Abstract
“Three years removed from the federal repeal of PASPA [Professional and Amateur Sports Protection Act], legalized sports betting is sweeping across the country and its expansion is sure to continue.” 1 In 2020, New Jersey brought in $49.4 million in new tax revenue through sports betting. 2 Although the legalization of sports betting has been spreading across the United States over the past several years, 3 the practical reality of legalizing sports betting is much more complicated than it may seem. Not only do state legislatures need to pass new laws, but, perhaps most importantly, any state with tribal casinos needs to ensure that any action taken comports with existing tribal-state compacts and is respectful of the unique relationship between tribes and states.
Tribal-state compacts govern Class III gaming on reservations under the Indian Gaming Regulatory Act (IGRA). 4 In seeking to legalize sports betting, the state must first consider existing obligations under tribal-state compacts and, if need be, seek to renegotiate with the tribe to amend the compact or enter into a new compact. Not only that, once a state legalizes sports betting, the tribe can then either engage in sports betting depending on the language of the tribal-state compact, or the state and tribe may need to negotiate with each other to amend the tribal-state compact to include sports betting.
This article provides an overview of the process for allowing sports betting through the lens of tribal-state compacts. Within each state, the provisions of each compact with the state and any particular tribe may differ. Therefore, each tribe and the applicable compact it has with the state must be considered on a case-by-case basis.
I. Background
In Murphy v. National Collegiate Athletic Association, the United States Supreme Court struck down the Professional and Amateur Sports Protection Act, allowing states to authorize sports betting. 5 The Court's decision immediately sparked interest across states regarding the potential of conducting sports betting. However, because many tribal-state compacts became effective before 2018, most either expressly prohibit sports betting or are silent on the topic.
In 1988, Congress enacted the IGRA to provide a framework for the conduct of gaming on Indian lands. 6 The IGRA establishes the National Indian Gaming Commission (NIGC) and the regulatory structure for tribal gaming in the United States. 7 The IGRA separates different forms of gaming into three classifications: Class I, II, or III. 8 Each type of gaming fits within one of these three classifications.
Under the IGRA, “Indian tribes have the exclusive right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity.” 9 Sports betting is considered a Class III game. 10
Based on the foregoing, for a tribe to lawfully engage in sports betting on its lands, the activity must: (1) be located in a state that permits such gaming for any purpose by any person, organization, or entity; (2) be permitted pursuant to an effective compact; and (3) be authorized by a tribal ordinance or resolution approved by the NIGC. 11
II. Tribal-State Compacts
For a tribe to conduct sports betting on the reservation and a state to permit sports betting off the reservation, both parties must consider any obligations under existing tribal-state compacts. The compacts governing Class III gaming activities obligate the state and the tribe to negotiate in good faith. 12 If litigation ensues, the courts carefully review the pertinent proceedings between the states and tribes to determine whether “good faith” was indeed part of the negotiations. 13
In states where tribes already conduct Class III gaming pursuant to a tribal-state compact, the tribe likely will be able to conduct sports betting if the following are in place: (a) the state “permits” sports betting; (b) an existing compact that includes sports betting as a permissible form of Class III gaming (or conversely, does not prohibit sports betting); and (c) an existing gaming ordinance that permits sports betting—if not, they will need to enact a new or amended gaming ordinance and obtain approval of the ordinance from the NIGC. 14 If these components are not met, the tribe will likely need to seek to negotiate a new or amended compact with the state that includes sports betting as a permissible form of Class III gaming. The tribe also may need to wait for the state to pass legislation permitting sports betting.
For tribes and states with existing tribal-state compacts, there are two major pathways to incorporating sports betting into tribal gaming operations—reinterpretation or renegotiation.
Determining which pathway is best depends on whether: (1) the state already “permits” sports betting; 15 (2) the existing tribal-state compact grants the tribe exclusivity over Class III gaming; and (3) the tribal-state compact prohibits sports betting.
III. Does the State “Permit” Sports Betting?
Tribes likely cannot conduct sports betting unless the state “permits” such gaming. The IGRA's requirement that the gaming activity be “located in a State that permits such gaming for any purpose by any person, organization, or entity” has generated at least two different approaches regarding the scope of negotiations required between tribes and states under the IGRA. 16
In Northern Arapaho Tribe v. Wyoming, the court called the two approaches the “categorical approach” and the “game-specific approach.” 17
The “Wisconsin” analysis or “categorical” approach requires courts to first review the general scope of gaming permitted by the state. See, e.g., Lac du Flambeau Band of Lake Superior Chippewa Indians v. Wisconsin, 770 F. Supp. 480 (W.D.Wis.1991). If the state permits any form of Class III gaming, the tribe must negotiate to offer all forms of Class III gaming because the state is merely “regulating,” rather than “prohibiting,” this type of gambling. Id. at 484–88. This categorical approach has been adopted by at least one circuit. See Mashantucket Pequot Tribe v. Connecticut, 913 F.2d 1024, 1031–32 (2d Cir.1990).
