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Despite compelling reasons to study the impact of Indian gaming on the health of tribal members, gambling problems among American Indians have received scant attention from the research field. One reason for the dearth of research in this area is the challenge of conducting research with a population that has a long history with research abuses, especially in the area of addictive disorders. How and when should investigators approach American Indian communities? Which research questions should receive priority? To answer these questions, Tribal Government Gaming magazine  invited Katherine Spilde and Eileen Luna-Firebaugh to offer guidance to gambling researchers interested in studying American Indian populations.

Both of our institutions, San Diego State University and the University of Arizona, encourage and support academic research on issues related to American Indian tribal governments.  Whether legal or policy studies, cultural analysis or public health research, part of our mandate is to strengthen and contribute to the foundations of original research about the important changes taking place in Indian Country. However, many projects that might seem important or interesting from an academic perspective are not meaningful to or feasible in tribal communities, where priorities and beliefs about what is to be shared vary widely from place to place.
   
To understand why tribal governments are sometimes reluctant to allow “outside” researchers to study their communities, consider the following story:  In 2004, the Havasupai Tribe filed a lawsuit against Arizona State University charging that ASU researchers had misused blood samples taken from tribal members who had been told that the sample material would be used for a study on the genetics of diabetes. The Havasupai community members later learned that the samples were also used for research on schizophrenia, inbreeding and migration patterns, without the tribe’s consent. This recent case, while shocking, was reminiscent of other past abuses and reinforced Indian Country’s suspicions of research and the assumption that findings could be used to harm and humiliate American Indian people and communities (Santos, 2008; Sahota, 2007).
   
Researchers interested in studying the economic and social impact of gambling on American Indian communities must understand the history this story reflects and illustrates as well as the new research regulations some tribal governments have adopted to protect themselves and to exert more control over investigations conducted on or with their communities. We offer the following recommendations to researchers who are thinking about studying gambling impacts or gambling disorders among American Indian communities.

OBSERVE PROPER PROTOCOL

Issues of proper protocol can make or break a research project in Indian Country. As sovereign nations, American Indian tribal governments have the right and responsibility to regulate research on their lands, and some tribal governments have created their own Institutional Review Boards (IRB) for the purpose of evaluating proposals for research on their communities (Sahota, 2007).  Investigators should take care to follow the community’s research
regulations when submitting the project to the tribe’s IRB.
   
We find that academic researchers are often reluctant to approach tribal government officials about potential projects. One simple guideline for dealing with tribal leaders is to consider them as one would any other esteemed elected official or honored representative. Elected tribal chairs and members of tribal councils are the chosen representatives of sovereign peoples and nations. They carry a heavy mantle of responsibility and should be accorded great respect. If the leaders and members believe that the concept of tribal sovereignty is understood and honored by researchers, they will be more cooperative and forthcoming and more likely to contribute their ideas and support to research among their community members.    

STRIVE FOR CULTURAL COMPETENCE

The recommendation to develop a project that is culturally competent might sound like obvious advice to those interested in working with native communities.  However, in our experience, academic researchers often fail to do their homework or invest time in trying to understand the community’s perspective on important issues. Learn as much as you can about the history, culture, traditions and circumstances of the community you would like to study. For example, try to understand the pace and rhythm of life in the community, which may not always proceed in accordance with your project’s timetable or deadlines. Ceremonies and rituals often take precedence, even over previously scheduled interviews with outside investigators.
   
In addition to examining your own personal preconceptions, take a critical look at the existing methodology for cultural bias. For example, current screening instruments for gambling problems have not been validated for use in American Indian populations. You might also consider how the view of gambling among Indian tribes might influence your investigation.  Whereas the dominant American culture often seems ambivalent about gambling, despite the large percentage of Americans who gamble, many tribes view their own traditional gambling activities as an important and positive part of their history and culture.         
 
Additionally, for many tribal governments, gaming revenues provide the most significant (or only) source of governmental income, so tribal gaming’s political impacts are understood to outweigh any potential or actual social impacts.

AIM FOR A TRUE PARTNERSHIP

Most importantly, community leaders and tribal members should be involved from the inception of the research project as more than just human subjects to be studied. Researchers should expect—and invite—tribal representatives to monitor your research project and to request continuous consultation and conversation. Be prepared to explain your project again and again to leaders, small groups and individuals and to incorporate feedback along the way. Projects that reflect true collaboration are ultimately the most valuable to tribal communities themselves and may provide additional value to populations of interest to other researchers.
   
