Native American Casinos and the Shifting Gaming Landscape

1000 648 David Hoppe

Native Americans have been mistreated and subjugated for generations. First, they were enslaved and abused by European settlers. Then, government representatives from the United States and Canada violated their rights and displaced millions. Many native communities today struggle to overcome the ramifications of this oppression, and some have been stamped out entirely.

While the specific incidents of systemic oppression and abuse of Native Americans are tragic and numerous, the overall result of this behavior is specific. Native Americans lost almost all their ancestral tribal land, sacred sites, and traditional ways of life. Despite this treatment, Native Americans and First Nations peoples are still here, proudly practicing tribal traditions and autonomous government while assimilating to life as modern US and Canadian citizens. Much of this tribal sovereignty is supported by tribal gaming, which has been staggered by recent changes in federal gambling laws.

Tribal Sovereignty in the United States

As part of historic treaties, the US government has agreed that Native American nations could govern themselves mostly independent of US federal, state, and local jurisdiction. The Supreme Court in 2020 affirmed tribal sovereignty in McGirt v. Oklahoma, preserving boundaries and tribal autonomy by holding that the State of Oklahoma had no jurisdiction to prosecute Native Americans accused of crimes on reservations.

While there are dozens of Supreme Court cases clarifying tribal sovereignty, in general, tribes are allowed to decide what activities are permitted on their land, including gambling. Tribal gaming has been an important source of revenue, and it provides the funding necessary for many tribes to maintain functional sovereignty. And while tribes are considered sovereign nations under a strict interpretation of the law, Congress can still regulate certain aspects of Native American life. The scope and degree of this regulation has ebbed and flowed over time.

Beginning in the 1970s, a series of Supreme Court cases opened the door for regulated tribal gaming. Bryan v. Itasca County served as the springboard by limiting that state and local jurisdictions’ ability to tax and regulate tribal lands. In 1988, federal lawmakers passed the Indian Gaming Regulatory Act requiring that tribes and states agree on the types of games that are allowed and details of how records and accounts are to be maintained.

First Nations Gaming in Canada

In Canada, provincial governments own many of the most popular casinos. Provinces also are responsible for granting First Nations gaming licenses. Because First Nations’ casinos may compete with local interests, provinces often are less inclined to grant gambling licenses to First Nations establishments. In fact, only about 16 First Nations casinos are currently licensed and running across all of Canada. Indigenous leaders are urging the Canadian government to allow more First Nation-owned casinos

Despite the challenges faced for First Nations to obtain gaming licenses, online gaming remains largely unregulated throughout Canada. Ontario, Canada’s largest province, is considering regulatory changes that will allow expanded online gambling in Canada. Although these laws will not carry over to the United States, the larger trend in gambling from casinos to online platforms is poised to shift tribal gaming across the North American continent.

Tribal Gaming in the US Today

Since passage of the Indian Gaming Regulatory Act, gambling on Indian reservations has on the whole has proven a boon to tribes that have allowed gambling. Tribal casinos have contributed increased tax revenues, employment levels, higher wages, and reservation population.

By the end of 2020, there were at least 527 licensed gaming establishments operated by 247 tribes across 29 states. These operations brought in over $33 billion in revenue. Tribal casinos in the United States have become both a driver of revenue and a popular tourist attraction for tribal communities and states alike. However, recent changes in US gambling laws may shift the landscape for tribal gaming.

In the past, tribal casinos were the only legal form of gambling available in several states, creating a massive opportunity for tribes to earn money. But a pivotal Supreme Court decision in 2018 allowing wider online gambling and sports betting threatens to upset the traditional gambling landscape on which tribes rely. While legal real-money games may open new opportunities for tribal gaming, it will also lead to increased competition in America’s legal gambling markets.

Murphy v. NCAA

In 2018, the Supreme Court ruled in Murphy v. NCAA that the Professional and Amateur Sports Protection Act restricting state’s rights to allow and regulate sports betting violated the 10th Amendment. While the Court did not legalize sports gambling with the Murphy ruling, it paved the way for states to decide for themselves whether to permit betting on sporting events within their jurisdictions, either online or in person.

