New Mexico Sports Betting Opens; Tribal Reach Grows

New Mexico Sports Betting Opens; Tribal Reach Grows

The debut of legal sports betting in New Mexico on Tuesday was undeniably less ceremonial than the spectacle four months earlier in New Jersey. There was no governor placing a wager on the Devils to win the Stanley Cup.

There wasn’t media to cover it if she had, as multiple local outlets were barred from the opening at Santa Ana Star Casino in a small burb just north of Albuquerque along Interstate 25.

There was, according to his Twitter feed, Matt Margolias watching his grandfather place the first wager, posing for pictures and accepting a buffet coupon.

It was subtle, but significant in multiple ways.

Five months after states were given the right to legalize sports betting on their own accord, a sixth – and the first in the west - had a sportsbook within its borders churning out slips and aspirations. With the Pueblo of Santa Ana tribe capitalizing on nebulous language within its agreement with the state of New Mexico to facilitate the practice, sports betting’s role as a new potential revenue stream for Native American groups across the country expanded. It's likely not done.

And concurrently, state governments that allow sports betting or are considering it continue to devise ways to profit. In process, the details within and interpretation of the tribal-state compacts regulating 506 gaming establishments operated by 246 tribes in 29 states has become worth billions of dollars more.

Land of Enrichment

New Mexico joined Nevada - which had been grandfathered under the Professional and Amateur Sports Protection Act of 1992 - Delaware, Mississippi, New Jersey and West Virginia in legalizing and currently undertaking sports betting. The Indian Gaming Regulatory Act of 1988 allows tribes to offer various types of gambling activity legal in their state on tribal land, under the auspices of contracts, called ‘compacts.’

New Mexico is the second state behind Mississippi in which Native American groups control some or all gaming activity to offer sports betting post-PASPA. Tribes in California and Connecticut have struck deals with national gaming operators and await legislative clearance, with a joint venture including MGM Resorts International announcing a deal earlier this month with the United Auburn Indian Community of California. Tribal gaming generates roughly $8 billion a year in the state. The legalization of sports betting in California has been advocated unsuccessfully by a handful of state councilmen in recent years and a group called Californians for Betting is attempting a ballot measure for a voter referendum.

Steve Stallings, chairman of the California Indian Gaming Commission which represents 34 tribes, told The Associated Press that "tribes feel like they have somewhat an exclusivity to [sports betting]. When the state or other interests violate that, then tribes are concerned."

Billions are in the Details

The sovereignty of tribal compacts – and the exactness of their wording – are invaluable as tribes seek to stoke stagnant growth, said Kevin K. Washburn, dean of the University of Iowa law school, former Assistant Secretary of Indian Affairs at the U.S. Department of the Interior and a citizen of the Chickasaw Nation of Oklahoma.

“Tribes are very interested,” Washburn told Gambling.com. “Once the [Supreme Court] decision came down, I think it was off to the races. That’s the thing, and it was ‘Who can get to the market quickest? Holy cow, let’s figure this out.’

“Indian gaming had plateaued there for a while and was growing more slowly, and I think that there’s a general notion that you always have to be doing something new to get more customers in. And whether you’ve got shareholders or tribal members, they’re always clambering for more growth and sports betting is an opportunity for growth. Once that limitation came off, that federal limitation came away, it became a really interesting opportunity for growth.”

According to the National Indian Gaming Commission, revenue nationally grew from $9.8 billion in 1999 to $26.5 billion by 2008 but flattened for a decade through the Great Recession. It has increased each of the last four years from which data is available, however, up four percent to $32.4 billion in 2017.

The confluence of law and untapped revenue will almost certainly prompt state legislators to attempt to rework compact terms to something they consider more equitable. The language of each individual deal is critical.

Negotiations over amending or extending compacts figure to become contentious.

Connecticut, Mississippi, Tough Deals, Sweetheart Deals

The Mashantucket Pequot and Mohegan tribes had been negotiating sports betting deals with Connecticut Governor Dannel P. Malloy although state Attorney General George Jepsen disputed the tribes’ claim of exclusivity regarding sports betting. The governor has since left the issue to his successor, who will be sworn into office in January of next year.

“It’s a little leverage and people are getting used to leverage,” Washburn said. “Legislators want to deliver more revenue-sharing to their constituents, in some states, at least. If it’s a state with lots of tribes, scattered around the state, then the tribes are pretty powerful themselves and they’re going to be a pretty powerful voice in all this.

“If it’s a state with a smaller number of tribes, then they can still speak pretty loudly because they can afford good lobbyists, and that’s what power is in the halls of state legislatures. But legislators are going to want to have more revenue to spread without having to raise taxes. That's like free money for states - the money they get from tribes - because no taxpayer has to pay that. It's the tribe and they are citizens and voters, but they tend to be kind of small in the grand scheme of things.”

The Mashantucket Pequot and Mohegans, the first federally recognized tribes to open casinos in New England after the passage of IRGA, have exclusivity over slot machines in Connecticut in exchange for 25 percent of proceeds.