Reciprocity should be the hallmark of research projects with American Indian communities. If investigators make use of the subjects’ time and participation, they should give back to the community by providing resources and skills and by focusing on projects that the community itself is seeking. Hiring tribal members to assist in research activities is a common practice that can benefit the tribe and also make it less likely that research participants will be exploited or exposed to unnecessary risk (Caldwell et al., 2005). 

CONCLUSIONS

These are just a few of the many opportunities and challenges involved in the study of gambling’s economic and social impacts on American Indian populations. Despite the many challenges, we are confident that academic researchers who make the effort to conduct community-based, collaborative research in Indian Country will succeed in producing enlightening studies that will benefit both the tribes and the larger gamb
ling field. We support the creation of tribal IRBs to monitor and shape academic research on tribal communities and encourage researchers to learn more about these processes and protocols to ensure successful completion of important work.

In February 24, 2009, the Supreme Court issued an opinion in Carcieri v. Salazar (129 S.Ct. 1058 (2009)) that limited the secretary of the interior’s authority to acquire land into trust for Indian tribes under the Indian Reorganization Act (IRA). Carcieri held that trust lands may only be acquired by the secretary under the IRA for tribes that were recognized and “under federal jurisdiction” as of 1934.

A year later, the three executive, legislative and judicial branches have had occasion to consider the decision and determine the impact of Carcieri on Indian Country. This article examines the aftermath of the Supreme Court’s decision.

The Executive Branch
The initial response from the Department of the Interior was very positive. On February 27, 2009, Secretary of the Interior Ken Salazar issued a statement that he was “very disappointed by the court’s ruling.” The department also conducted three consultation sessions last summer to seek input from tribal leaders on potential administrative and legislative solutions.

A year later, the department has yet to announce a legal standard for interpreting the phrase “under federal jurisdiction,” or made any determinations on how to apply Carcieri, if at all. In fact, the only determination of note thus far is the Interior Department’s decision concerning the United Keetoowah Band of Cherokee Indians of Oklahoma.

Citing Carcieri, Assistant Secretary for Indian Affairs Larry EchoHawk issued a determination on June 24, delaying the Interior Department’s decision on a land-into-trust application for the band. Although the band is one of two successors in interest to the historic Cherokee Nation, EchoHawk acknowledged that the band did not organize as an Indian tribe until 1950 (under the Oklahoma Indian Welfare Act).

The assistant secretary suggested that band’s application raises the question whether the secretary can acquire land into trust today for members of a tribe that was not in existence in 1934 if that tribe is a successor in interest to a tribe that was in existence and under federal jurisdiction in 1934. He wrote, “This question requires further consideration.”

Recently, department officials have said that achieving an administrative solution could take as long as two years. Unsurprisingly, the department has encouraged Indian tribes to pursue legislation. On November 4, Donald Laverdure, deputy assistant secretary for Indian affairs at the Department of the Interior, testified before the House of Representatives Committee on Natural Resources that the “department strongly supports Congress’ effort to address the recent United States Supreme Court decision.”

The Legislative Branch
Initially, Congress was quick to act after the decision was handed down, and the two primary committees of jurisdiction convened hearings. On April 1, 2009, the House Committee on Natural Resources convened an oversight hearing on Carcieri. Michael Anderson, an author of this article, was privileged to testify at the hearing. The committee chairman, Rep. Nick Rahall (D-West Virginia), observed that “while all of the potential ramifications of this decision are not known at this time, there is one thing that we are certain of: This decision may result in many frivolous lawsuits being filed to challenge the status of virtually every tribe.”

On May 21, 2009, the Senate Committee on Indian Affairs convened an oversight hearing to examine the Executive Branch’s authority to acquire trust lands for Indian tribes. Committee chairman Senator Byron Dorgan (D-North Dakota) offered his deep concern about the court’s decision. He described it as a complicated, interesting and difficult opinion requiring the attention of many Indian tribes and the committee.

Subsequently, three nearly identical bills, known as the “Cariceri-fix” legislation, have been introduced by Congress. These bills would amend the Indian Reorganization Act to apply the act to all federally recognized Indian tribes, regardless of when any tribe became recognized.

