The National Indian Gaming Commission (NIGC) has released a new advisory bulletin that warns Native American tribes of key considerations and potential restrictions they face under the Indian Gaming Regulatory Act (IGRA) when rolling out sports betting.
Speaking at a meeting of the New Mexico Association of Indian Gaming Commissions, NIGC chair E. Sequoyah Simermeyer explained that the bulletin was designed to clarify the legality of sportsbooks on tribal lands, following numerous queries from operators.
Since the repeal of the Professional and Amateur Sports Protection Act (PASPA) in May 2018, Simermeyer noted, tribes in Mississippi, New Mexico and New York had joined a Nevada-based tribal operator in rolling out wagering.
This is permitted, as sports betting is considered a form of Class III gaming, which can be rolled out by tribes that have a state compact approved by the US Department of the Interior. The bulletin advises tribes to check whether Class III gaming is covered by their existing compacts, or if it should be amended to include sports betting.
There are currently four options or models for tribes to consider when preparing to launch wagering, it continued. These range from complete control – when tribes manage all aspects of a sportsbook – to a sportsbook wholly owned and operated by a third party, but hosted on tribal lands.
In between, there is the option of having a sportsbook operated by a tribe, but using third-party data, or a tribal-owned sportsbook managed by a third party.
When third party partners are involved, the NIGC explained, management agreements must be submitted to its chair for approval. Failure to do so, or to operate an unauthorized sportsbook, would constitute a major breach of the IGRA, and likely lead to stiff financial penalties.
Managed services agreements, meanwhile, are also capped so that tribes can pay no more than 30% of gross gaming revenue generated through the sportsbook to their partner. In exceptional cases, at the NIGC chair’s discretion, a 40% revenue share agreement may be permitted.
In the case of allowing a non-tribal operator to run a sportsbook on Native American lands, the host tribe would be expected to act as a de-facto regulator. It would be expected to apply licensing standards that are at least as restrictive as those imposed by the state in which the offering is based.
Key to any such agreement is that gaming on tribal lands is carried out for the sole proprietary interest of the Native American entity with the state compact.
To determine whether an agreement violates this tenet of the IGRA, the NIGC expand that it looks at three criteria. First, the term of the relationship will be looked at, with longer relationships more likely to be considered supporting the partner’s interest as much as or more than the tribe’s.
Second, the amount of revenue that is to be paid to the third party, then finally the level of control afforded to the third party over any element of the gaming activity. The NIGC noted that its Office of General Counsel has declined to ratify agreements with terms ranging from 5 to 15 years.
Tribes are also advised to perform due diligence to ensure they are paying a fair fee for any third party services that is reasonable compared to their industry competitors.
“[Today’s] bulletin provides a new resource for tribes contemplating policy considerations related to the sound regulation of sports betting on Indian lands,” Simermeyer explained. “It also underscores the NIGC’s role in the oversight of sports books on Indian lands as part of the Indian Gaming Regulatory Act’s framework.”