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Internet Gaming Tops NIGA Agenda

There are known legislative proposals for Internet gaming and at least one known unknown

UNCASVILLE, Conn. – While several topics were discussed at the National Indian Gaming Association’s (NIGA) mid-year conference, Internet gaming was at the top of the agenda.

A panel discussion called “An Overview of Internet Gaming Legislation” kicked off the training sessions at the conference, which took place October 17-19 at Mohegan Sun. While a few people voiced an unambiguous "No!" to all proposed Internet gaming legislation, the majority unified behind a more nuanced position developed by NIGA and tribal leaders: Indian country opposes any Internet gaming legislation that doesn’t include protections for tribal sovereignty and tribal gaming. So far none of the known proposed legislation does.

But not all of the legislation is known, according to John Harte of the Mapetsi Policy Group, the panel moderator. To paraphrase Bush-era Defense Secretary Donald Rumsfeld, there are known legislative proposals—the ones that Indian country knows about—and at least one known unknown legislative proposal by Arizona Sen. Harry Reid. Harte called Reid’s proposal a “shadow bill.”

“There’s a strong push to legalize Internet gaming at the federal level coming primarily from the Poker Players Alliance, the American Gaming Association, and the gaming states of Nevada and New Jersey are making a strong push to legalize Internet gaming, but so is Reid, said Harte, a member of the San Felipe Pueblo. “Sen. Reid made a very hard push to include Internet legislation at the end of last year and he’s continued this year. He hasn’t been very up front about it. He hasn’t introduced legislation. Even last year when he was trying to attach legislation to the Omnibus bill he never came out with a formal bill. All he had was draft legislation. In addition to the 'shadow bill' that Sen. Reid is developing,” Harte said, Congressman Joe Barton (R-Texas) and Congressman Jim McDermott (D-Wa.) have proposed H.R. 2366 and H.R. 2230, respectively.

The push by legislators to legalize Internet gaming is diametrically opposite to the anti-Internet gaming position of five years ago when Congress passed the 2006 Unlawful Internet Gaming Enforcement Act, which aimed to prohibit Internet gaming by banning financial transactions debit and credit card payments to Internet casinos. The new push to legislate Internet gaming is driven by the tanked economy and the government’s need for additional revenues. Last year, Internet gaming reportedly generated more than $25 billion worldwide with $7 billion in wagers from U.S. bets on Internet sports, poker, and casino games with 10 million U.S. citizens playing poker online, Harte said. “The trend worldwide is to legalize and regulate,” Harte said, pointing to recent legalization of Internet gaming by Mexico and Canada. Europe has had Internet gaming for years. The trend in the U.S. is toward legalization on the state level, Harte said. This year seven U.S. jurisdictions tried to legalize intrastate Internet gaming – intrastate gaming means that the server, the web site and the player have to be in the same state – but only Washington, D.C. succeeded in passing legislation, Harte said.

Harte discussed the federal proposals under four areas of concern to Indian country: the regulatory scheme, eligible operators, the affect on the Indian Gaming Regulatory Act (IGRA), and taxation. Reid’s draft bill from last year would clearly favor Nevada and New Jersey as the most favorable states to conduct Internet gaming, Harte said, and would shut out the vast majority of tribes. For example, Reid’s bill would not allow an Internet casino operator to be a licensee, and it would limit eligible operators to facilities that have hosted 500 gaming devices in one locale over the past five years and to certain race tracks and vendors. “That would shutout more than half of the tribes that conduct gaming in Indian country, not to mention all of the tribes that don’t do gaming,” Harte said. Barton’s bill is similar. Neither bill protects exclusivity provisions in tribal-state gaming compacts – a negative for tribes – while tribes would not have to renegotiate compacts—a positive. Both bills would tax tribal gaming revenues—a red line that NIGA and other tribal leaders say is not to be crossed.

Using Reid’s draft bill as a model, NIGA and tribal leaders developed a set of principles and language for an Internet gaming bill that would treat tribal gaming fairly and meet the tribal government interests. The principles have been widely disseminated, including to members of Congress, and include the following:

  • Indian tribes are sovereign governments with a right to operate, regulate, tax, and license Internet gaming, and those rights must not be subordinated to any non-federal authority;
  • Internet gaming authorized by Indian tribes must be available to customers in any locale where Internet gaming is not criminally prohibited; and
  • Consistent with long-held federal law and policy, tribal revenues must not be subject to tax;
  • Existing tribal government rights under Tribal-State Compacts and IGRA must be respected;
  • The legislation must not open up the Indian Gaming Regulatory Act for amendments; and
  • Federal legalization of Internet gaming must provide positive economic benefits for Indian country.

The NIGA principles are “generic,” Harte said, but reflect the core need to protect Indian gaming and sovereignty.

But not everyone supports Internet gaming. Panelist Scott Dacey, a lobbyist at Pace Capstone, said he has a difficult time reconciling Internet gaming as something the tribes could live with. “In a real world environment, we would never think of allowing a nontribal casino to prop up its new building just across the street from your established gaming facility. In this instance, we’re being asked to consider having gambling not just across the street, but everywhere around you,” Dacey said. “You have to ask, what’s that going to do to your bottom line?” Dacey gave an overview of the commercial gaming interests and the powerful entities they have hired to help pass legislation that largely benefits them. “Indian country has to watch out because …none of these folks have any true concern for tribal sovereignty; what they have true concern for is making sure their side winsm,” Dacey said. Other panelists included Tom Brierton of Franklin Creek Consulting, Devendorf of Holland & Knight and Chuck Bunnell, chief of staff for the Mohegan Tribe. The panelists and audience members discussed their positions and strategies for the current Congress in an open session following the panel discussion.

The tribes have a number of champions in Congress, including Rep. Tom Cole, who wrote to Rep. Jeb Hensarling (R-Texas) and Sen. Patty Murray (D-Wash.), the co-chairs of the Joint Select Committee on Deficit Reduction—known as the Super Debt Committee—urging them not to include Internet gaming provision in their deficit reduction package. The Super Debt Committee was part of the compromise reached in negotiations over the summer between the Democrats and Republicans to raise the debt the federal government can have by $2.4 while calling for around $1.4 trillion in debt reduction over the next decade. The bipartisan committee has is charged with finding the cuts.

In his October 13 letter, Cole argued that that any Internet gaming “regime” not established through the regular committee process would threaten the “constitutionally recognized sovereignty of Indian Tribes.” He said revenues from Internet gaming could be as little as $5 billion over 10 years. He insisted that any internet gaming regime must follow long-standing federal law and policy and not subject tribal revenues to taxation. “Any Internet gaming provision that does not respect tribal sovereignty is unacceptable,” Cole wrote.