Fearing they may get left behind in the rush to expand legalized gambling to the Internet, more U.S. Indian tribes are lining up to back online poker and are angling for new ways to cash in.
Consider the Tulalip Tribes in Washington state: Eight months ago, tribal Secretary Glen Gobin told Congress the tribe opposed any kind of Internet gambling, regarding it as a threat to its two casinos. But on July 26, he told a Senate panel that tribes “must have equal footing to participate” and that Congress should consult with them before junking a 2006 ban on online gambling.
“Glen is a realist,” said W. Ron Allen, the chairman of the Washington Indian Gaming Association, which represents 27 federally recognized tribes.
John Pappas, the executive director of the Poker Players Alliance, a lobbying group that represents 1.2 million members across the country, said it was “definitely safe to say that the tribes’ position is evolving on a federal solution.”
Many tribes still oppose Internet gambling because they worry that gamblers would be less likely to go to casinos. But Allen predicted that there’ll be “less reluctant resistance” as tribes realize that there’s little hope of stopping the push for legalization in Congress.
“Inevitably, they’re going to pass something,” he said. “I think tribes as a general observation would prefer that it not happen, but tribal leaders are being realistic.”
With online gambling expected to quickly become a new cash bonanza, a feud has developed on Capitol Hill over who should regulate it. Two competing plans have emerged so far.
The first, favored by the Poker Players Alliance, would allow the U.S. Department of Commerce to certify states to regulate online poker.
The second, favored by Gobin and many other tribal officials, would leave oversight to the National Indian Gaming Commission, the federal agency that regulates the gambling operations of 237 tribes. It’s headed by Tracie Stevens, a member of the Tulalip Tribes whom President Barack Obama appointed in 2010.
The battle pits two big spenders against each other. Since 2007, the Poker Players Alliance has spent more than $7.6 million on lobbying, and it ranks fourth overall this year among gambling interests, according to the nonprofit Center for Responsive Politics, which tracks money in politics. The tribes spent more than $20 million on lobbying last year and have contributed nearly $58 million to federal candidates since 1990.
Jon Porter, a former member of Congress who lobbies for the Poker Players Alliance, said legalized online poker could help both commercial casinos and the tribes. He predicted that both will face a much greater threat from states that move to expand their lotteries to include online slot machines. But he said Congress should accept the fact that Americans will gamble on the Internet.
“It’s clear that any industry which fails to embrace the Internet is doomed to failure,” Porter said. “Think of the struggles that newspapers have been going through, or how long it took the recording industry to effectively sell digital music.”
The pressure on Congress to act has grown since April 15, 2011, a day the gamblers call Black Friday, when the Justice Department shut down the three largest online poker sites operating in the United States – PokerStars, Full Tilt Poker and Absolute Poker – and charged their officials with bank fraud and money laundering.
That angered poker players and led hundreds of professional players who lost money to move to Costa Rica, Mexico, Canada and elsewhere to gamble. Last Tuesday, the Justice Department announced a $731 million settlement with two of the companies – PokerStars and Full Tilt Poker – that will require them to forfeit their assets to the government.
For backers of online poker, the issue took on more urgency in December, when the Justice Department said it would apply the major anti-gambling statute, the Wire Act, only to sports events and races. Many said that cleared the way for states to begin legalizing online gaming without having to worry about federal laws. Nevada and Delaware already have approved online gaming.
Pappas said the action by the states had spurred the tribes to rethink their opposition.
“They are not comfortable with the idea of having to go to a state to get licensed,” he said. “But now states . . . are beginning to move forward and tribal casinos could be left in the dust."
Bruce Bozsum, the chairman of the Mohegan Tribe in Connecticut, called Internet gaming “a reality in today’s digital world” and said the tribe “is doing everything in our power to prepare for it.” He said tribes were likely to get a better deal if Congress, not the states, resolved the issue.
Things could come to a head in the next few months.
In the House of Representatives, Pappas said, backers already have enough votes to overturn the ban on Internet gambling. Texas Republican Rep. Joe Barton is leading the effort.
A bigger battle is expected in the Senate, where the poker players group is counting on Democratic Senate Majority Leader Harry Reid of Nevada to pass a similar bill before the end of the year.
In the latest move, Hawaii Democratic Sen. Daniel Akaka, the chairman of the Senate Indian Affairs Committee and a close ally of the tribes, unveiled a draft of his Tribal Online Gaming Act of 2012 less than two weeks ago. It would allow federally recognized tribes to apply for licenses to operate online gaming.
Akaka is facing resistance on one key proposal: Like the poker players group, he wants the Department of Commerce in charge of online gaming. Akaka suggests that the department create a new Office of Tribal Online Gaming.
Gobin said assigning regulation to any federal agency other than the National Indian Gaming Commission would be “burdensome and duplicative.”