US: Tribes express interest in online gambling operations

At least 17 states, including Florida, have considered some form of online gambling. The options range from offering only poker to having full casinos, with blackjack and virtual slots. Nationally, U.S. Senator Harry Reid has been hunting for a path to push Internet gambling through the Senate. But most experts, including Giles, say there won't be any legislative action until after the November elections.

Like many commercial casinos, which now see online gambling as a brand extension, after first fearing it as a competitive threat, the Indian tribes have come around to the idea of getting into the Internet game. The tribes, while technically sovereign nations, restrict their gambling offerings to match whatever states and the federal government says is OK for their casinos.

While Indian gambling is a us$ 26.5 billion a year business in the United States - just a little behind commercial casinos -the notion that all tribes function as profitably as the Seminole Tribe of Florida is misplaced, Giles said.

"The top 40 tribes make 75 percent of the money," he said. That means about 200 tribes, especially those in the upper Midwest and lower-population areas such as Montana, are pretty much break-even propositions, he said. "They are mostly there to generate jobs for the tribes," he added.

So Giles said he is worried about one proposal being circulated that would allow only casinos with 500 or more slot machines to enter the online gambling market. "For us, that's only five or six tribes," he said.

Giles said in Canada the Kahnawake Mohawk Tribe has been successful processing Internet bets for others' online gambling sites. "That's something that our bottom three-quarters could do," he said. Others could team up to create a greater mass of players, making for bigger poker tournaments, the way Powerball uses multiple states to increase its jackpots, he said.

Giles also said recent events have brought optimism that online gambling is on the way. That includes a December 2011 opinion by the Department of Justice that not all Internet gambling is banned by federal law. (The DOJ shut down offshore poker sites on April 15, 2011, arguing the sites violated the Unlawful Internet Gambling Enforcement Act and engaged in bank fraud and money laundering.)

Giles said one reason to bring the topic up this week at the tribe's midyear conference was to gather information on what the tribes wanted and to prepare tribes on how to better communicate with legislators. "We're not at the point to come out with any specific policy," he said.

John Pappas, executive director of the advocacy group the Poker Players Alliance, said he would welcome the Indians' entry if poker is approved. "Those who are opposed are pretty short-sighted," he said. "This is going to happen."

Seminole Tribe representatives declined comment on their Internet gambling plans. The tribe's seven casinos earned about us$ 2 billion last year, according to one report, and the Seminoles are looking to begin negotiations on a new compact with the state. The current 20-year agreement included a five-year period of exclusivity for blackjack and other table games, for which the tribe pays us$ 1 billion to the state.