A year later, neither the House nor Senate has approved the Carcieri-fix legislation. Both Democrat and Republican members are skeptical that a Carcieri-fix bill could move this year by itself. The current thinking on Capitol Hill is that the legislation’s best chance of approval is to include it in an appropriations measure.

The Judicial Branch
When the Carcieri opinion was first issued, many of us believed that the decision would be extremely disruptive for Indian tribes seeking to exercise rights under the Indian Reorganization Act and expected legal challenges to quickly follow. Indeed, opponents have sought to capitalize on Carcieri to prevent trust acquisitions by bringing litigation against the federal government.

A year later, there are as many as seven Carcieri cases pending across the United States at both state and federal levels. Two of these cases are before the U.S. Courts of Appeals. The first appeal is Patchak v. Salazar (DC Cir. No.: 09-5324). David Patchak challenged the department’s 2005 decision to take land into trust on behalf of the Match-E-Be-Nash-She-Wish Band of Potawatomi Indians. Patchak argued that the tribe was not under federal jurisdiction in 1934. The court never reached the plaintiff’s argument, dismissing the suit on prudential standing grounds instead. The fact that the District Court for the District of Columbia found no standing for individuals under Section 5 of the IRA to challenge trust acquisitions is encouraging.

In the second appellate matter, Butte County v. Hogen (DC Cir. No. 09-5179), the local government plaintiff is challenging the department’s decision to acquire trust land in Northern California for the Mechoopda Indian Tribe. The Carcieri decision was not before the district court, but the plaintiff noted the opinion in a footnote of the appeal brief and requested the court to take judicial notice of the case. The Butte County case is easily distinguishable from Carcieri. In Carcieri, none of the parties contended that the Narragansett were under federal jurisdiction in 1934 and in fact, stated that the tribe was under state jurisdiction. In Butte County, the federal government has argued that nothing suggests that the relationship between the United States and the Mechoopda Tribe is analogous to the Narragansett.

Carcieri continues to appear in several trial court cases, and not always at the hands of tribal opponents. One example is the Wilton Miwok Rancheria v. Salazar (CA-ND No. C-07-02681) case, in which the plaintiff Indian tribe brought a suit to seek federal recognition. In July 2009, the district court entered a stipulated judgment approving a consent decree in which the United States agreed to restore federal recognition to the Wilton Rancheria and to acquire trust land for tribe.

One month later, two local governments sought to intervene. Unexpectedly, the district court has requested supplemental briefing from the parties as to the relevance of the Carcieri decision to the recognition of the Wilton Rancheria.

Looking Forward, A Year Later
It appears that the courts will be the first of the three branches to determine the impact of Carcieri on Indian tribes. Based on at least one recent federal court decision, this generally looks favorable for Indian Country.

However, the judiciary is also the one branch of government with no legal or moral obligation of government-to-government consultation prior to decision-making. Indian tribes have very little input on how the Carcieri decision will be interpreted by a judge. Therein lies the risk.

If opponents begin to see successes in the courtroom, many Indian tribes that believe they do not have a direct “Carcieri issue” may find themselves hauled into court to provide sufficient evidence that they were under federal jurisdiction in 1934. Indian tribes and their investors that believe opponents may seize upon the Carcieri decision to challenge recent, pending or even past fee-to-trust acquisitions would be well advised to begin laying the groundwork for a defense in potential litigation.

An even worse outcome could occur if a court chose not to confine itself to a reasonable interpretation of the IRA, but instead elected to determine the general application of Carcieri to other Indian tribes. It is not unheard of for a court to expand a ruling beyond the dispute before it and establish a new broad rule.

To avoid such disastrous occurrences, tribal leaders and their investors must continue to encourage their congressional representatives to approve the Carcieri-fix legislation, the preferred remedy.

Over the past few decades, casino gaming has unquestionably been a catalyst for enhancing the economic situations of many Native American tribes. Successful casino operations have created hundreds of thousands of jobs, contributed to substantial development of Native American-owned small businesses, provided millions of dollars to non-gaming tribes through special trust funds, and supported essential tribal programs such as schools, hospitals, water and sewer systems, roads, police and firefighting programs, infrastructure needs, and cultural and social projects.     

The lingering effects of the current economic crisis, when combined with the potential for further supply in terms of additional gaming capacity in many markets, will likely keep many gaming markets very competitive for the foreseeable future. As many tribes face the prospect of suppressed profits from casino operations for the next few years, economic diversification strategies will be increasingly important in order to continue to fund programs and grow tribal economies.

