As far as the U.S. Dept. of the Interior (DOI) is concerned, federally recognized tribes can take wagers from consumers not located in Indian Country, as long as it’s legal within a state and the action is consistent with the Indian Gaming Regulatory Act (IGRA) and the Unlawful Internet Gambling Enforcement Act (UIGEA). That is a key takeaway from the draft final regulations released by the DOI’s Bureau of Indian Affairs (BIA) earlier this month.
The interpretation of how the federal government views online sports betting that occurs off Indian lands but flows through tribal servers has been more than a year in the making. The draft rule is one among many that will clarify how tribes can proceed when compacting with states. It also codifies what the BIA has put into practice in recent years.
Sports betting is a form of Class III gaming, which tribes are permitted to compact with states to offer. Class III gaming also includes house-banked card games like blackjack or baccarat, casino games like roulette or craps, qualified slot machines, and parimutuel betting.
Practically speaking, the rule would mean that, in a state like California, should voters eventually legalize online sports betting, bets taken anywhere in the state that flow through tribal servers would be legal. But it also means Florida’s Seminole Tribe still might not be within the bounds of the law.
There are currently two lawsuits pending around the Seminoles’ November 2023 launch of their federal case that West Flagler and Associates (WFA) brought against DOI Secretary Deb Haaland, claiming the agency overstepped its authority by approving the Seminole-Florida compact.
The denied a motion to stay the mandate, Justice Brett Kavanaugh wrote that there are state-law issues at play, in particular that Florida’s Amendment 3 requires any expansion of gaming to go to the people. WFA is now appealing to the U.S. Supreme Court.
The second is a Florida law, such decisions must go to the voters.
The draft final regulations “say that compacts like the one reached between the Seminole Tribe and Florida are lawful under IGRA, but still need to be lawful in the state,” one lawyer who specializes in tribal gaming law and spoke on background told Sports Handle. “But if state law doesn’t allow [gaming], then it is not legal.
“Florida remains a state issue. If the state court decision strikes down the sports betting provision, that doesn’t change what the D.C. Circuit said or what the U.S. Supreme Court [might say]. It would just require the Seminoles and state to take it to the people.”
States do have the right to make a “public policy decision to give a tribe exclusivity in a state,” another lawyer familiar with the draft final regulations, who wished to remain anonymous, told Sports Handle.
Washington State in 2020 became the first and remains the only state to give total exclusivity for sports betting to its tribes through its legislature. In other states with tribes that have legalized sports betting, Indian Country has either agreed to be regulated by and pay taxes to the state (Arizona).
On balance, tribal lawyers and leaders view the latest revision of the BIA regulations as positive for Indian Country. In its introduction to the draft final rules, the BIA wrote that the new regulations are meant to “codify long-standing departmental policy and interpretations of case law.” The agency further went on to explain that the goal is to “give tribes the tools they need” to compact with states.
“Through IGRA, Congress diminished Tribal sovereignty by requiring tribes to enter into compacts with States governing the Tribes’ conduct of Class III gaming before Tribes may conduct casino-style or Class III gaming,” wrote DOI assistant secretary for Indian Affairs Bryan Newland. “However, States have often sought to include provisions in compacts which test the limits Congress provided in IGRA. Tribes have sought both judicial and istrative relief resulting in a body of case law and istrative decisions clarifying the proper scope of the compacts.”
The latest rules were published in the Federal Feb. 21 and will go into effect March 22.
Feds don’t have final say d6e14
With regard to the legality of wagering from an off-reservation location, the draft final rules lean heavily on the June 2023 appellate court opinion in West Flagler vs. DOI. The draft final rules address betting off a reservation two ways — first, they state that betting from one “tribal property” to another is allowed, if both tribes consent. As an example, in Oklahoma if sports betting were legal and the Chickasaw Nation offered mobile sports betting, it could partner with another tribe, like the Cherokee Nation, to allow those on Cherokee land to place digital bets that run through a Chickasaw server.
The battle over the Seminoles/Hard Rock's sports betting monopoly in Florida rages on, with national implications. Here's the latest from Jill Dorson.https://t.co/mNAwRU9GKE
— Sports Handle (@sports_handle) February 9, 2024
Newland went on to say that for an online bet to be “legally received on a tribe’s land, the wager must comply with IGRA and other federal laws, including the UIGEA. The UIGEA requires wagers to be legal both where they are initiated and where they are received.”
