It is highly probable that by the conclusion of this year, a tribal government representing a Native American tribe located in Michigan will officially authorize and process the initial mobile sports wager in the state.
The tribe in question is potentially Bay Mills Indian Community, who recently revealed a collaboration with DraftKings to oversee their online sportsbook, online casino platform, and retail sportsbook operations.
During a webinar held on July 29 and organized by Victor Rocha of Pechanga.net and the National Indian Gaming Association, Bryan Newland, the president of Bay Mills, shared insights on how Michigan tribes have embraced the concept of online gambling.
Why Michigan tribes saw value in online wagering
Indian tribes in numerous states view internet gambling as a significant concern, as it poses a significant risk to their tribal governments and communities, which heavily depend on revenue generated by their physical casinos.
During a hearing in June, tribal leaders in California expressed concerns that the incorporation of mobile betting apps into a bill had the capacity to cause significant harm to tribal economies.
Newland highlighted three exceptional factors specific to Michigan that piqued the tribes’ interest in iGaming.
- The iLottery in Michigan had already enabled online gambling.
Newland expressed that in Michigan, the presence of three Detroit casinos and the state internet lottery continuously posing a threat to our business, we had no choice but to adapt or face extinction in the realm of online gaming.
- The tribal casinos in Michigan are situated in various locations across the state, including rural areas. Specifically, Bay Mills casinos are found in the eastern Upper Peninsula, approximately 400 miles away from Detroit. Unfortunately, these casinos have experienced a continual decrease in revenue following the economic crash of 2008.
According to Newland, it provides us with an opportunity to equalize the competition and engage in a market where the significance of a physical store is overshadowed by the quality of the product you provide.
- Michigan has the ideal number of properties, including 12 tribes authorized for online gambling and three commercial casinos, to attract top-notch online operators and provide competitive platforms.
Opting for a commercial agreement instead of IGRA
The uncertainty surrounding the ability of tribes to accept online bets from individuals outside their reservations, as per the Indian Gaming Regulatory Act (IGRA), is a primary concern for tribes nationwide regarding iGaming.
The location of a bet is not clearly defined. Following the legal ruling in California v. Iipay Nation of Santa Ysabel, the National Indian Gaming Commission adopts the stance that wagers originate from the bettor’s physical location.
According to Newland, the Michigan tribes expressed a preference for conducting online gaming activities within the framework of IGRA. However, they believed that achieving this would necessitate a federal-level legislative amendment.
A bill was presented by Congress to eliminate federal obstacles for federally recognized Indian tribes in providing mobile sports wagers. However, the legislative process in Congress is often slow-moving. Consequently, Michigan tribes have chosen to engage in a commercial agreement solely with the state, enabling them to offer online sports betting and iGaming services.
Newland expressed his excitement, stating, “At Bay Mills, we are eager for Congress to align with the market. However, we have taken the practical decision to proactively accomplish our goals.”
Maintaining tribal sovereignty in commercial deal
The paramount principle for Native American tribes is acknowledging their status as sovereign governments.
Commercial deals can present challenges as tribes are cautious about jeopardizing their sovereignty.
Newland stated that the commercial aspect of our business is subject to regulation and licensing. We have deliberately separated it from our physical store to safeguard our ability to maintain control over our operations within the regulatory framework. We aim to prevent the state from gaining unauthorized access to our operations, which we have not explicitly agreed upon.
He drew a parallel between Connecticut tribes engaging in commercial agreements to run casinos outside of reservation lands.
Apart from the online aspect, it closely resembles numerous instances where highly successful gaming communities have engaged in commercial gaming.
A hybrid of commercial and tribal gaming
The tribes were deeply appreciative of the state’s single gesture, which had a lasting impact.
The tribes observed that the bill included a provision stating that Detroit would receive 30% of state tax revenue generated by its casinos, specifically for city services. This provision aimed to safeguard the city from potential financial losses in the event of a decline in brick-and-mortar business due to internet gaming.
The tribes claimed that they would encounter the identical issue, prompting them to be granted a 20% rebate destined for tribal governments.
Newland stated that the situation in Michigan’s legislation is an exceptional illustration of a blend between commercial gaming and governmental gaming. This is because it acknowledges our government’s status.
Can other states learn from Michigan tribes?
Newland emphasized his uncertainty about the applicability of Michigan’s approach in other states, as he acknowledged the distinct dynamics and circumstances that vary from state to state.
In terms of tribal gaming, California differs greatly from Michigan. In California, tribes hold a significant presence in the industry and their casinos were flourishing, until the impact of the pandemic.
Because there are numerous tribes in California, it becomes challenging for all of them to develop successful mobile platforms. Consequently, reaching a consensus on online wagering becomes a complicated matter for them.
According to Newland, California is home to over 100 tribes and has prominent casinos in major cities. He believes that in such areas, the number of people losing in internet gaming would surpass the number of winners, making it unlikely to thrive there. Typically, only a few players tend to dominate internet commerce across various industries. Considering the abundance of gaming tribes in California, it is likely that there are more tribes than successful internet gaming sites in the state.
The coronavirus pandemic has caused economic difficulties for all tribal casinos across the country.
Newland stated that iGaming has the potential to generate significant revenue, which can help fund government operations. This is crucial as our brick-and-mortar casinos, like other gaming tribes across the nation, are currently incurring substantial losses. Therefore, the upcoming launch of iGaming is of utmost significance to us, as it will enable us to sustain our operations and cater to the needs of the people.