Justifying the Need for Diversification
Like non-tribal gaming owners and operators, tribes are being forced to address the many challenges in their gaming operations resulting from the current economic crisis. Across the U.S., gaming revenues are down, in some markets quite substantially, as consumers react to job losses as well as steep declines in their investment portfolios and housing prices.

Anecdotal evidence suggests that the revenue declines casinos are experiencing are a combination of both a cutback in the number of trips that consumers are making and a reduction in their per-trip gaming budgets. In addition, many operators have reacted to the revenue declines they are experiencing by offering more incentives to consumers, thereby putting further pressure on operating margins and profits from their casino facilities.

While there are some encouraging signs that the economy is on the mend, most financial experts agree that the timing and extent of a sustained recovery remain large question marks. When the economy does turn, the question that remains on the minds of many gaming operators is to what extent, and how quickly, consumers return to their pre-economic crisis gaming habits.

Some consumer research that the Innovation Group has completed suggests that a rebound in gaming factors (i.e. number of trips, spend per trip) back to the levels experienced during the 2006-2007 period may be prolonged.

While job growth and job stability are critical factors in getting some consumers back to feeling as if they can participate in gaming like they have in the past, other consumers have experienced such a devastating blow to their net worth and economic situations that their gaming habits may be impaired for a long period of time, thereby keeping the much-anticipated rebound somewhat subdued.

While tribal and non-tribal operators are dealing with the decreases in demand in the industry, there continue to be significant spikes in competition, primarily from new venues. While Maryland and Ohio begin to implement recently passed legislation and Pennsylvania gears up for table games, other states such as Massachusetts, New Hampshire and Kentucky continue to seriously consider and debate the topic. Additionally, pressure builds as nearby jurisdictions like Bermuda and Jamaica also consider gaming. Finally, i-gaming is receiving serious attention, offering the prospects of even further competition for consumers’ discretionary dollars.

Hence, with more supply imminent, demand subdued for the near future and profit margins already under pressure in the gaming industry, there is not only a sense of urgency to improve operational efficiencies but also the need for tribes to diversify their long-term economic and investment strategies.

Tribes with successful gaming operations have the means to discover new potential streams of economic money flow. Historically, many tribes strategically reinvested back into the gaming operations by building hotels, conference centers, golf courses and other amenities that drove incremental gaming trips to the casino.

While the right strategic developments should continue to be considered in order to augment their casino operations or provide a competitive edge, more emphasis needs to be placed on leveraging their success in casino operations into investments in energy, other strategic businesses, and even in public and private enterprises. These investments could help provide tribes with a balanced revenue steam that can be complementary to their gaming operations.

Approaching Economic Diversification
Venturing into new opportunities or lines of business has inherent risks. Tribes are often approached about investing in a wide variety of new business enterprises. Determining which ones are appropriate for a tribe to consider and ultimately invest in can be a time-consuming and expensive process if there is not a clearly defined economic diversification plan in place.

The basis of a well-defined economic diversification plan is to provide tribes with a framework that allows them to move forward with their economic diversification goals while attempting to minimize the risks associated with new ventures or investments. Having a plan in place will ensure that only those projects or companies or investments that fit a tribe’s goals in terms of size, scope, risk, acceptable returns and other factors are considered.

A well-defined economic diversification plan can be developed following several basic steps as summarized below.

Step 1:
Identifying and Understanding Tribal Goals and Objectives
The first step in creating an economic development plan is the identification of the overall goals and objectives of the tribe. The goals of the tribe may go beyond just a pure financial return on an investment. For example, is tribal employment a consideration? What about the importance of emphasizing tribal entrepreneurship growth? From a geographic perspective, is the goal to make investments only within the local community or is a wider sphere important?

These and other key questions can be answered through a series of stakeholder interviews. By gathering feedback from tribal leaders, council members, tribal members, advisers and other parties, the specific goals and objectives can be determined.