In the introduction to the draft final regulations, Newland included overviews of comments from those ing the new rule, 293.26, and those opposing it. In his response to both parties, Newland said, in part, that the federal government does not have the reach to have the final say in any state regarding statewide mobile betting.
“Consistent with the D.C. Circuit’s 2023 decision in West Flagler Associates, Ltd. v. Haaland, 71 F.4th 1059 (D.C. Cir. 2023), a compact may include provisions addressing regulatory issues concerning statewide mobile wagering provided that State law authorizes the portion of the wagering transaction occurring off of Indian lands,” he wrote. “The Secretary, however, does not have the authority to unilaterally require a State to allocate jurisdiction over wagers made by patrons located off Indian lands in the State.”
Other key issues 2p4t67
Besides somewhat settling the issue of off-reservation online betting, the draft final rules seek to clarify many other parts of the compacting process. One thing that Newland makes clear is that the proposed draft rules apply only to future compacts; any existing compacts or those currently being considered by the DOI prior to the new rules going into effect are exempt from the changes.
The draft final rules address a new way to submit compacts, the timelines on which decisions will be made, and how disputes can be resolved. The rules also codify how and why the DOI has been using “deemed approved” letters, which allow a compact to become operational without the signature of the secretary. That method was used to approve the 2021 Seminole-Florida compact.
Here is a look at some of the rules, comments, and discussion that went into the final rulemaking:
What is an illegal taxation of gaming revenue and what is not? Draft Final Rule 293.19 addresses taxation by saying that IGRA already outlines what is a legal taxation and what is not: “The inclusion of provisions addressing the Tribe’s taxation of other activities may be considered evidence of a violation of IGRA.”
May compact provisions address standards for the operation of gaming activity and maintenance of the gaming facility? Rule 293.21 clears up this question by defining what a gaming facility is, using the phrase “within gaming space” to limit the area in question. It goes on to say if a compact requires a tribe to accept standards equivalent to those of the state around maintenance, and that both parties must be able to show that the standards are related to and necessary for the licensing and regulation of gaming. Newland explained that the use of the phrase “gaming space” keeps the area in question as small as possible.
What may be included in a compact? Rule 293.23 makes clear that only issues directly related to gaming can be included in a compact. Newland wrote that the DOI has long used the “direct connection test” with regard to what can be in a compact, and the rule codifies that practice. As noted in the foreword to the draft final rules, Newland suggested that states “test the limits” of IGRA. Going forward, states will not be able to include issues like tobacco law or drivers license istration in their compacts. The document must be strictly limited to issues directly related to offering gaming.
May a compact or amendment include provisions addressing the rights of employees? Draft Final Rule 293.24 was an addition that did not appear in the proposed rules. It essentially allows for labor unionization and reads, “Notwithstanding Sec. 293.23(c)(8) above, a compact or amendment may include provisions or procedures addressing the organizational and representational rights of employees, including service or hospitality workers, where such provisions or procedures are ‘directly related’ to the operation of gaming activities as articulated by the Ninth Circuit in Chicken Ranch Rancheria of Me- Wuk Indians v. California, 42 F.4th 1024, 1035-1040 & n.2 (citing Coyote Valley Band of Pomo Indians v. California (In re Indian Gaming Related Cases Chemehuevi Indian Tribe), 331 F.3d 1094, 1116 (9th Cir. 2003)). The Department notes that this provision codifies case law that a compact may include provisions addressing organizational and representational rights of employees.”
May a compact or amendment permit a tribe to engage in any form of Class III gaming activity? In the final analysis, Newland decided to delete proposed draft final Rule 293.27. It contained language which read that if a state “allows any form of Class III gaming, then the State is regulating all forms of Class III gaming.” One of the lawyers familiar with the document told Sports Handle that the language has been “misconstrued” to mean if a state offers any kind of Class III gaming, then it must compact for all Class III gaming, which is not what the “proposed rule said or what the case law said,” and that the decision to eliminate the regulation is “politically expedient.” By deleting the proposed rule, the decision of how to proceed falls to the tribes and the states to work out at the negotiation table.
May any other contract besides a compact regulation Indian gaming? Rule 293.29 clarifies that IGRA limits what can be handled in a compact and that issues like a tribe’s use and “enjoyment” of its land or agreements with local governments should not be part of a compact.
However the new rules are viewed, they will serve as clear guidance in compact negotiations going forward, and, a source said, should be a “tremendous help” to tribes in the future “as a source of authority to try to back the state off of overreaching provisions.”
