Abstract
In the wake of the Supreme Court's invalidation of the federal Professional and Amateur Sports Protection Act, a majority of states have legalized sports wagering. In states where tribes operate gaming, states have varied approaches to authorizing tribal sports wagering. A state's regulatory approach impacts tribes' sports betting operations in multiple ways: whether and where tribes can offer mobile wagering, what in-state commercial competition tribal operations will face, and to what extent state law and state regulations will apply to a tribe's sports-betting operations. In this article, we identify emerging empirical trends and specify the three most-prevalent state legalization and regulatory approaches to tribal sports wagering on a national level: the Compact Model, under which tribal sports betting is conducted and regulated according to federal law and the tribal-state compact, and is confined to Indian lands; the Commercial Model, under which tribes may operate sports betting under state license and in direct competition with commercial operators; and the Combined Model, in which tribal sports betting is conducted and regulated through a combination of federal law and the tribal-state compact (for tribal sports betting conducted on Indian lands), and state law (for tribal sports betting conducted outside of Indian lands but within the state's borders). The models we provide here are a first, and foundational, step in identifying and establishing emerging and best practices to authorization and regulatory frameworks to help all stakeholders navigate this highly dynamic legal, regulatory, and market environment at the intersection of theory and practice in gaming law and policy.
I. INTRODUCTION
In the few years since the U.S. Supreme Court invalidated the federal Professional and Amateur Sports Protection Act 1 (PASPA), a majority of states have legalized sports wagering in one or more formats: in-person (i.e., physical or retail), mobile or online, or both. 2 In many of these states, American Indian tribes own and operate casinos, 3 inviting the possibility of tribally operated sports books.
Sports wagering is a Class III game pursuant to the 1988 federal Indian Gaming Regulatory Act 4 (IGRA), requiring the negotiation and approval of a tribal-state compact before a tribe may operate sports betting on tribal lands. 5 A growing number of tribes are considering or have opened sports books, either under existing compact provisions or following the negotiation of amended compacts.
While some states have limited legalization of sports betting to tribal casinos under IGRA, others have simultaneously legalized commercial operation of sports betting. Tribes thus may elect to act like a commercial operator, obtaining a state license to operate sports betting off tribal lands, and sometimes under state law tailored to tribal operators. The regulatory structure in a particular state impacts tribes' sports betting operations in multiple ways: whether and where tribes can offer mobile wagering, what in-state commercial competition tribal operations will face, and to what extent state law and state regulations will apply to a tribe's sports betting operations.
In a highly dynamic and increasingly competitive environment that is reshaping the landscape for commercial and tribal gaming alike, it is notable that tribes, states, and commercial operators predominantly are taking a custom, jurisdiction-specific, and market-driven approach to developing sports wagering regulations. While this may be standard operating procedure for states with commercial gaming, tribal gaming under federal law suggests a more consistent approach, grounded in public policy and tribal sovereignty, may be more appropriate when tribes are involved. 6
In this article, we provide a practical overview of what tribal sports wagering looks like now. We identify emerging empirical trends and specify three of the most-prevalent state regulatory approaches to tribal sports wagering on a national level, with state-specific examples and issues arising. We classify state approaches to legalizing tribal sports betting: the Compact Model, under which tribal sports betting is conducted and regulated according to IGRA and the tribal-state compact, and is confined to Indian lands; the Commercial Model, under which tribes may operate sports betting under state license and in direct competition with commercial operators; and the Combined Model, in which tribal sports betting is conducted and regulated through a combination of IGRA and the tribal-state compact (for tribal sports betting conducted on Indian lands), and state law (for tribal sports betting conducted outside of Indian lands but within the state's borders).
II. SNAPSHOT OF LEGALIZED TRIBAL SPORTS BETTING
We start with a national snapshot of the current extent of legalized sports betting in the tribal and commercial sectors. 7 We offer this snapshot with the caveat that state, tribal, and commercial authorization and operationalization of sports betting activities are dynamic.
There is a total of thirty-six states, along with Washington, D.C., in which sports wagering, whether commercial, tribal, or both, currently is authorized by state law. Of these, thirty-one states and Washington, D.C. currently have legal sports wagering operations in some combination of retail sports books (twenty-nine states) or mobile/online formats (twenty-one states and Washington, D.C.), or both. 8 About one-third of the states with operational sports betting permit only retail sports books (that is, in-person or physical sports books, typically located at an existing casino or sports venue). About two-thirds of states with operational sports betting permit either state-wide or more geographically limited (for example, limited to a casino property premises, or limited to tribal lands) mobile or online sports wagering.