Step 2:
Outlining Specific Investment Criteria
The next step in the process of developing the plan is to identify specific investment criteria that are acceptable to the tribe based on desired returns, levels of risk and resources available. This step is important so the tribe (or entity charged with developing and managing these economic diversification projects) does not spend needless time evaluating projects that do not meet the minimum criteria. It is also important to have a thorough understanding of the resources, capital, time and energy that the tribe is willing to devote to projects. For example, some of the specific questions that need to be answered regarding investment criteria may include:

• What is the size of investments or projects to be considered?
• Are there specific businesses that the tribe does or does not want to be in, and what should the priorities be?
• What capital resources are available? Internally? Externally?
• What tribal resources are available (institutional/labor/professional) for potential implementation?
• What is the tribe’s acceptable level of risk?
• What is the tribe’s threshold for a minimum return on investment (ROI)?

In addition to internal financial resources, tribes need to consider external financial resources that are potentially available for projects. Indeed, access to capital in these times is more difficult, especially for casino-related projects. However, there are a number of opportunities available to tribes, including stimulus funds established under the American Recovery and Reinvestment Act of 2009.

This stimulus funding can allow tribes to issue low-interest bonds for projects such as health care centers, water plants and wind farms. Tribes will be able to issue either traditional tax-exempt bonds or special Build America Bonds for designated projects. The bonds are intended to help states, local governments and tribes build schools, hospitals, roads and other infrastructure. No casinos or gambling projects are allowed under this funding.

Other tribal funding opportunities include resources from the Small Business Administration (8a), as well as tax credits for natural resource and clean energy development. The Jemez Pueblo in New Mexico recently announced it is developing a new large-scale solar energy project. The proposed 30-acre site for the project will contain 14,850 solar panels that will be able to generate four megawatts of solar energy, or enough to power approximately 600 homes. The project, which is expected to cost $22 million, will be financed entirely through various loans, grants and tax credits from federal and local governments and other entities.

Step 3:
Implementing the Right Governing Structure
Governing and monitoring any new tribal economic development activities can also be a challenge for many tribes looking to diversify. Some may be branching into new businesses they will oversee, and for which they may not have in-house expertise to adequately mange. Establishing the proper approach to governance and establishing an entity and a protocol that works for the tribe are therefore essential.

There are a number of tribes around the country that have set the standard for diversifying their economic interests and establishing the appropriate governance over these investments. Benefitting from these tribes in terms of studying the best practices and lessons learned regarding how to structure the oversight of these investments can be a valuable approach for those just initiating their economic diversification strategies.

Some of the more successful tribes have established separate entities for owning the interests in these alternative investments. Separating these new business operations from the ongoing operations of the tribe and tribal councils can be an effective structure that allows these entities to operate independently on a day-to-day basis without interference, yet still allows control by the tribe over strategic initiatives.

These new entities are usually governed by a board consisting of tribal members, and in some instances outside third-party members who can bring valuable expertise to the table. In evaluating what structure is right for a tribe, the following questions should be considered:

• What type of entity should be formed to hold these alternative investments?
• Should a governance board be elected by general membership or appointed by tribal councils?
• What role should independent third parties play?
• How should the board be structured in terms of length of services, compensation, removal criteria, etc.?
• Should management of the oversight entity be in-house with dedicated staff, contracted out or a combination of the two approaches?

Step 4:
Sourcing Deal Flow and Opportunities
Once the tribe’s goals and objectives have been set, investment criteria determined and a governing process put in place, the next step is to begin identifying and evaluating potential projects and investments.

There is a variety of ways to begin sourcing potential deals and opportunities. The key is to compare the prospective source against the strict criteria that the tribe has established, so that only opportunities that are of the right size and scope, are in geographic areas the tribe wishes to concentrate its efforts, and are in industries or businesses that the tribe has determined are a potential fit for them are presented for evaluation.

While this process will restrict the overall universe of potential opportunities, it will ensure that the tribe is properly allocating its energy and resources and evaluating only those opportunities that fit its overall goals and objectives. Potential sources of deals and opportunities can include the following:

• Industry publications
• Various conferences
• Developing relationships with banks, investment advisors, equity firms and other financial entities
• Law firms and accounting firms that the tribe works with
• Local chambers of commerce and business leaders
• State or regional economic development entities

Due Diligence
Once opportunities are identified that potentially fit the tribe’s investment criteria, it is critical that adequate due diligence be completed on the opportunity or the company prior to committing to any investment.

Depending on the nature of the investment, the tribe may or may not have the internal expertise to adequately evaluate the prospective opportunity. In these situations, reaching out to financial and legal advisers and/or consultants knowledgeable of the industry or situation is recommended.

