Tribal Gaming Power Flexed in California, Florida Could Follow

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Tribal gaming is having a moment right now.

It’s about business, certainly. But it’s also about economic independence and fending off perceived existential threats, not all of which involve their ability to derive wealth from gambling.

The power of the 110 federally recognized tribes in California was demonstrated in November when a coalition of Native American gambling companies funded a campaign to crush Prop 27, which would have allowed national operators like DraftKings and FanDuel to offer mobile and online sports betting in the state of 39 million residents.

“I don’t think it’s a moment. I think it’s about time,” Sheila Morago, executive director of the Oklahoma Indian Gaming Association, told Gaming Today. “In California, I think it was such a great job. [Anti-27 tribes] did the polling, they knew what they wanted, they knew exactly what the people in California wanted. And they were underestimated, I think, by companies coming in, especially from states that they don’t live in, assuming that they know how things work.

“We’ve spent years and years developing these relationships with our state legislators, with the governor’s office in many states. They’re going to go to the tribes first and say, ‘Hey, what do you think?’ So I think it’s not just a moment. I think it’s about time that the tribes are actually flexing political muscle.”

Tribes Among Few That Got Something out of Props Fight

Not all tribal entities opposed Prop 27, and the level of support for Prop 26, which would have allowed retail sports betting on tribal lands, received tepid financial and lobbying support from Native American groups.

But the $110 million — of about $180 million — spent and the political capital leveraged by the San Manuel Band of Mission Indians, which owns the Yaamava’ Resort and Casino in Southern California and The Palms in Las Vegas, made native groups the one clear winner from an expensive and fruitless effort to expand gambling there. The campaign in California and nationally centers around economic freedom, Morago said:

“This is actually money for higher education, for healthcare, for infrastructure, and not just for the tribal communities, but their surrounding communities as well. So they’re not making decisions on whether or not you get a new yacht or enough money to buy a new Mercedes. It’s about making sure that our kids have money to go to school.”

For the San Manuels, the win provided a firewall against the next evolution of gambling expansion, the first ask before the second ask by the national commercial gambling industry, they believe. It was the precursor to the maneuver that could have dire impact for tribal communities in California, San Manuel Band of Mission Indians chief intergovernmental officer Daniel Little said.

Sports betting, he said, would inevitably lead to a push for online casinos. The tribes have seen this before, he said.

“Tribes think the long, long term, the long game, and hopefully these companies, the takeaway from this election is that any kind of future gaming’s going to have to go through the tribes,” Little said. “Right now I think tribes are in a position where they may want to look this as there isn’t an appetite in California for online gaming. Fifteen years ago, we all heard, ‘Oh, online poker’s coming. It’s coming. It’s coming. Get used to it.’

“Does this go away like the debate for online poker? I just don’t think we subscribe to the idea that it’s inevitable that, ‘Oh, everybody’s doing it, so we have to do it too.’ California’s unique and goes its own way. Many, many instances. And maybe this is one of them.”

Tribes See Existential Threat in Commercial Expansion

Holding on to sports betting revenue was a topic of concern in November when the National Indian Gaming Association convened in Arizona a year after the launch of mobile and retail sports betting there. Tribal operators generated $208 million in revenue — returning $30 million to the state in privilege fees in the first year — but tribal leaders fear a loss of exclusivity. Arizona sports betting law allowed for 20 licenses to be split between tribes and professional sports teams, providing plenty for the likes of the big-four league franchises and even TPC Scottsdale and Phoenix Raceway. Twelve federally recognized tribes were shut out, however.

“The big fear now is loss of exclusivity,” Jason Giles, executive director of NIGA said at the conference. “Gaming is the only thing that has ever worked for us. Since 1492 when Columbus landed, it’s the only thing that has worked. That’s why we fight so hard.”

Though California was the backdrop of a prodigious moment for tribal gaming companies, a Washington, D.C., courthouse may ultimately set the scene for the future. That’s because the Seminole Tribe of Florida is involved. The small tribe that once emerged from hiding in the Everglades to buy the massive Hard Rock hospitality brand in 2007, set the tone for what tribal gaming could be decades ago. Now, the litigation surrounding a voided gambling compact that for a month in 2021 gave it a monopoly on mobile sports betting in the entire state of Florida is being watched closely by other tribal leaders.

Florida exports tribal legal precedents as well as orange juice.

