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Tribes that already operate casinos or retail sports betting may find it difficult to amend their compacts to replicate the state-wide, hub-and-spoke mobile wagering model offered by the Seminole Tribe in Florida, according to a prominent tribal gaming attorney.
“One important factor is that it is going to vary state by state,” said Joseph Webster, a partner with Hobbs Straus and lead attorney for the Seminole Tribe, whose compact with the state was deemed legal by the U.S. Supreme Court in June.
The Supreme Court on June 17 declined to hear an appeal by two commercial gaming operators of a federal appeals court’s decision that upheld a 2021 compact between the Seminole Tribe and Florida that allows the tribe to accept mobile bets from players across the state.
The two commercial operators argued that processing bets placed outside tribal lands, even though servers are on a reservation, violated the Indian Gaming Regulatory Act (IGRA) of 1988. The Supreme Court’s decision not to review the case affirmed the Seminole’s monopoly on sports betting in Florida until 2051 when the current compact expires.
Webster defined the hub-and-spoke mobile as placing the server that receives and processes the wager on Indian lands, which is the hub, and the spokes are the devices located off Indian lands that are being used to transmit the wagers to those servers.
“This is a tool available to tribes,” Webster said Wednesday (July 24) during a webinar hosted by the Indian Gaming Association (IGA).
“It’s an option,” Webster added. “Some places I think this could work very well, some places probably not. And in other states, there may be ways to basically modify the approach. This is not a cookie cutter.”
Webster stressed that the hub-and-spoke approach to legalizing mobile sports betting for tribes was not going to be easy in a lot of states “but again this is one additional tool that is available to tribes to use”.
The Seminole model is entirely different from regulatory regimes in several other major tribal gaming markets, such as Arizona, Michigan and Connecticut, which have allowed tribes to participate in mobile sports betting and internet gaming only if they obtain a state license and agree to be regulated via a state gaming commission.
Webster was asked if tribes in Arizona now regretted their decision to limit their compacts to retail sports betting in land-based casinos and require a state license to participate in state-wide mobile wagering.
Currently, there are a total of 20 sports-betting licenses in Arizona, with ten designated for tribes to launch mobile wagering via commercial partners. However, the most lucrative sportsbooks in the state, such as FanDuel and DraftKings, have instead partnered with Arizona sports teams that are similarly authorized to offer sports wagering.
“I think so,” Webster said. “I’ve certainly heard from some of the tribes in jurisdictions like Arizona … that the model has not worked out very well for tribes. They are only getting a small fraction of the revenue and not even all the tribes are able to participate.”
Interest in the hub-and-spoke model of tribal sports betting is not confined to Florida.
Kansas has also adopted the model via at least two tribal gaming compacts, while the Southern Ute Tribe of Colorado has recently sued Governor Jared Polis and state gaming officials for limiting the state's sports-betting market to commercial casinos and their partners.
Specifically, the tribe argues that existing law allows them to engage in any gaming activity that is authorized elsewhere in Colorado so long as the tribe’s gaming activity mirrors Colorado bet amounts.
The Southern Ute Tribe launched its mobile sports-betting platform across Colorado in the wake of a 2019 state law, but according to Colorado Public Radio, received pushback from state officials before later shuttering the operation.
The tribe argues that it should be able to accept on-reservation wagers by gamblers anywhere in the state, following the recent court decision in the Seminole case.
In Kansas, the state legislature has renegotiated compacts with the Prairie Band Potawatomi Nation and the Iowa Tribe of Kansas and Nebraska to adopt the hub-and-spoke model for mobile wagering, enabling the two tribes to compete with commercial sportsbooks.
The compacts included a trigger mechanism that allowed for state-wide wagering after the Seminole compact was found to comply with IGRA.
Currently, the Prairie Band operates a retail sportsbook but has yet to launch its mobile app, while the White Cloud casino operated by the Iowa Tribe of Kansas and Nebraska does not offer any form of sports betting.
Tribes in several other states are expected to seek similar arrangements to Florida’s hub-and-spoke model, according to lawmakers and regulators.
One of them is Washington, where a 2020 state law and subsequent compact amendments currently exclusively authorize Indian tribes to conduct sports wagering but strictly for players that are located in tribal casinos or elsewhere on tribal lands.
Chris Stearns, a former chair of the Washington State Gambling Commission and now a state representative, said the state’s 29 tribes are considering their options to pursue state-wide mobile sports betting under IGRA but no decision has been made.
“That’s the model that now exists,” Stearns told delegates at the National Council of Legislators from Gaming States (NCLGS) summer conference in Pittsburgh on Saturday (July 20).
“I think you’ll find no matter what state you are in there may be strong interest in those states to pursue that model,” Stearns said.
The difference between Florida and Washington state was a supportive governor and legislature willing to support the compact with the Seminole Tribe in exchange for a revenue-sharing deal that would pay the state at least $2.5bn by 2026 and billions of dollars more in the future. Currently, there is no revenue sharing from tribal gaming in Washington state.
Democratic Governor Jay Inslee and the legislature would want revenue sharing if they agree to approve mobile sports betting through tribal compacts, Stearns believes.
Stearns also reminded state gaming regulators that the hub-and-spoke model of the Seminole compact does not involve a commercial license like those issued to tribes in Arizona, Michigan and Connecticut.
“That’s why the revenue-sharing point becomes important from the state’s side,” Sterns said. “That will be a really big issue going forward. Will tribes be willing to do that? I have a feeling we will find out in the next few years.”