A total of twenty-nine states have tribal gaming operations within their borders; of these, twenty-five states permit Class III or “casino-style” gaming and four permit only Class II (bingo, games similar to bingo, and some card games) gaming on tribal lands. 9 Tribal sports betting is operational in twenty-two states; in five of these states, only tribal operators are authorized to offer sports wagering within the state's borders. 10
The rapid legalization of sports wagering in different forms in so many states with tribal gaming, and in many of those, the addition of commercial wagering, is creating a new, overlapping set of cross-jurisdictional legal and regulatory imperatives. It is instructive to step back and try to identify some useful patterns from this patchwork.
III. EXAMINING THE STATE LEGALIZATION OF TRIBAL SPORTS WAGERING
A. Primary research questions
The regulatory and competitive environment of tribal sports wagering is dynamic and far from determined; its regulatory regimes are being developed on a state-by-state basis while tribes by necessity seek both to cooperate and to compete with state and commercial industry players. Missing from both public policymaking and the scholarly literature is a grounded approach to answering two primary questions that could assist in identifying emerging and best practices in tribal sports wagering regulation:
How are tribally owned and operated sports books being authorized, operationalized, and regulated in states that have legalized sports wagering? What are the emerging trends and best practices in the law, regulation, and public policy of tribal sports wagering?
These questions arose both in our own scholarly research on tribal sports betting and in the more practical, executive-level training we provide through the International Center for Gaming Regulation (ICGR). 11 We note, therefore, that the questions, and our findings, are at the useful intersection of theory and practice in gaming law and policy.
B. Case study methodology
To fill this gap, we designed a qualitative empirical case study methodology to examine the legalization, operationalization, and regulation of tribal sports betting. We worked with the ICGR to initially identify three state jurisdictions selected on the basis of type and scope of existing and potential tribal and/or commercial gaming markets, state and tribal regulatory regime, and sports wagering authorized. For each of the three state jurisdictions—Washington, Arizona, and New York—we developed an empirical case study focused on how tribal sports betting was authorized, operationalized, and regulated within each jurisdiction.
For each case study, we obtained and reviewed (1) information regarding the state's legalization of in-person and/or mobile sports betting, including applicable state legislation, (2) the tribal-state compact(s) permitting tribal operation of sports betting, (3) the allocation of regulatory authority over tribal sports betting under the compact and/or state law, (4) each regulatory authority's promulgated rules regarding tribal sports betting, and (5) additional relevant information, including with regard to state-tribal relations, tribal-state revenue sharing, and legal challenges. 12
In developing the original case studies, we observed two distinct approaches to state authorization and regulation of tribal sports betting. In Washington, tribal sports betting was authorized through amendment of existing tribal-state compacts and regulated entirely in accordance with the compacts and IGRA. In Arizona, in addition to authorizing tribal sports betting through the tribal-state compacts, the state also created a separate, state-licensed regulatory scheme for both commercial and tribal operators. In New York, the state adopted an approach similar to that used in Arizona.
With these observations in mind, we then examined tribal sports wagering in other state jurisdictions, looking at the nature of state authorization, compact provisions, regulatory framework, and the type and extent of tribal sports wagering to further develop our sense of whether there were distinct approaches and, if so, whether they might be categorized in a logical and useful way. We arrived at three models to describe and explain how states are legalizing tribal sports betting within their jurisdictions: the Compact Model, based on our case study of Washington state; the Combined Model, based on our case studies of Arizona and New York; and the Commercial Model, which logically stems from the Combined Model.
IV. THREE MODELS OF THE LEGALIZATION OF TRIBAL SPORTS WAGERING
A. Compact Model
We developed the Compact Model based on initial observations in our case study of tribal sports betting in Washington state, of which we describe pertinent elements here. 13 There are twenty-nine federally recognized tribes with lands within Washington state. All twenty-nine tribes have Class III compacts pursuant to IGRA; of these, twenty-two tribes operate a total of twenty-nine casinos under the compacts. 14
Washington state legalized sports betting in 2020, through a state law permitting amendment of the tribal-state compacts to include sports betting. The legislation directed that such an amendment must address “[l]icensing; fees associated with the gambling commission's regulation of sports wagers; how sports wagering will be conducted, operated, and regulated; issues related to criminal enforcement, including money laundering, sport integrity, and information sharing between the commission and the tribe related to such enforcement; and responsible and problem gambling.”
15
The legislation also expanded the powers of the Washington State Gambling Commission to include regulatory authority over sports wagering, including ensuring sport integrity and tracking and monitoring gambling-related transactions.