Casinos have been a cornerstone of many tribal economies over the past few decades. However, the current state of affairs in the gaming industry suggests that for certain tribes, now is the time to leverage the success they have had with their casino operations and invest in other businesses in order to diversify their economies.

Internet gambling could be either an economic savior or the downfall of brick-and-mortar casinos, depending on with whom you’re speaking. Debates on the topic are occurring at both the federal and state levels, and the recent discussion over legalizing intrastate internet poker in California has been divisive.

Past and Present
The Morongo Band of Mission Indians has been at the forefront of the internet poker movement in California, though a push for legislation last year was unsuccessful. Morongo Chairman Robert Martin is attempting to garner more support for an internet poker bill this year, and recently testified at a state Senate hearing on the matter. In 2007, the Morongo tribe partnered with cardrooms in Los Angeles to offer card games online when legislation is passed.

“I think the handwriting is on the wall,” Martin says. “Legislation is coming at some point. State lawmakers made clear at that hearing that they realize online poker is growing and are interested in tapping that revenue stream for the state. They also clearly want to protect Californians and regulate the industry, and they seem to agree with Californians that regulation should happen on the state level.”

Internet poker opponents think the writing on the wall says something entirely different. California Tribal Business Alliance spokesman Doug Elmets says the fact that no legislators have penned a bill is indicative of a lack of support for internet poker.

“It’s a non-starter from the vast majority of tribes and clearly has very little support, if any, in the California legislature,” Elmets says. “In fact, the Morongo tribe has not been able to find an author for their legislation. They weren’t able to find an author for their legislation last year. It appears to be running into the same roadblock this year.”

The California Tribal Business Alliance represents many of the gaming tribes in California.

Testing the Waters
It is unclear how much support intrastate internet poker has from California residents themselves. There are few definitive studies showing how Californians feel about legalizing intrastate internet poker, though the Innovation Group recently surveyed 550 internet users in the state on the issue. The study was commissioned by the California Commerce Club-a company affiliated with the Commerce Casino cardroom in Los Angeles-and was skewed toward people who had played online poker before.

The study was conducted online, and asked questions like, “If internet poker were legalized, would you visit your local casino or cardroom more or less often?” Fifty-two percent of respondents said they would continue visiting their nearby casino or cardroom as frequently as before, while 14 percent said they would visit less and 13 percent said they would visit more.

“What that suggests to me, at least among this subset of folks, is that they’re playing online poker, and if internet poker was legalized, they’re saying they wouldn’t really change their habits,” says Paul Girvan, managing director of the Innovation Group. “That suggests to me there would not be a significant impact on brick-and-mortar casinos.

“The other reason why I believe that is the level of wagers that occur in an internet poker room are very low. We’re talking quarters, 50 cents. The Native American casinos and brick-and-mortar casinos don’t want that business. Their bets are $5 bets. They can’t afford to provide the services, the room, the staff to accommodate all these people who want to play quarter games.”

Contention in California
Many tribes disagree with Girvan’s analysis, and have said they are concerned about the potential effects of intrastate internet poker on land-based casinos. Considering that no bill has been proposed in the California legislature, it is uncertain if internet poker would be exclusively operated by tribal gaming enterprises, or if non-tribal gaming companies would be allowed to operate gambling sites.

“A lot of it would depend upon what is and what isn’t legalized and who can offer it and who can’t,” Lewis and Roca attorney Anthony Cabot says. “It could be very favorable for the tribes if only the tribes were authorized to do it. It could have a different impact if it were more open so others could do it as well, such as the cardrooms.”

The partnership between the Morongo Band of Mission Indians and Los Angeles cardrooms is cause for concern, Doug Elmets says, because of the exclusivity agreements that California tribes have in their gaming compacts.

“We’re opposed to the state legalization of intrastate internet gambling of any kind, because we believe that it’s going to violate the exclusivity provisions in our compacts,” Elmets says. “Those exclusivity provisions in our compacts give tribes the sole right to operate gaming devices, which are broadly defined and include personal computers.”

Tribes with exclusivity provisions in their gaming compacts share a portion of their revenues with the state, which totals $365 million per year for California’s general fund. Elmets says that if tribal gaming exclusivity is violated, California will be left with a budget gap amounting to hundreds of millions of dollars.