The Mississippi Band of Choctaw Indians, whose facilities in August became the first outside Nevada owned by Native Americans to accept legal sports bets, were insulated from state leverage by prescient and extremely open-ended compact language signed in 1993. The state legalized sports betting in 2017 in anticipation of eventual federal movement and the Choctaw compact - which can only be ended by mutual consent of the tribe and the state – became worth its weight in golden betting tickets.

Gaming and sports law attorney Daniel Wallach said there could be a myriad of “sleeper” versions of the Santa Ana or Choctaw compacts nationally.

“The Choctaw are able to roll out this new vertical and not have to pay the state anything additional,” he told Gambling.com. “It's in perpetuity and it’s the best deal in the gaming industry. Or depending on your lens the worst deal ever negotiated.”

Sunshine, Sports Bets and Strange Allegiances

And then there was Florida. And as usual, it’s complicated. The Seminole Tribe of Florida possesses what Seminole Gaming chief executive officer Jim Allen describes as a “semi-monopoly” on Class III, so-called casino-style gaming in the state under a 2010 compact, but has not stated intentions on offering sports betting at Hard Rock International properties the tribe owns in Florida. Federal law classifies sports betting as Class III gaming.

Allen noted in an August interview with WLRN his belief that the Seminole Tribe already has the right under compact language – which states tribe exclusivity to offer “any new game authorized by Florida law” - to launch sports betting if the Florida legislature legalized it. “If the state legalizes sports betting explicitly, then absolutely they’ve got the right,” Washburn said.

Numerous attempts by the Florida Senate to alter gambling laws in Florida have foundered in the House in the last four years, however. A disparate cultural and political environment and the influence of horse and dog racing interests complicate legislative attempts.

A 2007 Advisory Legal Opinion by then-Florida Attorney General Bill McCollum appeared to assert that tribes are precluded from offering games until granted the right through negotiation with the state.

“I believe sports betting is less political than the other forms of gambling because it wouldn’t require the construction of any new gambling facilities,” Wallach said. “It would be operated through existing gaming structures with the potential down the road of having online.

“Florida represents, to me, the pot at the end of the rainbow because as a state with a large population base and a huge tourism industry, to bring legalized sports betting would drive significant additional visitation to the state.”

Washburn agreed.

“It is a key state because there’s lots of retirees with disposable income. That will be interesting,” he concurred. “It’s a gold mine for somebody, presumably.”

Mining it could be laborious. Interpretation of what Seminole Gaming is afforded in its 2010 compact is subject to wide interpretation through the filter of IGRA’s federal mandate. The five attorneys and tribal gaming legal experts interviewed for this story by Gambling.com could form a consensus of interpretation.

Seminole Tribe, Sports Betting and Atlantic City

Kresimir Spajic, Hard Rock International senior vice president of online gaming, in an email to Gambling.com declined comment on Seminole Gaming’s prospects or ambition for offering sports betting in Florida. But the company is advancing quickly toward its goal of harvesting the bankable New Jersey online market by the end of the year. HRI last week added online platform-provider Gaming Innovations Group to its partner portfolio of wagering providers bet365 and the Kindred Group.

Meanwhile, the Hollywood, Fla.-based Seminole Tribe has forged an improbable faction with Disney Worldwide to protect a market where it gleaned $2.2 billion in revenue in 2015, according to Politico. The Florida economic and therefore political juggernauts have combined to underwrite $36.425 million of $37.338 raised for a group supporting the passage of Amendment 3, which would mandate that “Florida voters shall have the exclusive right to decide whether to authorize casino gambling” through ballot measures requiring 60-percent approval. Allen asserted the tribe’s right to defend business interests in Florida against outside forces and pari-mutuel operators.

Wallach believes that sports betting would be Seminole Gaming’s exclusive property in Florida if legalized, and a possibility regardless of the outcome of Amendment 3 voting on Nov. 6. An amendment to the compact would be required in either case, he believes.

“[Sports betting] would require an amendment to the Compact because the new game would have to be something that is authorized by Florida law and future authorization would be subject to voter approval [if Amendment 3 passes], so that’s not going to happen so easily done,” he said.

“So what happens next? If you can’t satisfy the threshold for voter approval, the legislature doesn’t get to legislate in that area, so that leaves state tribal compacts as the sole vehicle for providing additional entitlements to the Seminole Tribe. Amendment 3 does not adversely impact the right of the tribes to have their compacts amended."

Breaking: Bets

Robert Walker, director of sports operations at US Bookmaking, which is working with Santa Ana Star, said the casino has “been extremely busy with a great mix of play.” Wagers have been in the lower monetary range, with the Dodgers, not surprisingly, and Celtics, more so, popular choices.

“From my perspective we could not have asked for a better start,” he said. “The new tellers were great and Santa Ana management has been a joy to work with. We think we are going to be very busy this weekend. And only busier after that.”

Just like contract lawyers and legislators for the foreseeable future. And then, perhaps, in more sportsbooks in more states.

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