The “Florida” analysis or “game-specific” approach requires courts to review whether state law permits the specific game at issue. See, e.g., Coeur d'Alene Tribe v. Idaho, 842 F. Supp. 1268, 1278 (D. Idaho 1994) (citing Seminole Tribe of Florida v. Florida, 1993 WL 475999 (S.D. Fla. Sept. 22, 1993)). If the state allows a particular game for any purpose, it must negotiate with the tribe over that specific game. Id. at 1279–80. Similarly, if the state entirely prohibits a particular game, the state is not required to negotiate with the Tribe as to that game, even if the state permits other games in the same category. Id. Under this approach, the state's permissive treatment as to one type of Class III game does not mean that the state must negotiate with tribes as to all Class III games. At least two circuits follow the “game-specific” approach. See Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250, 1257–58 (9th Cir.1994); Cheyenne River Sioux Tribe v. South Dakota, 3 F.3d 273, 278–79 (8th Cir.1993). 18
Under either approach, “the legislative history [of the IGRA] reveals that Congress intended to permit a particular gaming activity, even if conducted in a manner inconsistent with state law, if the state law merely regulated, as opposed to completely barred, that particular gaming activity.” 19 Attempting to limit negotiations based on state law restrictions against commercial gaming has been generally rejected by courts. 20
Therefore, whether a state “permits” sports betting is dependent on the state's laws and the approach the state applies to determining the scope of negotiations.
IV. Reinterpretation
The reinterpretation of an existing tribal-state compact and state laws can involve either the categorical approach or the game-specific approach. The key to reinterpretation is an expansive compact that permits “any and all Class III games,” or contains similar wording to the same effect.
With respect to the categorical approach, if the state permits any game of chance, 21 there is likely no hurdle with the analysis regarding whether the state “permits” sports betting. For tribes in states with broad tribal-state compacts, the tribes may not need to seek to renegotiate their compact, but rather assert the compact already provides for sports betting due to its expansive language.
With respect to the game-specific approach, if the state passes a law legalizing sports betting, even if only exclusively legal for the tribe, for tribes in states with broad tribal-state compacts, tribes may not need to seek to renegotiate their compact, but rather may begin engaging in sports betting as soon as the state passes a law legalizing sports betting.
The best example of successful reinterpretation is the allowance of sports betting at the tribal casinos in New Mexico. The New Mexico compacts are quite broad in terms of authorized Class III gaming—allowing tribes to offer “any or all forms of Class III gaming.” 22
The foregoing language has been interpreted as expansively as the plain text suggests. In 2015, the New Mexico attorney general determined that the intent of the legislature had been to allow tribal casinos to conduct any form of Class III gaming, without exception. 23 “Betting” and “gaming activity” are generally prohibited in New Mexico. 24 Although these prohibitions cover sports betting, 25 they explicitly exempt any betting or gaming “otherwise permitted by law.” 26 New Mexico permits Class III betting made pursuant to a Class III tribal-state compact. 27 Thus, tribes operating casinos in New Mexico are legally authorized to offer sports betting without amending their existing tribal-state compacts.
The more favorable interpretation for tribes wanting to offer sports betting is the categorical approach because it does not require any additional action on the part of the tribe or the state; however, the applicable approach will depend on the specific jurisdiction. For tribes without expansive tribal-state compacts, reinterpretation of an existing tribal-state compact is likely not an option.
V. Renegotiation and Amendment Considerations
Tribes without an existing tribal-state compact that is broad or includes sports betting as a permissible form of Class III gaming likely will need to seek to renegotiate their compacts.
If a tribal-state compact expressly lists the Class III games in which the tribe may engage and sports betting is not specifically listed, the tribe likely will need to seek to renegotiate the compact with the state to include sports betting. For example, in the Amended and Restated Tribal-State Compact Between the State of California and the Viejas Band of Kumeyaay Indians (the “CA Compact”), the Tribe is given exclusive rights to engage in gaming in the state of California. 28 This exclusivity provision is identical in all of the tribal gaming compacts in the state of California. The CA Compact authorizes the Tribe to engage in certain gaming activities expressly listed in the CA Compact, but prohibits Class III gaming activities that are not expressly permitted. 29 The CA Compact authorizes gaming devices, any banking or percentage card game, and the operation of any devices or games authorized under state law to the California State Lottery. 30 There is also a specific prohibition on Class III gaming that is not expressly authorized in the CA Compact, 31 which would include sports betting.
Additionally, as part of some tribal-state compacts, the tribe enjoys the exclusive right within the state to conduct all types of Class III gaming with limited exception in exchange for a revenue sharing obligation to pay the state a portion of its Class III gaming revenues. 32 And oftentimes, the compact contains a “poison pill” provision that stipulates compacts may become null and void, or other adverse consequences ensue, if either side violates the terms of the agreement. 33 For instance, if a tribe operates more table games than allowed in the compact, or the state grants gaming rights to non-tribal entities, the action may trigger the “poison pill” and could jeopardize all or part of the tribal-state compact. In such circumstances, if the state wants to permit sports betting on non-tribal lands (“off-reservation”), the state likely will need to negotiate with the tribe to include provisions allowing the state to permit such off-reservation gaming without triggering the “poison pill.”