Since the ruling, a number of states have passed laws permitting sports gambling, but those who have chosen to move forward in this regard have done so in a highly regulated and intentional fashion. For example, most jurisdictions are restricting the number of businesses allowed to offer gaming services. These regulatory restrictions are familiar territory for existing casinos, so most of the new online gaming and sports book operations emerging post-Murphy are actually affiliated with established casinos.

Murphy’s Impact on Tribal Casinos

As mentioned, prior to the Murphy case, tribes were often the only sources for legal sports gambling and other types of gaming in a particular state. After Murphy, tribes face competition and greater regulatory scrutiny regarding online and sports gambling in these states. Even so, with COVID-19’s profound impact on state government budgets, states will be pressed to look to boost revenue wherever they can find it, including online gaming. As a result, Murphy is more likely to set up tribal gaming establishments for expansion rather than place them under greater competitive pressures:

  • Potential Online Expansion – Online gambling in the United States has traditionally been a complicated and legally obscure activity. Offshore and international enterprises have for some time offered quasi-legal online gaming that is accessible from US computers – even in jurisdictions where gambling is illegal. In recent years, however, more states have given in to the pressures of reality and allowed online casinos. As existing gaming operators, tribes are well positioned to take advantage of this new wave of legalized online gamblin

    Tribes are already requesting permission to implement online casino offerings, and in December 2020 the first tribal casinos in Michigan were approved to offer online gaming. Expect this shift to continue as more tribes seek to offer online gaming through their existing casinos, while other competitors simultaneously petition the state.

  • New In-Person Gaming Options – The Indian Gaming Regulatory Act dictates that tribal casinos only engage in gaming activities that have been negotiated between the state and the tribe and approved by the US Department of the Interior. As more states pass legislation allowing online gaming, tribal casinos will be positioned to expand their casino offerings online because states will be more amenable to a wider variety of gaming options in these negotiations

    Online gambling is predicted to grow rapidly in the next five years, but it’s unclear how much of that growth will be from tribal casino operators moving online. Traditional sports betting and fantasy sports gambling appears to be the sector best positioned to benefit from increased online gambling due to the growing popularity of fantasy sports betting apps. If tribal gaming organizations are able to capture more of these markets, the recent change in law will prove to be a great benefit to their operations.

  • Limitations Imposed by the Federal Wire Act -Even as online gambling becomes legitimized in states that allow it, the total scope of online gaming remains limited by federal legislation. The Federal Wire Act prohibits gaming organizations from transferring bets or wagering information across state lines. This law has prevented legal gambling businesses in one state from taking bets from other states, and investigators have become very good at detecting violations.

    Modern regulators use advanced geolocating technology that can pinpoint the location of the computer or phone the prospective gambler is using. As a result, tribal and private casinos seeking to expand into online gaming will be restricted to only their state due to the Wire Act. This is true even if adjacent states also allow online gambling.

The Future of Online and Tribal Gambling

Sovereign tribal nations will continue to operate in-person casinos. What remains unclear is whether the growing popularity and prevalence of online gaming will negatively impact their revenues or provide them with new opportunities for growth and expansion. Due to the legal complexity and changing landscape of online gaming, however, legal counsel experienced in real-money gaming and the laws that apply to skill-based games can offer critical guidance to tribes seeking to expand online gaming.

Regardless of what the future will hold for North American gaming law, one thing is very clear: the online gaming landscape is growing more complex. Tribal casinos, private casinos, and sports betting businesses will all jockey for position as new legislation and opportunities emerge. In this complicated environment, those with strong legal representation capable of navigating the gaming landscape are most likely to emerge victorious.

Gamma Law is a San Francisco-based firm supporting select clients in cutting-edge business sectors. We provide our clients with the support required to succeed in complex and dynamic business environments, to push the boundaries of innovation, and to achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.

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David Hoppe

All stories by: David Hoppe

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