The Mouthpiece


By Martin Owens
Contributing Editor


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    Martin Owens

    A Bigger Reservation Online?

    Internet gambling and Indian gaming may not be opponents after all.

    "Love your enemies, just in case your friends turn out to be bastards."
    Anonymous


    Are Gambling Tribes Threatened by I-Gaming?

    Philadelphia, PA (Sports Network) - Empty coffers and declining tax rolls, the continuing effect of bad economic times, have undercut traditional qualms and moral objections about state-sponsored Internet gambling. California,, New Jersey, Florida, Iowa and even New Hampshire are openly considering Internet poker, and many others are watching intently from the sidelines. The need for revenue has so completely trumped all other concerns that now, the biggest opposition to state licensed I gaming does not come from the concern for morals anymore, but from other anxieties about money. The first thing that existing gambling businesses assume is that I-gaming is going to steal their customers.

    That ain't necessarily so, as we will see in a minute. But if it were true, then the group most in danger from Internet gambling would be America's Indian gaming industry. About 220 tribes have opened gambling businesses on their respective tribal lands since the Indian Gaming Regulatory Act of 1988 was passed.. U.S. Indian gaming has mushroomed into an entertainment industry of its own, estimated at up to $25 billion annually. Tribes whose lands were located close to major population centers especially cashed in, as with the Foxwoods casino in Connecticut, the Seminole Hard Rock in Florida, and the Agua Caliente resort outside of Los Angeles.

    But there was , and is, one potential drawback: Indian gaming as we now know it, can only take place in Indian country. Even Congressman Frank's proposed licensing scheme for nationwide Internet gambling doesn't overcome that problem. Electronic or not, a customer has to physically be in an Indian controlled gaming facility to place a bet there. There have been suggestions that different tribes could link up. A gaming network between a number of Indian facilities might even technically cross state lines- but the requirement to stay on tribal land would still apply.

    And in any case, most of the tribes haven't been very excited by the possibilities of the Internet until just recently. A tangible brick-and-mortar operation is what they have in mind. So the Internet seemed to represent nothing but a threat. But, in fact, it wasn't. To the contrary, it's a place that the tribes, like every other facet of the gaming industry, need to get familiar with.

    Years of study have revealed that the American gambling public can be broken down into discrete demographic groups. Horseplayers, for instance, tend to be middle-aged to elderly white males from working or small business backgrounds. Blue-collar couples are very fond of the "weekend getaway" to play the slots in Reno or Atlantic City. Bingo tends to be the preserve of moms and grandmas across several age groups. But the Internet gambler, including the Internet poker player, is a beast from a different part of the forest. Your average Internet player is a white, male, college-educated professional between about 22 and 40, with a respectable income and relatively few family commitments, who won't often go to the brick and mortar places but who will sample the games online. So now it becomes clear: established gaming interests who reach into Internet gambling are not risking their existing customers, but gaining new ones. This was, after all, exactly what happened with horse racing . Today 29 states use the Internet in some fashion to help them attract and service bets on their licensed races. So it is becoming clearer every day that use of the Internet will be a requirement for survival as the gambling market becomes even more flexible, digital and global.

    Getting Off the Reservation

    Still, some tribes have lingering doubts. They remember that the big advantage of Indian gaming was that no one had to go all the way to Vegas anymore. And by comparison, Internet gaming is even handier; you don't even need to leave the house. And if they don't even have to leave the house, why would they even bother to make that shorter trip to the Indian facility? After all, even to bet on the Internet the customers would have to come into the tribal facility, wouldn't they?

    Well, the legal answer, as usual, is an interesting blend of "yes, but", and "that depends".

    To bet at a 100% tribal owned, 100% tribal supervised operation, that would be true. Even so, the states and the tribes could agree together to modify their gaming compacts to reflect the use of the Internet. Relatively simple changes in state gaming statutes could take care of this matter also, and legally adjust the location which a tribe could use to catch customers. And of course, nothing prevents tribes from investing in Internet gaming businesses which, as licensees of state authorities, would not have their location limited to on-reservation only.

    New Model

    The trick, however, is to climb out of the old boxes. The new model is not Indians versus everybody else, it's whether the Indians want to fit into a state regime for licensing Internet gambling, or a national one. And everything points to the state arena as being far more favorable to tribal interests.

    Indian gaming businesses make a relatively large impact in the smaller state- level frame of reference. The prime example, of course, is California, where 66 tribes have signed gambling compacts with the state government. California's Indian gambling is a market worth about $8 billion a year. As a result, the tribes are a power to be reckoned with in Sacramento.

    On a national level, however, tribal gaming interests, unless they could be welded together in a way never seen before, would rapidly become small fish in a very big pond.

    The marketing influence of nearby Indian resorts and casinos is very strong in a state frame of reference, especially where, as with California, the tribes have a legal monopoly on casino style gambling within state borders. Playing coast to coast, no monopoly, would be far different, especially against Vegas -size gaming companies with tens of millions of names in their databases.

    But if the states strike first, and get their systems in place, then a gaming tribe which is a part of such a system would automatically have staked a claim, and earned a seat at the table, even if a national licensing program should come along and make the table a lot bigger. But what the tribes (and all the other stakeholders) have to realize is that a coordinated, cooperative effort is needed. The first state that licenses I-gaming will have a big and obvious advantage. But that's all that's left to decide- who will be first. This thing is moving too fast to stop, and it's too big to steal.

    Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose,( Mary Ann Liebert Publishers , 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com Comments and inquiries welcome at to mowens@trade-attorney.com.

    Copyright 2010


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