“Tribes that have compacts with the state that have exclusivity provisions are helping in a substantial way offset the state budget deficit,” Elmets says. “Should that exclusivity provision be violated by the legalization of intrastate internet gambling, then clearly the tribes would no longer be compelled to contribute to the state’s general fund. That is a substantial amount of money (to lose) on an annual basis.”

Internet poker would generate approximately $50 million per year, according to early estimates.

Few tribes currently support legalizing internet poker in California, though Agua Caliente Band of Cahuilla Indians Chairman Richard Milanovich says he is interested in discussing the issue further. Morongo Chairman Martin says he is optimistic that more tribal leaders will be swayed.

“We respect the views of all tribes and have taken time to have many conversations about this subject,” Martin says. “We are continuing those conversations and finding more and more tribes that are interested in intrastate internet poker. They’re recognizing that legitimate online poker is not a threat to our casino businesses or our exclusivity but a new opportunity to maintain and expand our business models.”

Martin also contends that a large number of Californians are already gambling online, and that the state should take control of the industry.

“Legalization of intrastate internet poker will provide Californians with important consumer protection against fraud, identify theft and cheating that they currently do not get from illegal offshore operators,” Martin says. “Californians are playing on sites operated by offshore companies that don’t pay taxes and don’t generate local jobs. Legalization also offers the state an opportunity to tap into a multibillion-dollar revenue stream, all of which currently is pouring into the pockets of offshore companies.”

The Innovation Group’s Girvan says that additional studies are needed to determine if tribal casinos would be positively or negatively affected by intrastate internet poker.

“I understand what the issues are on both sides of this,” Girvan says. “Would more studies help alleviate some of the concern? I think it would. To really hammer down these issues, two things would need to happen. One, you would need to survey the actual customers of Native American casinos, and have them as your survey base. Two, you’d probably want to do focus groups with these folks. I think those are two aspects that could be put together and could at least provide some information on that issue that would be really unequivocal.”

The Big Picture
Tribes are not only concerned about the legalization of intrastate internet poker in California. The Unlawful Internet Gambling Enforcement Act is currently dominating the discourse among internet gambling supporters and foes. Many tribes oppose the UIGEA, and are anticipating the federal debate to “fix” the bill and legalize online gaming in the United States.

Though the Indian Gaming Regulatory Act enables tribes with established reservations to conduct gaming, many tribal reservations are in rural areas, where a gaming facility would be unsuccessful. Legalizing online gambling would enable tribes in remote locations to launch internet gaming enterprises.

Other tribes, like the Morongo Band, support the UIGEA because of its allowance for intrastate internet gambling. While the UIGEA prohibits the transfer of funds from American banks to offshore gambling websites, there are no federal restrictions on intrastate internet gambling.

“We support the regulation and taxation of internet gambling at the state level as the best mechanism to ensure consumer protection and to maximize the benefits to local economies,” Martin says. “Current federal law that provides states the ability to assume regulatory control of Internet gambling is appropriate and no new federal law is needed.”

Organizations like the National Indian Gaming Association and the California Tribal Business Alliance have remained neutral on the subject of U.S. Rep Barney Frank’s bill to neutralize UIGEA, but NIGA is expected to address the topic at its conference. The California Nations Indian Gaming Association opposes Frank’s bill.

“The California Tribal Business Alliance hasn’t taken a position on the Frank bill or the various other federal bills to legalize and regulate internet gambling,” CTBA’s Elmets says. “We need to understand how their enactment is going to affect the tribal gaming business. The reality is that the legalization of internet gambling in the United States could be a disaster for tribal governments as it relates to gaming, or it could be a wonderful new avenue for tribal economic development.”

Many tribes outside of California have expressed support for internet gaming, as it presents additional opportunities, and as long as it does not threaten the exclusivity that some tribes enjoy in their own states.

“It has the potential to create economic development opportunities for Indian country,” Miko Beasley Denson of the Mississippi Choctaw tribe and Chairwoman Lynn Malerba of the Mohegan tribe said in a letter to United South and Eastern Tribes President Brian Patterson earlier this year. “States like Connecticut and Mississippi are unable to support an intrastate internet gaming system.”

In addition, tribes that haven’t been able to capitalize on land-based gaming because of their remote reservations would be able to participate, according to some experts.

Internet gaming expert Sue Schneider told Indian Country Today, “Internet gambling is inevitable and the sooner tribes get entrepreneurial about it and not be afraid of it the better off they will be. Some tribes are there with it. Others are not, and should be.”