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Insight | Analysis

Sports betting and igaming regulation is sweeping the States, and in territories where tribes hold exclusive rights or market-leading positions, they are having to weigh up the benefits of new verticals with drawbacks such as a loss of exclusivity. How are operators in Indian Country engaging with this balancing act? By Daniel O’Boyle

As tribal operators are presented with perhaps their biggest new opportunity in decades,  exclusivity—a central pillar of tribal gaming in many states—has faced its biggest challenge.

Deals to ensure that tribes alone may offer gaming are a key part of tribal compacts in many states. Valerie Spicer, founding partner of Trilogy Group and former executive director of the Arizona Indian Gaming Association (AIGA), says exclusivity both helped ensure an investment in gaming was worth it for tribes, and provided states with a cut of income.

“Exclusivity started way back when tribes first started negotiating compacts,” she says. “Gaming was clearly going to be a major investment, and prior to tribal gaming coming along, tribes didn’t necessarily have a major economic engine for their government.

“This new enterprise was going to take substantial investment and to protect those investments, that’s how exclusivity came about. And a state can’t tax a tribe, that’s a sovereign taxing a sovereign, so exclusivity also allowed states to take some sort of revenue share.”

But the world of gaming has changed massively since the launch of tribal gaming, particularly as legal betting and igaming came to the US in recent years.

At first, the states that initially opened up their online betting and gaming markets tended to be those dominated by commercial casinos, as willingness to expand land-based gaming to let commercial players in often extended to the online sphere.

While tribes in some states could offer sports betting, this rarely included an online component.

The first major change came in Michigan, which began offering online betting and gaming—with both launching in January 2021. That in particular was seen as something of a watershed as it marked one of the first times that tribal and commercial operators were set on an equal footing.

From there, things accelerated. The year to date has seen a new wave of efforts across the US to introduce online betting, igaming or both. That included many states where tribal operators held all the cards.

In these states, tribes—which often held the exclusive right to offer gaming—frequently had to weigh the benefits of expansion with potentially allowing other operators in on the action.

Government Gaming

In Washington, 16 of the state’s 29 federally recognized tribes have recently agreed new gaming compacts with the state Gaming Commission.

Here, while new forms of gaming—most notably sports betting—are on offer, it remains on tribal lands, with the state legislature agreeing that mobile betting should only be allowed on-premises.

Rebecca George, executive director of the Washington Indian Gaming Association, says this fits what Washington voters have tended to support.

“We know that the voters in Washington like gaming in a limited capacity,” George explains. “They like it, but they like it to be sort of over there, they can gamble if they want, but it’s not in their face.”

To George, the idea of allowing other operators into the market is a non-starter. As tribes are sovereign governments and revenue benefits tribal communities, she says that interfering would be akin to stepping in on the state’s lottery monopoly.

“The framework that the state and the tribes have agreed is that gaming in Washington benefits the people in Washington and not corporations,” she says. “So when I hear people talk about exclusivity, if you compare tribal gaming to state gaming, the position becomes clear.

“You would not be talking about whether or not the state should have exclusivity in running a state lottery. The state isn’t going to consider a proposal that would hurt itself, and that money goes to the people of Washington. And that’s exactly what tribal gaming money does.

“The money from the Washington lottery goes to education, and money from tribal operators goes to education, healthcare, natural resources, elderly services, the list goes on. And the benefit is not only to our own tribal members, but to our own communities, often very poor communities that desperately need basic infrastructure.”

Poison pilled

Arizona’s tribal compact has been controversial among some for allowing sports venues their own piece of the pie, ending the tribes’ exclusivity on gaming. Many of these venues, such as Scottsdale Golf Course and the Phoenix Suns Arena, have been quick to agree deals with major commercial operators.

However, Spicer says that in order to understand the decision to allow new parties in, one has to look back over the history of Arizona tribal gaming.

Under a previous compact agreed in 2002, the state’s share of tribal revenue was set between 1% and 8%, but could be lowered to 0.75% if exclusivity is waived.

“The important thing about Arizona and the new compacts, is understanding the old compacts,” Spicer says. “And in Arizona you have tribes close to a large metropolitan area, tribes in rural settings, tribes who have gaming compacts but don’t operate a casino of their own, and lease their machines to another tribe. So in expanding gaming, you had to look at all of these factors.

“The governor called this update ‘the modernization of the compacts’, and way back when the compacts were initially done, nobody was contemplating sports betting or igaming.”


Spicer says that the “poison pill” within the 2002 compact threatened to cause major problems for some of the tribes located in more remote areas.

“A lot of people have said things like, ‘oh gosh, they gave up a lot of exclusivity,’ but by bringing in leagues and sports venues, it helped bring that revenue share down and that was really necessary for the more rural tribes.”

Governments only

In Connecticut, where the Mohegan Tribe and Foxwoods operator the Mashantucket Pequot Tribe have become two of the most successful tribal gaming operators in the nation, a chance for gaming expansion presented a clear opportunity for tribes.

