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Why Tribes Should Oppose Internet Gaming

Robert Odawi Porter
4/5/13

Congress is now considering the legalization of gambling over the Internet. Indian country, which has invested billions of dollars in traditional “bricks and mortar” businesses, should be extremely worried about this effort. If successful, many of the over 300 tribally-owned gaming facilities risk losing significant patrons and profits.

Research on the impact of Internet gaming legalization is thin, but the primary study to date (Geiger-Johns 2010) concludes that tribal casinos could lose up to 25 percent of annual gross gaming revenues if legalization were to occur. Controlling $28 billion in gaming revenues is a major economic accomplishment for Indians. Given our history of economic deprivation, who would have guessed that this revitalization was possible? But we should not sit idly by while $7 billion in revenues and associated jobs is given away to the competition.

Indian country response to the Internet legalization threat has been mixed. A few tribes are actively pursuing efforts to get involved in on-line gambling. They see it as simply a logical expansion of the market given technological advances. Other tribes see it as a clear threat, seeing the great potential for unknown numbers of patrons to gamble in the comfort of their own homes rather than visit the tribal casino.

Our industry trade association, the National Indian Gaming Association, has strongly defended the need to protect existing tribal-state compacts. Both NIGA and I in Congressional testimony have argued that tribes should have the same rights as non-Indian casinos were legalization to occur.

The problem with legalizing Internet gambling, as the research suggests, is that it drains away customers who would otherwise be limited to visiting tribal casinos. The Poker Players Alliance argues that legalizing on-line poker would actually support “bricks and mortar” casinos since poker players eventually want to play against other humans as they get better.

But powerful forces in the gaming industry, led by name-brand Nevada and New Jersey interests, are strongly promoting the legalization effort. States, too, are eager to get in on the action and start taxing on-line bettors. It doesn’t seem reasonable that this effort will end with only legalizing on-line poker. Our competitors and their allies in government are going “all in” for full legalization of all Internet gambling.

Losing 25 percent or more of gross revenues could cause widespread economic injury to tribal casinos, many of which have significant debt. Which is why Indian country needs to stop watching this economic tsunami in the making and start fighting against it. If the on-line gambling market opens wide, only a handful of providers will control the market. Do we really think tribal gaming brands can beat out the marquee gaming brands in a global on-line market? A few larger tribes might, but I seriously doubt – as the research suggests – that tribal casinos will gain new customers in an Internet gaming era.

There are actions that can be taken now to fight against this effort. We should be preparing our litigation strategy to protect existing compacts and investments. We should be educating and lobbying Congress to protect Indian country gaming—which employs tens of thousands of non-Indians as well as Indians—to protect the bird in the hand rather than chase the bird in the bush. The Internet might not be stopped, but it can be slowed down.

If we don’t act now and Internet gambling legalization occurs, the ensuing economic disaster in Indian country would be our own version of the “fiscal cliff.”

Robert Odawi Porter is the former President of the Seneca Nation of Indians and currently Senior Counsel at SNR Denton in Washington, D.C.

 

 

