Gambling News | 21 Nov 2024

Warning: "We don't negotiate with terrorists" sent by California tribes to sweepstakes operators

Today (November 21), host Victor Rocha stated that there is no space for dialogue between California tribes and operators of sweepstakes in the most recent installment of the New Normal webinar series.  We must now investigate possible enforcement measures.
 U.S. and California flags
 In addition to Jason Giles, who is also the executive director of the Indian Gaming Association (IGA), Rocha served as co-host for the event.  Former chair of the National Indian Gaming Commission (NIGC) and principal at Chaudhuri Law, Jonodev Chaudhuri was our guest this week.

 Law enforcement and regulatory frameworks were central to the show.  In particular, Rocha and Giles wanted to know how the federal and state governments, as well as the NIGC, can combat the spread of sweepstakes websites.

 "You can tell the whole industry is responding to this," elaborated Rocha.  He made the observation that, in the case of Californian tribes, "you're starting to see the outrage" that usually follows efforts to invade tribal exclusivity.

 He went on to say that tribes and sweepstakes can't work together.  We don't negotiate with terrorists - this is not a dialogue or discussion, he stressed.

 That NIGC be "reactive" is Chaudhuri's main point.
 The intricacies of tribal gaming regulation were investigated by Chaudhuri, who occupied the position of NIGC chair from 2013 to 2019.  He went over the background of IGRA, the federal law passed in 1988 that laid the groundwork for Indian gaming in the United States.  The National Indian Gaming Commission (NIGC), a federal agency engaged in tribal gaming, was also founded by IGRA.

 Chaudhuri admitted that the commission had certain limitations in terms of enforcement.  The NIGC works as a go-between for the government and complements the efforts of the tribes, which are primarily responsible for regulation.  A little regulatory role is also played by states in some instances.  Additionally, the commission is heavily restricted to following IGRA's guidelines.  This makes it challenging to stay ahead of the curve when it comes to new innovations.

 "The NIGC has to be somewhat reactive in many ways," Chaudhuri said. 

 However, he did make notice of the fact that IGRA specifies that tribes must have exclusive proprietary rights in gaming activities and be the principal beneficiaries throughout the conversation.  Regarding the preservation of Indian territories, it lays out specific rules.

 It is a breach of IGRA, he stated, if gaming is taking place on tribal lands that aren't managed by the tribe.  "The real issue at hand is a discussion of how that relates to sweepstakes."

 Tribes in California have a range of enforcement options
 According to Chaudhuri, there are possibilities for enforcement in the event that someone or anything is found to be operating illegally on tribal property.  They apply to any kind of organisation, whether it's a commercial sweepstakes or a tribal one.

 As basic examples, he brought up fines and closure orders.  "When I was at the NIGC, I did letters like that," he remarked.  The NIGC can also determine if a game is Class II or III by reviewing it when a tribe requests it.  It seems like sweepstakes are one of those situations where the game supplier isn't participating, which makes reviewing the game far more difficult.

 Tribes have the authority to conduct such enforcement measures since they are the principal regulators.  As a hypothetical matter, Rocha and Giles wanted to know if the state's gaming tribes could band together and sue sweepstakes companies.

 It is theoretically feasible, although Chaudhuri refrained from endorsing the idea.  Still, he made it clear that tribal lands are affected and stated that "there is not one uniform compact" throughout California.  The state and each tribe have its own treaty.

 The role of compacts is significant in this context.
 Multiple people brought out the importance of compacts in this discussion.  In the event of an illegal expansion or violation of exclusivity, "a lot of compacts will have provisions in the revenue-sharing portions" that Chaudhuri noted would make the agreements null and invalid.

 Typically, when gaming occurs on Indian Country's territory, the landowner does not pay taxes to the state.  However, there are instances where states and tribes reach revenue-sharing arrangements.  For instance, according to their agreement with the state, the Seminole tribe in Florida pays hundreds of millions of dollars annually.  However, the tribe started withholding payments in 2019 on the grounds that the state was enabling commercial card rooms to invade its exclusive territory.

 To prevent the nullification of their income cut, states have an interest in halting sweepstakes, since they frequently do profit from revenue sharing.  However, not even the NIGC has been successful in convincing federal and state officials of that significance.

 "Education is an endless struggle," Chaudhuri remarked.  He elaborated by saying that the NIGC is always coordinating with other government bodies to bring attention to Native American concerns.  The same barrier that prevents sweepstakes also applies to other types of gambling that can be considered as an invasion of exclusivity, such as skill games and card rooms.

 "Every week, this gets worse."
 Before wrapping up, Giles and Rocha reemphasised how critical this issue is for the tribes of California.

 "This is becoming worse every week," Giles bemoaned, bringing up the recent opening of the Legendz social casino and sportsbook in 43 states, among which was California.  Using the example of a corporation constructing a dam downstream from a reservation, Rocha agreed and offered an illustration.  He warned that while the effects may not be immediately apparent, they will surely have an impact on infrastructure in the future.

 Rocha stated that in order to address these locations more directly in future episodes, it would be necessary to speak with tribes in places like Connecticut.

 "We must take the lead, even though the industry is trailing behind us," he continued.  "We're quite familiar with that situation."