16
The legislation expressly authorized online and mobile wagering within the premises of a tribe's casino:
The transmission of gambling information over the internet for any sports wagering conducted and operated under this [act] is authorized, provided that the wager may be placed and accepted at a tribe's gaming facility only while the customer placing the wager is physically present on the premises of that tribe's gaming facility.
17
The following year, in accordance with the new state law, Washington negotiated amended compacts with the tribes to permit sports wagering. The 2021 compact amendments are uniform: each authorizes the tribe to engage in sports wagering at the tribe's Class III gaming facility. Each amended compact adds “Sports Wagering” as a permitted game, subject to the rules included in the new Appendix S (Sports Wagering). Sports wagering is defined universally as
the business of accepting wagers on any of the following sporting events, athletic events, or competitions by any system or method of wagering: (a) a Professional Sport or Athletic Event; (b) a Collegiate Sport or Athletic Event; (c) an Olympic or international sports competition or event; (d) an Electronic Sports or Esports Competition or Event; (e) a combination of sporting events, athletic events, or competitions listed in (a) through (d) of this subsection; or (f) a portion of any sporting event, athletic event, or competition listed in (a) through (d). 18
The tribe's sports book must be located within the tribe's gaming facility; kiosks are permitted on the broader premises. Tribes also may conduct online and mobile wagering within the broader premises of a tribe's casino. 19
The tribal-state compacts in Washington require concurrent state and tribal regulatory jurisdiction, including the tribe's obligation to adopt criminal laws related to gaming that are consistent with and at least as restrictive as the state's laws, and the tribe's consent to concurrent application of the state's gaming laws to Class III gaming on tribal lands. 20 The new Appendix S sets out “Standards of Conduct and Operation” for tribal sports wagering, 21 minimum internal control standards that the tribal regulatory authority must adopt and implement, 22 and licensing and certification requirements related to the tribe's sports betting operations. 23
Thus, as tribal sports betting in Washington state is operated entirely on tribal lands under the terms of the tribal-state compacts and IGRA, we categorized this regulatory approach as the Compact Model. In short, the Compact Model follows the usual process and rules concerning tribal gaming on tribal lands: tribal sports betting is authorized by the terms of the compact; its operation is limited to tribal lands; and federal law, particularly IGRA and National Indian Gaming Commission (NIGC) regulations, apply. Other states, such as New Mexico, North Dakota, Oregon, and Wisconsin, have utilized the Compact Model to authorize tribal sports betting. 24
The terms of the compact may permit the tribe to operate mobile wagering; under the Compact Model, any mobile wagering would necessarily be limited to tribal lands and may be further limited, as in Washington state, to tribal casino premises. 25 The regulatory authority of the tribe and the state depends on the terms of the compact. Some compacts assign primary regulatory authority to the tribe, such as in North Dakota and New Mexico; others give a more robust role to the state, such as in Washington. A few tribes, like those in New Mexico, have compacts that broadly permit them to operate any Class III games; 26 those tribes were able to operationalize sports betting on tribal lands without having to negotiate an amended compact with the state.
B. Commercial Model
While our prior case study research did not focus on a state jurisdiction that permitted tribal sports betting solely under state regulation, a few states have done so. We call this model the Commercial Model. Under this approach to state authorization of sports betting, tribes are treated the same as commercial operators, operating sports wagering and other casino games entirely under state law and regulation. Typically, in states employing the Commercial Model, there are no federally recognized tribes with tribal lands within the state's borders, so that the only entry into the state's market is through state licensure of commercial gaming operators. In a few states, however, this approach is available in addition to the Compact Model, at least for those tribes with Indian lands within the state's boundaries. 27
In Pennsylvania, for example, the Mohegan Sun Pocono, owned and operated by the Mohegan Tribe of Connecticut, operates entirely under state law. The casino's Unibet Sportsbook opened in 2019, shortly after the state legalized sports betting. 28 As there are no federally recognized tribes within Pennsylvania, all sports betting within the state is operated exclusively under state law, whether the operator is a tribal or commercial entity. And within the last year in Las Vegas, the Mohegan Sun Casino at the Virgin Hotel and the Palms under the ownership of the San Manuel Band, both just off the Strip, reopened after complete renovations during the pandemic, and operate entirely under Nevada law and regulation, as will the Mirage under the Seminole Tribe's Hard Rock brand. 29
It is likely that an increasing but select group of tribes will pursue sports betting as commercial operators in their own states and/or other state jurisdictions under the Commercial Model. 30
C. Combined Model
In our prior research we also examined the regulatory approach to tribal sports betting in Arizona and New York.
