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Why Tribes Should Oppose Internet Gaming

Congress is now considering the legalization of gambling over the Internet. Indian country, which has invested billions of dollars in traditional “bricks and mortar” businesses, should be extremely worried about this effort. If successful, many of the over 300 tribally-owned gaming facilities risk losing significant patrons and profits.

Research on the impact of Internet gaming legalization is thin, but the primary study to date (Geiger-Johns 2010) concludes that tribal casinos could lose up to 25 percent of annual gross gaming revenues if legalization were to occur. Controlling $28 billion in gaming revenues is a major economic accomplishment for Indians. Given our history of economic deprivation, who would have guessed that this revitalization was possible? But we should not sit idly by while $7 billion in revenues and associated jobs is given away to the competition.

Indian country response to the Internet legalization threat has been mixed. A few tribes are actively pursuing efforts to get involved in on-line gambling. They see it as simply a logical expansion of the market given technological advances. Other tribes see it as a clear threat, seeing the great potential for unknown numbers of patrons to gamble in the comfort of their own homes rather than visit the tribal casino.

Our industry trade association, the National Indian Gaming Association, has strongly defended the need to protect existing tribal-state compacts. Both NIGA and I in Congressional testimony have argued that tribes should have the same rights as non-Indian casinos were legalization to occur.

The problem with legalizing Internet gambling, as the research suggests, is that it drains away customers who would otherwise be limited to visiting tribal casinos. The Poker Players Alliance argues that legalizing on-line poker would actually support “bricks and mortar” casinos since poker players eventually want to play against other humans as they get better.

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But powerful forces in the gaming industry, led by name-brand Nevada and New Jersey interests, are strongly promoting the legalization effort. States, too, are eager to get in on the action and start taxing on-line bettors. It doesn’t seem reasonable that this effort will end with only legalizing on-line poker. Our competitors and their allies in government are going “all in” for full legalization of all Internet gambling.

Losing 25 percent or more of gross revenues could cause widespread economic injury to tribal casinos, many of which have significant debt. Which is why Indian country needs to stop watching this economic tsunami in the making and start fighting against it. If the on-line gambling market opens wide, only a handful of providers will control the market. Do we really think tribal gaming brands can beat out the marquee gaming brands in a global on-line market? A few larger tribes might, but I seriously doubt – as the research suggests – that tribal casinos will gain new customers in an Internet gaming era.

There are actions that can be taken now to fight against this effort. We should be preparing our litigation strategy to protect existing compacts and investments. We should be educating and lobbying Congress to protect Indian country gaming—which employs tens of thousands of non-Indians as well as Indians—to protect the bird in the hand rather than chase the bird in the bush. The Internet might not be stopped, but it can be slowed down.

If we don’t act now and Internet gambling legalization occurs, the ensuing economic disaster in Indian country would be our own version of the “fiscal cliff.”

Robert Odawi Porter is the former President of the Seneca Nation of Indians and currently Senior Counsel at SNR Denton in Washington, D.C.