Tribal gaming has long been a pillar of the US industry, but what are some of the key regulatory and technological challenges that the sector faces in 2023?
Las Vegas, Reno and Atlantic City have long been hubs for land-based gaming across North America, with US bettors flocking to these cities for an occasional flutter.
However, in the late 70s and early 80s, we saw a shift in strategy from tribes as many began to offer bingo games at their properties. Arguably, this marked a pivotal moment for the future of gambling in the US.
The success of tribal bingo games soon caught the attention of local and state governments who were beginning to authorise gaming as a means of generating new revenue streams, something that the tribes had already done successfully.
As you can probably guess, this caused significant friction between tribal governments and state legislatures – one such example is the landmark 1987 legal battle between the Cabazon Band of Mission Indians and the California State government, which resulted in a US Supreme Court decision.
Very soon thereafter, the US Congress enacted the Indian Gaming Regulatory Act of 1988 that set forth the framework under which tribal gaming has operated ever since.
“…tribes have taken this framework and grew their local bingo parlours into world-class casinos and resorts”
Jamie Hummingbird, Chair for the National Tribal Gaming Commissioners & Regulators, ahead of his appearance at SBC Summit North America, explained: “The Act effectively split the authority to offer, conduct, and regulate gaming between the tribes and states.
“Class II gaming – bingo, pull-tabs, and, in some cases, poker – were within the exclusive jurisdiction of tribes while class III gaming. Slot machines, card and table games required the tribes and states to enter into compacts, which allowed the state a portion of the revenues and a degree of oversight of tribal operations.
“In the 35 years since the passage of IGRA, tribes have taken this framework and grew their local bingo parlours into world-class casinos and resorts.”
It should therefore come as no surprise that tribal gaming has played a significant role in the development of the US betting scene.
For Hummingbird, the growth of the tribal gaming sector has largely been driven by the NTGCR and the education that it provides. He explained that this organisation has helped spearhead the creation of new gaming regulations – something he believes are “more broad than most people realise”.
Hummingbird continued: “In 2018, the organisation began offering its regulatory certification academy as a way to introduce new and growing tribal gaming regulators to the many facets of the positions they hold.
“Tribal gaming regulation is more broad than most people realise and, as such, our training is equally diverse”
“Tribal gaming regulation is more broad than most people realise and, as such, our training is equally diverse. We provide training not only on electronic gaming machines, card and table games, auditing, background investigations and licensing. This is in addition to cybersecurity, money laundering, responsible gaming as well as active shooter prevention and response.
“The nature of the business we’re in is constantly evolving and the NTGCR does its best to make sure tribal gaming regulators receive the most up-to-date training possible.”
So how does this differ from non-tribal gaming? In short, the differences are hard to come by.
According to Hummingbird, many of the procedures for reviewing games are “very similar” to those used by commercial gaming operators. Tribal organisations, he added, also carry out similar background checks when it comes to licensing.
“Gaming licence applications are comparable to those of any non-Indian jurisdiction,” he said. “Similarly, the technical standards used to evaluate electronic games and equipment are on par with state and federal, and to some extent, international standards.
“The main thing to remember when it comes to working with tribes is that, unlike receiving a licence from a state or country where you are free to offer your products or services to anyone within that jurisdiction, you must seek authorisation from each individual tribe.”
“Oftentimes tribes have been the innovators in regulation”
To improve the licensing process going forward, Hummingbird suggested that the gaming sector must “learn from those that came before us” – a mantra he believes the vast majority of tribes subscribe to.
“Oftentimes tribes have been the innovators in regulation, but when we are not, we tend to pay attention to what has happened in other jurisdictions,” he continued.
“We look at all levels of regulation and ask ourselves ‘would that work here?’, ‘is there anything we need to modify to fit our laws?’, ‘what else can we / do we need to learn?’.
“I like to say that I’m not above stealing my best ideas – if someone has a workable solution to an issue I’m facing, I’m thankful that I can learn from the example they’ve set. I think most regulators, tribal or otherwise, can appreciate that.”
The biggest challenge that the Indian gaming sector faces is the question of cyber security and the roll out of sports betting legislation.
He explained: “Using ransomware, digital criminals have crippled a number of tribal operations, some for extensive amounts of time, and have demanded large sums for the return of casino data and control of their systems.
“Tribal gaming management and regulators are each responsible for integrity of the gaming environment and have recognised the growing need for new technology, new practices, and additional personnel to combat this threat.”
“There have been tribes that have seen significant declines in their revenues immediately following the introduction of sports wagering”
Under the Indian Gaming Regulatory Act, sports wagering is currently considered to be a class III game, which requires a compact between a tribe and the state to be authorised at a tribal property.
Within certain states, however, tribes have the exclusive right to gambling activities – some of which include sports wagering. Hummingbird noted that this does not mean that there have not been attempts by commercial gaming operators to get in on the sports betting action.
“There have been tribes that have seen significant declines in their revenues immediately following the introduction of sports wagering in states where tribes did not have exclusivity,” stated the NTGCR’s Chair.
“In these areas, tribal gaming revenue is often the main, if not the only, means of income for tribal governments, which means tribal communities could be devastated as a result.
“This is why the discussion around the legalisation of sports wagering is so critical to tribes. The realities of sports wagering are still becoming clear and only time will show the true impacts of the nationwide legalisation of sports wagering.”
Something that Hummingbird underlined in his discussion with SBC Leaders is the commercial benefits that gaming can bring for tribal communities. He explained that gaming revenues are the largest contributor towards the funding of tribal governmental service programmes.
“…the facts strongly support a decision to uphold the rulings of the lower courts and reinforce tribal sovereignty and tribal self-determination”
He commented: “For others, tribal gaming revenues are the lifeblood of the tribe and essential to meet the needs of tribal citizens. Health clinics, food service programs, housing, and education services are among the many resources available to tribal citizens that would be negatively impacted with the loss of gaming revenues.”
The future of tribal gaming could be set to face another pivotal moment in its history with two ongoing cases involving the tribal sector, one relating to Seminole and the State of California and the second being the Maverick Gaming case in Washington State, which was dismissed but an appeal to the US Supreme Court is expected.
Both cases revolve around the state’s right to negotiate a compact, which some say would create tribal monopolies. Hummingbird concluded:
“Should the Supreme Court decide to hear the case, the facts strongly support a decision to uphold the rulings of the lower courts and reinforce tribal sovereignty and tribal self-determination.”