Renegotiation will likely result in the need for either new tribal-state compacts or compact amendments. 34 For a compact or amendment to become effective, it must be approved by the Secretary of the Department of the Interior (“Secretary”), as provided for under the IGRA. 35 The tribe and the state should submit the new compact or amendment for approval only after it has been legally entered into by both parties. 36
Once the tribe and state agree to the new compact or amendment, it is submitted to the Secretary for approval. 37 The Secretary has 45 days to approve or disapprove it. If the Secretary takes no action within that time, the compact or amendment is “deemed approved” to the extent it does not conflict with the IGRA. 38 The compact or amendment is considered valid, binding, and effective once it is published in the Federal Register. 39
In April of 2021, Arizona Governor Doug Ducey signed tribal-state compact amendments with 20 tribes, which include expanded Class III game offerings at the tribal casinos. Sports betting (called “event wagering”) is among the expanded gaming available. 40 In exchange for the tribes' continued exclusivity of Class III gaming in the state—other than limited exceptions for off-reservation gaming—certain tribes will continue to pay revenue sharing to the state. Additionally, the state of Arizona enacted a new law which legalized sports betting on and off the reservation, which aligned with the compact amendments. 41 Arizona also will benefit from revenue sharing paid by the off-reservation gaming venues for sports betting, daily fantasy sports contests, and keno.
The Secretary affirmatively approved the Arizona tribal-state compact amendments on May 21, 2021. The amendments became effective on May 24, 2021, when they were published in the Federal Register. 42
VI. Tribal Sports Betting in other States
The tribes and states that have already launched sports betting can serve as examples of the process. There are active sportsbooks at tribal-owned properties in multiple states, including Colorado, Oregon, Mississippi, New York, New Mexico, Michigan, and North Carolina. 43
In Colorado, Sky Ute Tribal Casino launched a statewide sports betting app in 2020. 44 In Oregon, the Chinook Winds Casino owned by the Siletz Tribe offers sports betting. 45 In Mississippi, tribal casinos owned by the Mississippi Band of Choctaw Indians have active sportsbooks. 46 Mississippi tribal casinos Bok Homa, Golden Moon, and Silver Star—all part of the Pearl River Resort—allow mobile wagers while on the casino premises via an app. 47
In New York, sports betting is permitted at the tribal casinos. 48 Out of the eight federally recognized tribes in New York, three tribes currently conduct gaming pursuant to Class III compacts. 49 Under the New York tribal-state compacts, the tribes can offer Class III gaming, including sports betting, provided the tribes conduct the games in accordance with state-approved specifications. 50 Earlier in 2021, New York legalized mobile sports betting; however, it is unclear how and if tribes will be able to offer mobile sports betting. 51
In June 2020, the Nottawaseppi Huron Band of the Potawatomi in Michigan opened Dacey's Sportsbook at the FireKeepers Casino, the first tribal casino retail sportsbook in Michigan. 52 Additionally, the Nottawaseppi Huron Band signed a deal earlier in 2021 with Scientific Games to conduct online and mobile sports betting. 53 At present, there are 23 tribal casinos in Michigan permitted to offer sports betting. 54
In 2020, the Eastern Band of Cherokee Indians and the state of North Carolina amended their tribal-state compact to include sports betting as an authorized Class III gaming. 55 This amendment was negotiated after North Carolina passed legislation permitting sports betting on Indian lands within the state. 56 The Tribe now offers sportsbooks at two casinos in North Carolina. 57
In Washington, 15 tribes have sought to amend their tribal-state compacts to include sports betting. 58 As of early June 2021, 11 of the 15 compacts still required a final vote by the commissioners of the Washington State Gambling Commission, 59 then the signature of each tribe's tribal chair and the governor. 60 Once signed by both the tribal chair and the governor, each tribe will send the amendment to the Secretary of the Department of the Interior for review. If approved, the amendments are considered effective upon publication in the Federal Register. 61
In May 2021, the Florida legislature approved a new compact between the state and the Seminole Tribe of Florida, essentially providing the Tribe with exclusive rights to sports betting on and off the reservation in the state. 62 The compact, however, has been viewed as controversial with respect to mobile sports betting because of the placement of servers on tribal lands while patrons can place bets anywhere in the state of Florida, including off the reservation. As of early June, the compact had not yet been submitted to the Secretary to commence the 45-day IGRA review process.
Lastly, the Pokagon Band of Potawatomi Indians finalized a Class III gaming compact with the state of Indiana in May 2021, which includes sports betting. 63 As with the Seminole Compact, the Pokagon Compact had not yet begun the Secretarial review process at the time this article was prepared.
VIII. Conclusion
Whether it is reinterpretation or renegotiation