Why Tribes Will Carry So Much Clout In U.S. Sports Betting

Juan Carlos Blanco April 8, 2018 473 Reads
Tribes Sports Betting

The consensus view is the short-term future of widespread legalized sports betting lies in the hands of the highest court in the land. That’s technically accurate, of course.

But from a practical perspective, the fate of legalization in certain states may ironically rest with entities that enjoy sovereignty within their jurisdictions — Indian tribes.

Tribes wield considerable influence in Minnesota

Indian gaming interests have often served as formidable opposition to expansion of other gaming in states where they have a presence. Minnesota is certainly one such example – their 18 casinos, run by 11 tribes overall, give them a great deal of leverage.

The fact they contribute a reported $1.8 billion annually in direct and indirect revenue back to the state likely has something to do with that.

According to a report by the Minnesota Indian Gaming Association, tribal casinos and related industries annually:

  • Employ 13,371 people.
  • Attract 23 million visitors.
  • Channel $482 million to other Minnesota vendors.

In short, they carry plenty of clout. A recent comment by Minnesota Representative Pat Garafolo, the architect of a still-to-be introduced sports betting legalization bill that he’s considerably optimistic about, crystallizes the sphere of influence perfectly:

“I won’t submit a sports gambling bill the tribal casinos are opposed to,” Garofalo said. “Nonnegotiable.”

Tribes’ power rooted in decades-old gaming compact

That type of deference isn’t overly surprising, considering Minnesota’s tribes literally and figuratively hold all the cards.

Minnesota’s claim to fame as the first state to have officially reached a compact with its local tribes for gaming back in 1989 is not a point of pride; their initiative actually led them into a heavily one-sided agreement.

With no real foresight of how profitable Indian casino operations would eventually become, Minnesota signed a compact that allowed the tribes to be perpetually free of any revenue-sharing obligations to the state. Renegotiate a better deal, you say? The compact also stipulates that only the tribes can initiate such a process.

To the surprise of absolutely no one, they’ve subsequently used this outsized influence and deep pockets to make the path of entry for any other gaming interests thorny at best. The combination of their intense lobbying and lucrative campaign contributions has reportedly played a pivotal role in derailing efforts to bring ventures such as racinos and riverboat gambling into the state.

Sports betting legislation’s chances largely in the tribes’ hands

Will sports betting fare any better? Garafolo’s comments are a surprisingly frank admission from an elected official that an outside party – one that technically doesn’t even answer to the state government that he helps manage – dictates potential legislative initiatives to an extent.

Supposed apprehension expressed by an unnamed Minnesota tribal official about sports betting early this year strikes a bit of alarm, as well.

“Most tribes are not really excited about this,” said a Minnesota tribal official who requested anonymity. “It’s not really profitable. Then there are the risk factors, technology and space issues. You still can make more with slot machines.”

Past foray into DFS could be a positive sign

What happens in a state like Minnesota if matters come to a head between the tribes and lawmakers over sports betting? Banking on the legislature to buck their wishes would likely be a sucker’s bet.

It’s not equitable by a long shot, but it’s reality in the North Star State. However, sports betting supporters in Minnesota could draw cautious optimism with respect to the tribes’ willingness to expand their gaming offerings from one example in the recent past.

In 2016, the business division of the Mille Lacs Band of Ojibwe  — a tribe that owns and operates Grand Casino Mille Lacs and Grand Casino Hinckley – delved into the daily fantasy sports industry in significant fashion. They rolled out the real-money version of their Grand Fantasy Sports platform that fall in their casinos.

Moreover, they began offering the underlying software, EZ Fantasy, as a white-label solution to casinos in 11 other states. That type of forward thinking with respect to new real-money gaming activity could certainly repeat itself when it comes to sports betting.

The fact all of the tribes’ casinos seamlessly fit the description of a potential “sports wagering premise” licensee under a draft of Garafolo’s potential legislation certainly doesn’t hurt, either.