tribes, they will. But publicly-traded gambling operators are unlikely to surrender other options or pursuit of parallel paths to satisfy tribal stakeholders.”
