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California Tribes Seek Law Enforcement Options for Sweepstakes
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California Tribes Seek Law Enforcement Options for Sweepstakes

In the latest edition of the New Normal webinar series today (Nov. 21), host Victor Rocha said there’s no room for discussion between California tribes and sweepstakes operators . The time has come to consider enforcement measures.

Rocha, conference chair of the Indian Gaming Association (IGA), was joined by fellow host and IGA executive director Jason Giles. This week’s guest was Jonodev Chaudhuri, Director of Chaudhuri Law and former Chairman of the National Indian Gaming Commission (NIGC).

The theme of the episode was regulation and enforcement. Specifically, Rocha and Giles explored what tools the NIGC – as well as state and federal governments – can use to combat the proliferation of sweepstakes sites.

“You see, the whole industry is reacting to this,” Rocha said. He noted that among California tribes in particular, “you’re starting to see the outrage” that typically follows attempts to encroach on tribal exclusivity.

He later claimed there was no room for collaboration between tribes and sweepstakes. “It’s not a dialogue, it’s not a discussion – we don’t negotiate with terrorists,” he said.

Chaudhuri: NIGC must be “responsive”

Chaudhuri, who served as NIGC president from 2013 to 2019, explored the nuances of tribal gaming regulation. He explained the history of Indian Gambling Regulatory Act (IGRA), the 1988 federal legislation that established the framework for Indian gaming in the United States. IGRA also created the NIGC, one of the federal agencies involved in tribal gaming.

In the context of enforcement, Chaudhuri acknowledged that the commission is somewhat limited in its capabilities. The tribes themselves are the primary regulators and the NIGC complements these efforts and acts as a liaison to the government. In some cases, states also play a small role in regulation. The commission is also largely limited to advice from IGRAs. For this reason, it is difficult to stand out in the face of new developments.

“In many ways, the NIGC needs to be somewhat responsive,” Chaudhuri said.

But he noted throughout the discussion that the IGRA has explicit stipulations that tribes be the primary beneficiaries and have the sole exclusive interests in gaming operations. It also contains clear guidelines on protecting Indian lands.

“If there is gambling on tribal land that is not managed by the tribe, that is a violation of IGRA,” he said. “The way this applies to sweepstakes is a conversation about what’s actually happening.”

Application options vary for California tribes

If an entity is determined to be operating illegally on tribal lands, Chaudhuri said enforcement options are available. They are applicable to any entity, whether tribal or, in the case of sweepstakes, commercial.

He cited fines and shutdown orders as simple examples. “I made letters like that when I was (at NIGC),” he said. The NIGC also has the ability to review games at the request of tribes and rule whether they are Class II or III. But these reviews are much more difficult when the game provider is not involved, which seems to be the case for sweepstakes.

Since tribes are the primary regulators, they too can take similar enforcement actions. Rocha and Giles questioned whether, in theory, all of the state’s gaming tribes could take such action collectively against lottery operators.

Chaudhuri did not go so far as to endorse this but said it was technically possible. But it again stipulated that it applied to tribal lands and noted that “there is not a single uniform agreement” in California. Each tribe has its own compact with the state.

Covenants play an important role in this discussion

The role of pacts in this debate has been mentioned several times. Chaudhuri pointed out that “many pacts will have provisions in the revenue sharing portions” of the agreements that will render them void in the event of illegal expansion or violation of exclusivity.

Indian Country, in general, does not pay taxes to any state for gambling that takes place on its lands. But in some cases, tribes enter into revenue-sharing agreements with states. As an example, in Florida, the Seminole Tribe pays the state hundreds of millions per year as part of its agreement with the state. But the tribe withheld these payments starting in 2019, when he claimed the state was allowing commercial card rooms to encroach on its exclusivity.

Since states often benefit from revenue sharing, they also have an incentive to stop sweepstakes to ensure that their revenue reduction is not undone. But getting state and federal officials to recognize this importance is a challenge, even for the NIGC.

“It’s a never-ending educational challenge,” Chaudhuri said. He explained that the NIGC constantly works with other officials and agencies to recognize the importance of indigenous issues. This obstacle applies not only to sweepstakes, but also to games of skill, card rooms and other forms of gambling that could be considered an infringement of exclusivity.

“It’s getting worse week by week.”

In conclusion, Giles and Rocha again emphasized the importance of the issue as it relates to California tribes.

“It’s getting worse by the week,” lamented Giles, referring specifically to the recent launch of Legendz social casino and sports betting in 43 states, including California. Rocha agreed and used the analogy of a company building a dam upstream of a reservation. The consequences may not be immediately noticeable, he added, but future infrastructure will undoubtedly be affected.

For future episodes, Rocha mentioned the need to talk to tribes in Connecticut and other states who appear to be take a more frontal approach to these sites.

“The industry is behind us but we must take the lead,” he concluded. “This is not an unfamiliar position for us.”