Bellwether Seminoles Again Key to National Tribes

A 2021 compact hammered out in coordination with Gov. Ron DeSantis allowed for a so-called hub-and-spoke mobile sports betting model, where Seminoles could offer mobile sports betting statewide through Hard Rock Digital as long as the servers accepting the bets were located on tribal lands. A small group of pari-mutuel operators and anti-expansion gambling opponents successfully convinced a federal judge to void the compact entirely — also stripping the Seminoles of the right to offer retail sports betting, craps and roulette — and an appeal by the Department of the Interior has reached the U.S. Court of Appeals for the District of Columbia. Oral arguments were heard by a panel of three judges in December. A ruling could take months.

Judge Dabney Friedrich contended in disallowing the compact in 2021 that the hub-and-spoke model was “legal fiction” and not supported by the auspices of the Indian Gaming Regulatory Act. A reversal would be another landmark win for tribal gaming interests, many of whom would obviously want the same type of deal in the states where they are either limited to offering sports wagering on their property or in states (like Connecticut) where they negotiated state-wide access outside their compacts.

“We are hopeful the Court recognizes that IGRA does not authorize the Secretary to approve a compact that permits and governs gaming off of Indian lands, which is exactly what this compact does.  By allowing such a compact to be approved, the Secretary acted ultra vires – beyond what the statute authorized her to do.  The Department of Interior has told the Court that it can “interpret” the compact as merely mentioning the gambling that will occur off Indian lands, but that is false.

“No matter how the court purports to interpret the compact, if the compact’s sports betting provisions are somehow approved under IGRA, then the proponents of the compact will use that IGRA approval to authorize gambling that occurs off of Indian lands — gambling that, absent a federal IGRA approval, would be considered a felony under Florida law.  That would be an egregious abuse of IGRA and should not be permitted.”

  • Hamish Hume, attorney, West Flagler Associates; partner, Boies Schiller Flexer

Tribal Gaming Official Sees Hypocrisy in Seminole Compact Ruling

Morago said the eventual outcome is “going to have reverberations either way.” She believes that the striking down of the Seminoles compact should reverberate all the way to New Jersey, where computer servers are required by law to be housed at a racetrack or Atlantic City Casino to facilitate state-wide mobile wagering.

“I think what you have to remember is that this is just a tribe that’s doing it,” she told Gaming Today. “What about Atlantic City, New Jersey? That is the exact same model that they used in Florida. It’s just the servers are on tribal land. In the constitution in New Jersey, the only place you can have gaming is in Atlantic City. They have statewide online sports betting and all their servers are in Atlantic City because that’s where the bet is. So if [the Seminoles] lose, what happens to the Atlantic City model?”

Gambling Industry Insider: Seminoles Remain Leaders No Matter Appeals Decision

The Seminoles continued influence won’t be measured by this or any court decision, though, said Jason Ader, gambling industry expert and the CEO of SpringOwl Asset Management LLC.

“I would focus on the Seminoles,” he said. “The Hard Rock Seminole, they are the leaders. The size of the Hard Rock business now is extraordinary. And despite the fact that California is an example of the tribe’s ability to dissuade expansion, the [Seminole] tribe’s ability to grow a brand, a gaming business, create jobs, driving economic impact through the Seminole Hard Rock position absolutely shows the position of leadership that they’re in.”

Non-Gambling Court Cases Could Have Gambling Impact

There are also mounting threats to tribes beyond gambling sovereignty, according to some observers.

Steve Geller, the general counsel of the National Council of Legislators from the Gaming States and a former Florida senator and a representative, believes a 5-4 Supreme Court decision in Oklahoma vs. Castro-Huerta could signal a broader trend toward minimizing tribal autonomy. The decision, swayed by Conservative members of the Court, established that state and federal governments wield concurrent jurisdiction over alleged crimes committed by non-natives on tribal land. It had nothing to do with gambling. That, Geller believes, doesn’t matter.

“I think we’re in a new world now in terms of how the United States Supreme Court is going to be reacting on tribal issues,” Geller said. “That case has nothing to do with gambling, had everything to do with Indian sovereignty. This case dealt with the exact same issue that had been decided in favor of an expansive view of Indian sovereignty by a 5-4 vote when Justice Ginsburg was on the bench. Justice Ginsburg passed away, was replaced with Justice Barrett. …Now on the exact same issue, 5-4 ruling, but this case now has a very narrow view of Indian sovereignty. If you are a tribal member or you do business with the tribes, it behooves you to read that case.”

Other industry observers believe the structure established by IGRA to grant gambling rights to tribes will insulate them in those cases. Observers of the Seminole case generally agree it eventually will land with the Supreme Court.

About the Author
Brant James

Brant James

Brant James is the lead writer for Catena Media Sharp Sites including Gaming Today. He has covered the American sports betting industry in the United States since before professional sports teams even knew what an official gaming partnership entailed.

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