There are twenty-two federally acknowledged tribes with Indian lands within Arizona. All twenty-two tribes have entered into Class III compacts with the state. 31 Arizona legalized sports betting in 2021, through amendments to existing compacts as well as new state laws and regulations. The existing compacts were amended to allow both retail and mobile sports betting on Indian lands. 32 At the same time, Arizona legalized both commercial and tribal sports betting state-wide, using a state licensing model. Arizona authorized ten tribal licenses for state-wide mobile sports betting, and also ten commercial licenses for both retail and mobile wagering. 33
As of 2021, the state had negotiated uniform amended compacts with twenty tribes (the “2021 compacts”). 34 Under the 2021 compacts, tribes are permitted to operate “event wagering” and “fantasy sports contests” in accordance with the “standards, specifications, and regulations” set forth in Appendix K (“Standards for Event Wagering”). 35 Event wagering is broadly defined to defined to include accepting wagers on
sports events or other events, portions of sports events or other events, the individual performance statistics of athletes in a sports event or combination of sports events or the individual performance of individuals in other events or a combination of other events by any system or method of wagering, including in person or over the internet through websites and on mobile devices. 36
As the latter clause indicates, the 2021 compacts permit mobile or online wagering on the tribe's Indian lands.
The compacts require concurrent state and tribal regulatory jurisdiction. For gaming conducted pursuant to the compacts, each tribe's gaming regulatory authority is charged with responsibility for the regulation of all gaming activity pursuant to the tribe's gaming ordinance, as well as with enforcement of the compact and appendices. Tribal gaming offices are required to notify the Arizona Department of Gaming of any violations or suspected violations, and to provide the state agency with access to ongoing investigations.
At the same time, the Arizona Department of Gaming has regulatory and oversight authority as provided in the compacts, including unrestricted access to tribal casinos and records. The state agency conducts biennial comprehensive reviews of each tribal casino's compliance with the compacts. The tribal and state regulatory authorities also meet at least quarterly “to review past practices and examine methods to improve the regulatory program created by this Compact and its appendices.” Both the tribal and state regulatory authorities have authority to promulgate rules that incorporate the compact provisions. 37
Specific to sports betting, Appendix K includes detailed requirements in the areas of general regulation (including licensing, equipment, access to records and reports, responsible advertising, policies and procedures, reporting, self-exclusion and responsible gaming, and wagers); integrity monitoring and geofencing; event wagering system and testing (including servers and cloud storage, technical standards, event wagering systems, event wagering system testing, change management, event wagering system recertification, system self-monitoring of critical components, event wagering system communication, and integrity and security assessment); event wagering system shipping and installation; event wagering (including authorized wager types, authorized events, prohibited wagers, events and wagers, wager rules, and layoff wagers); operational requirements (including house rules, player account creation, player account terms and conditions, player account maintenance, promotions and/or bonuses, and tournaments); minimum internal control standards (including cashiering, accounting, internal audit, and surveillance); and net win calculation (for purposes of revenue sharing under the compacts). 38
For retail and mobile sports betting operated on tribal lands in Arizona, then, we can see a similar approach to Washington state's implementation of the Compact Model: pursuant to IGRA, the terms of the negotiated and approved tribal-state compacts, along with federal law and regulations, govern tribes' operation of sports betting on tribal lands.
Arizona law, however, also permits tribes to operate mobile sports betting state-wide under state law. Along with authorizing amendments to the compacts, the state authorized a total of twenty sports betting licenses: ten for sports organizations 39 and ten for tribes. These state licenses allow—and indeed, require—tribes to offer mobile sports betting outside of Indian lands: “An Indian tribe…[may be licensed] to operate only mobile event wagering outside the boundaries of its Indian lands and throughout the state….” 40 With regard to tribal operation of state-wide mobile sports wagering, then, Arizona's implementation is similar to the Commercial Model: tribes are treated as commercial operators, subject to state licensure and regulation.
Thus, tribes in Arizona can operate sports betting under two separate regulatory structures: for tribal sports betting on Indian lands, the 2021 amended compacts, as well as federal law and regulation, govern; for tribal sports betting outside of the tribe's reservation, state law and state regulations govern. We call this approach the Combined Model, as it combines key elements of the Compact Model and Commercial Model.