But while the tribes clearly held exclusive rights to operate casino games, sports betting presented a more complicated issue.

Chuck Bunnell, chief of staff for the Mohegan Tribe, says the tribe maintains it does have this right, but acknowledges that opponents have an argument.

“What was in question was whether sports betting was included as a casino game, because it was not mentioned specifically,” Bunnel says. “In some jurisdictions it is mentioned outright, but in our compact, when we negotiated it, it was the early ’90s and it was illegal federally. PASPA had not been overturned and would not be for a long time.

“So at the time, it just didn’t seem like it needed to be named. But we have taken the position all along that sports wagering should be included there if it ever becomes legal.”

So rather than engage in a potentially lengthy and costly court battle over its exclusivity, the tribes allowed the state lottery into the mix. Bunnell says an important distinction was that while tribes were willing to let the state itself into the market, they wished to keep operation of gaming on a government level—whether state government or tribal—rather than letting commercial operators in as well.

“With sports wagering, we said that this—between the two tribes and the state—was a government-to-government discussion, and that no other commercial operators had a seat at the table because of agreements that already existed,” he says. “And through that discussion, the two tribes offered to bring the state into the sports wagering discussion alongside us, through the Connecticut Lottery.

“So each of us would have a skin and we’ll divide that space up. I would say we’d divide it up equally but of course it will depend on who can offer and market the best platform.”

In return, opening up these negotiations on betting may have led to speedier work to bring about legal igaming, a vertical that’s both set to be more lucrative and specifically mentioned as the exclusive purvey of tribes.

“It was never a question for anybody, including the state, that any other outside operator was going to be allowed into the igaming space, so it’s irrelevant to even think about what that would have meant because it would have destroyed a 25-year relationship,” he continues. “Naturally, it was never really on the table.”

Not all sunshine?

But while Connecticut tribes ensured they would sidestep any major legal challenges, in Florida, an expanded compact may have a more complicated path.

In April, the state’s Seminole Tribe agreed a deal with the state where it could offer sports betting exclusively, both at its casinos and online across the state.

“It is a historic and mutually beneficial partnership between the state and Seminole Tribe that will positively impact all Floridians for decades to come,” tribe chairman Marcellus W. Osceola Jr said in the wake of the announcement.

As part of this online offering, the tribe may partner with the state’s pari-mutuel operators, which carry a long history in the state.

However, despite no mention of a way in for commercial online operators, Jim Allen, chief executive of Seminole Gaming and chairman of Hard Rock International, said in a Senate hearing on the bill that there have been discussions about getting some of the giants of online betting involved.

“I want to make sure that there isn’t a perception that companies like FanDuel and DraftKings and Barstool, and obviously the pari-mutuels themselves, will not have an opportunity,” he said “We actually have proposals from some of those companies, specifically DraftKings and FanDuel, and I’ve met personally with Barstool and many of the other companies.”

But the constitutionality of online betting remains in question. Under Amendment 3 of Florida’s constitution, any expansion of gaming besides offerings on tribal lands would require a constitutional amendment.

Whether that includes sports betting, and whether a bet that is processed at a server located at a Seminole casino is considered on or off tribal lands, remains unclear.

The compact has already been weakened since it was first agreed. While iGB North America understands that a provision to open up negotiations on igaming within the next 36 months was a key part of the bill for the tribe, this segment was ultimately removed.

Members of the state House of Representatives made it clear they would not pass a bill that could open the door to online casino and met with Seminole representatives to renegotiate the deal.

But despite the possibility of a legal challenge, the tribe and governor are hopeful of quick progress, with plans for Florida’s take on tribal sports betting to go live just before the NFL and NCAA football seasons begin in September.


Yet regardless of state, tribes say they feel that compacts they agree may not necessarily act as a template that will be copied across the nation. Instead, as compacts tend to be borne out of individual circumstances, tribes find that each one ends up suited to a specific situation.

“I think our situation was so unique here to how things are in Connecticut,” Bunnell says. “We were cutting a new path here. We really did not look at other state and tribal agreements in terms of setting a template.”

George expresses a similar sentiment, citing Washington residents’ preferences for a relatively quiet gambling market.

“Washington is such a unique market when it comes to gaming and what the people of Washington want, so what we have come up with is a very careful and deliberate system,” she says.

“Of course, we watch what is happening in other states, but there’s a lot we have to change to make things work for us.”

And while exclusivity agreements play a big role in negotiations, Bunnell says there may be an even more important factor in securing a solid framework for tribal gaming expansion.

“I think you’ll see across the United States, that depending on what exclusivity exists for the tribe within the jurisdictions, and frankly, how much respect there is between the state and the tribes, you can get very different outcomes,” he says. “Because if there isn’t that kind of respect and appreciation of that sovereign relationship, it doesn’t go as well.

“It’s a combination of mutual respect and putting that respect into paper with compacts.”