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chahta ohoyo's picture
or...somehow convince the gaming commission that gaming tribes are taking a major hit because of this, and be allowed to have a cut of the internet pie instead of trying to fight it???
chahta ohoyo
Anonymous's picture
Thats a pretty short-sighted view. How about getting intotheinternet business.you could make money online and also run promotions to attract moer people to the actual casinos. What an idea! But then again, peolple tried to ban cars also.
Anonymous
Anonymous's picture
How the heck do you make something illegal to do just because somebody isn't going to get all the money from it and someone else is? What does that have to do with the law? Last I heard this was the land of the free.
Anonymous
Anonymous's picture
I'm somewhat confounded that people will trust the security of the internet and gamble online. Sorry, I won't be doing it. I've read the news about computer hacking and it's largely coming from overseas; even the FBI and Homeland Security can't keep up with it. People want the experience and environment of a casino, and the internet can't replicate it. It will largely be a niche for hobby gamers and those people aren't the bread-and-butter of casinos. I agree, tribes need to always keep up the fight to preserve what we have, because it's been a long time coming.
Anonymous
Anonymous's picture
This article is just more misinformation about Internet Gaming vs Brick and Mortar Gaming.
Anonymous
Anonymous's picture
Although I agree with some of Mr. Porter’s assertions, Internet Gaming will not go away just because Tribes will not accept it or because they do not want it to occur. I agree that Tribes have invested billions of dollars in their casinos but Congress and State Governments will have little concern for our investments. With the millions of dollars that are or will be spent on lobbying efforts, our arguments about our investments will be diminished and set aside. All that Tribes will hear from State Governments is, go ahead and protest but those protests will fall on the deaf ears of a State that wants to realize revenues from gaming. Many States will see Internet Gaming as a way to develop a casino without actually having to build one and will allow them to expand gaming in their State that they feel is already inundated with too many Tribal Casinos. If we believe this will be a fair and equitable playing field, IT WILL NOT BE FAIR OR EQUAL, the states will realize profitability, either by controlling internet gaming and sharing in the profits with the licensee or just by charging exorbitant fees/licenses for the right to provide internet gaming in their state. Either way the States will find a way to benefit from gaming and will have little to no regard for the impact of the investments made by Tribe's for their Tribal casinos. Let’s all face the one truth of internet gaming, this is truly a State and probably in the very near future a National expansion of gaming. Internet gaming is coming and tribes need to realize it and try to take economic advantage of it or they will be left playing catch up to an evolving industry that will invest millions if not billions of dollars to capture this lucreative market. It is my contention that Tribes need to embrace the inevitable rush of internet gaming and carve out their share and offset the potential revenue loss to our current casinos. It should be a Tribes goal to sustain our casinos until the social gambler realizes they lose their money to fast on the Internet and comes back to the casinos (this is truly conjecture and we may just lose a segment of our market share that we will not be able to bring back). I realize that it is very difficult for Tribes to consider a partnership and revenue share with the States but this may be a real option for maintaining control of gaming for the Tribes and something Tribes and Tribal Coalitions should seriously consider and not dismiss out of hand. Rural casinos should see much less impact then an urban casino but never-the-less all gaming will be affected by the intrusion of internet gaming. Will States care that Tribal gaming is negatively impacted by internet gaming, maybe some (those states that have a percentage share of Tribal Gaming revenue) but not many. The initial push for poker on the internet will have some impact on casino’s maybe not the 25% indicated in Mr. Porters report but every poker player lost is a potential slot player not in the casino. However, if table games and full slot play are approved for internet gaming, there will definitely be an impact on Tribal gaming revenue and the Tribal casinos. I don't buy the “if poker is approved it will help the casinos”, the poker bubble has burst and the Internet may revitalize poker in the casino to a certain degree but the future of poker will more likely be driven by the internet. Traditional poker has become a media event and has introduced a younger player who will be much more prone to internet gambling. I just attended NIGA and was in a workshop called Generation Net or Net Gen, and they had a forward looking gaming hypothesis concerning the younger population that communicates through their I-pads and I-phones. The socialization of poker will and can be realized over the internet and the Net Gen population will embrace on-line poker. I believe they are a herald of things to come for Indian and non-Indian gaming with this segment of our population. Tribes that want to believe and hope internet gaming goes away, will be left out of this new gaming trend/phenomena. Internet gaming is not just a trend of the future but an evolution of today’s gaming environments and it is my belief that Tribes need to fight hard to find their niche in this new gaming environment. Instead of spending millions of dollars to keep internet gaming out, Tribes may want to invest those resources in finding way’s of inclusion in this new gaming horizon. Using the poker vernacular, Rebelling and struggling against internet gaming will only deal Tribe’s a potentially disastrous losing hand.
Anonymous
Anonymous's picture
interesting
Anonymous
Anonymous's picture
Bury your head in the sand. That's going to work...
Anonymous
Anonymous's picture
Indian gaming (gambling) started as a result of lottery tickets being sold by states. The states fought hard to not allow Indians gaming, but lost. This is now happening to the Indians and gambling will flow everywhere, as it should. Indians have had time enough at the gaming trough and should have been well aware that the golden goose would die some day. That day is coming, or is here, knocking at the door.
Anonymous
Anonymous's picture
Casino gaming should of only been a stepping stone to economic development. It should only of been used as a tool to move onto a diversified portfolio of entities for tribal prosperity. But too many tribes embraced casinos as an end all. As with anything tribes do, the "others" will find a way of taking it for themselves. I believe many many tribes will do nothing to ween themselves off the reliance on gaming, and one day will wake up with little left for their tribes/people. Internet gaming will become a reality regardless of the amount of money tribes spend to oppose it. The smart ones will position themselves to take advantage of it and/or diversify to lessen the blow when they lose that 25% or more of revenues to their competition. And, with states hurting for revenue, how long will it be before more states legalize gaming in their state? A tribe that relies on a majority of their income and jobs to be supplied by a casino is going to be hurting. . . . . . . .this is only my opinion, your opinion and reality may differ.
Anonymous

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