Under the Combined Model, the typical division we've observed to date is retail and/or mobile sports betting on tribal lands under the terms of the compact, and mobile sports betting statewide under state law and regulation. Often, the state will require or incentivize tribes to partner with commercial mobile sports betting platform providers in order to be eligible for a state license. The state's regulatory role with regard to gaming on tribal lands is determined by the compact, and the state fully regulates all gaming off of Indian lands, regardless of whether the gaming is operated by a tribe. Tribes generally must submit to state licensing to operate sports betting under the Combined Model. Under the Combined Model, increased tribal revenue sharing is a likely outcome of negotiation over the introduction tribal sports betting on tribal lands. Tribes also must pay applicable state fees and taxes to operate gaming off of tribal lands.
The specifics of the Combined Model vary significantly from state to state. Typically, but not always, the Combined Model includes state authorization of commercial sports betting, so that tribal operations are in direct competition with commercial operators. This is the case in Arizona, for example, where tribal sports betting operations compete with the ten state-licensed commercial sports organizations, which are able to offer both retail sportsbooks at a sports facility and state-wide mobile sports betting. 41
New York's implementation of legalized sports betting provides another example of the Combined Model. In New York, three tribes operate seven Class III casinos: the Oneida Indian Nation, the Saint Regis Mohawk Tribe, and the Seneca Nation. New York legalized commercial casinos in 2013, including sportsbooks via a triggering clause “provided there has been a change in federal law authorizing such activity.” 42 After the demise of PASPA, New York operationalized legalized retail sports betting in 2019 for both tribal and commercial casinos, permitting retail betting by “persons physically present” in “a sports wagering lounge located at a casino.” 43 The state's four commercial casinos, along with the seven tribal casinos located in the state, all operate retail sports books. Thus, initially, tribal sports betting in New York operated under the Compact Model, as tribes' retail sports books are located on tribal lands and governed by the terms of the compacts as well as federal law and regulation.
Then in 2021, New York authorized mobile sports betting. Under the new law, the server for mobile wagers must be physically located on the premises of one of the state's commercial casinos. 44 There has been some uncertainty, and controversy, about how the 2021 authorization of mobile wagering may or may not trigger the compacts' automatic amendment provisions. While it appears that the new state law does not permit tribes to operate mobile wagering independently under the compacts, it does allow for the possibility of a tribe partnering with a commercial casino, either through a revenue-sharing arrangement (commercial operators who entered into an agreement with a tribe had an advantage in competing for a license 45 ) or to locate the tribe's server on the commercial casino's premises. Tribes also are eligible to seek an operator license under state law (that is, as a commercial gaming operator). 46
This approach, requiring tribes either to partner with licensed commercial casinos or to seek a state license of their own in order to operate mobile sports wagers, transforms New York's approach from the Compact Model to the Combined Model: tribes operate retail sportsbooks on Indian lands under the compacts, and can operate or participate in mobile wagering under direct or indirect state licensure. As in Arizona, New York's approach highlights issues related to commercial competition, as well as the relatively complex regulatory approaches in operationalizing sports betting under the Combined Model.
V. CONCLUSION
While the particular details may vary, state authorization and regulation of tribal sports betting to date may be usefully categorized into the three models we identify here: the Compact Model, the Commercial Model, and the Combined Model. Each model is characterized by two key factors: the extent of state regulatory authority, and where tribal sports betting is conducted.
The models have obvious implications with regard to state and tribal regulatory authority and tribal sovereignty, as well as ramifications with regard to commercial and tribal market access and competition. As we identify, describe, and discuss throughout, this project spotlights several of the most significant implications for tribes.
At bottom, the Compact Model limits tribes' markets to tribal lands, but often is accompanied by limited or no legalization of commercial sports betting. The Commercial Model permits tribes to operate sports betting in any location deemed appropriate by the state, including state-wide mobile wagering if authorized, but puts tribal operators in direct competition with commercial operators. The Combined Model provides tribes with some exclusivity, at least on tribal lands, but typically puts tribes in competition with commercial operators for sports betting conducted outside tribal lands.
By sorting out, defining, and categorizing these legalization and regulatory models for tribal sports wagering, and surfacing the types of issues they appear to raise, we intend to assist tribal and state officials, as well as tribal and commercial operators and other interested parties, in understanding how each model may be implemented, identifying the implications of each model as well as variants within each model, and determining which model best serves the shared policy goals of tribes and states.
As more states, more tribes, and more commercial operators are entering into the sports wagering market, there is much at stake, as competition will only increase. The models we provide here are a first, and foundational, step in identifying and establishing emerging and best practices to authorization and regulatory frameworks to help all stakeholders navigate this highly dynamic legal, regulatory, and market environment.