By the end of this year, a Native American tribe based in Michigan likely will accept the first MI mobile sports wager ever taken by a tribal government.
That tribe could be Bay Mills Indian Community, which last month announced a partnership with DraftKings to run its online sportsbook, online casino platform, and a retail sportsbook.
Bryan Newland, president of Bay Mills, discussed how Michigan tribes came to embrace taking gambling online in a July 29 webinar hosted by Victor Rocha of Pechanga.net and presented by the National Indian Gaming Association.
Why Michigan tribes saw value in online wagering
Internet gambling is considered a major threat by Indian tribes in many states. They rely on their brick-and-mortar casinos to support their tribal governments and people.
In California, tribal leaders claimed at a hearing in June that the inclusion of mobile betting apps in a bill had the potential to “devastate” tribal economies.
Newland pointed to three factors, altogether unique to Michigan, that made tribes interested in iGaming.
- Michigan already had gambling online through the iLottery.
“Here in Michigan, with the three Detroit casinos and the state internet lottery eating our lunch year after year, we were faced with the prospect of evolve or die when it comes to internet gaming,” Newland said.
- The location of tribal casinos. Michigan is a big state with a lot of rural areas. Bay Mills casinos are located on the eastern Upper Peninsula, about 400 miles away from Detroit. They had seen a steady decline in revenue since the 2008 economic crash.
“It allows us the chance to level the playing field and participate in a market where a physical location matters less than the product you offer,” Newland said.
- With 12 tribes eligible to offer online gambling and three commercial casinos, Michigan has the right number of properties to match up with quality online operators and offer competitive platforms.
Opting for a commercial agreement instead of IGRA
One of the main reasons why tribes around the country are wary of iGaming is the uncertainty of their ability to take online bets from people located outside their reservations under the Indian Gaming Regulatory Act (IGRA).
It is unclear where a bet occurs. Given the legal decision in the case California v. Iipay Nation of Santa Ysabel, the National Indian Gaming Commission takes the opinion that wagers originate at the location of the bettor.
Newland stated that Michigan tribes would have preferred to do online gaming under IGRA, but they believed that required a legislative change at the federal level.
Congress introduced a bill to remove federal barriers for federally recognized Indian tribes to offer mobile sports wagers. But Congress often takes a long time to move on legislation. So, Michigan tribes opted to operate under a commercial agreement with the state only for online sports betting and iGaming.
“Here at Bay Mills, we can’t wait for Congress to catch up to the market,” Newland said. “That’s why we made the practical choice to get this done.”
Maintaining tribal sovereignty in commercial deal
Recognition that they exist as sovereign governments is the most important tenet for Native American tribes.
Entering into a commercial deal can be tricky because tribes don’t want to risk putting their sovereignty in danger.
“This is regulated and licensed in a commercial context, and we are walling it off from our brick-and-mortar business because we want to make sure that we retain what we do here in our regulatory powers and not unwittingly grant the state authority to peek behind the curtain at that where we have not negotiated it,” Newland said.
He compared it to Connecticut tribes making commercial deals to operate casinos off reservation lands.
“Other than the fact that it is done online, it is no different than a lot of places where you’ve seen very successful gaming tribes get involved in commercial gaming.”
A hybrid of commercial and tribal gaming
One gesture by the state went a long way with the tribes.
The tribes noticed the bill had Detroit receiving 30% of state tax revenue from its casinos for city services. It was a hedge that the city wouldn’t lose money if brick-and-mortar business decreased because of internet gaming.
Tribes argued that they were going to have the same problem. As a result, they received a 20% rebate to go to tribal governments.
“That’s the biggest example of how what’s gone on here in Michigan in the legislation is a hybrid of commercial gaming and governmental gaming, because it is a recognition of our status as governments,” Newland said.
Can other states learn from Michigan tribes?
Newland made clear that he didn’t know if what Michigan is doing can work in other states. The dynamic in each state is different.
Particularly, California is little like Michigan when it comes to tribal gaming. In the Golden State, tribes dominate the industry and their casinos were still thriving, at least prior to the pandemic.
The number of tribes in California also means that not all can have successful mobile platforms. That makes online wagering a difficult issue for them to agree upon.
“California has more than 100 tribes and well-established casinos in very big cities,” Newland said. “I think, in those areas, there are primed to be more losers than winners when it comes to internet gaming so it may not work there. Internet commerce in every field tends to get dominated by only a handful of players. In a state like California, there are more gaming tribes than there are probably sites that will succeed through internet gaming.”
But one thing all tribal casinos around the nation are dealing with is economic struggles as a result of the coronavirus pandemic.
“iGaming … can become a revenue force that allows us to fund government operations while we’re just hemorrhaging money on our brick-and-mortar casinos like every other gaming tribe in the country,” Newland said. “So this iGaming which is going to launch later this year is taking on an added importance because, for us, it will allow us to keep the lights on for people.”