Few Tribal Casinos Plan to Open Legal Sportsbooks in the US

Pearl River Resort Sportsbook

Pearl River Resort in Mississippi was the first tribal casino to offer sports betting.

Though single-game sports bets have been legalized in 6 states since the U.S. Supreme Court decision in May which ended a federal ban on sports gambling, only 2 of the 475 tribal casinos in the country have opened sportsbooks. For most, the risks still exceed the potential rewards.

The Mississippi Band of Choctaw Indian operates a sportsbook at the Pearl River Resort in Choctaw, Mississippi.

The Santa Ana Pueblo near Albuquerque, New Mexico also opened a sportsbook. In both cases, the adjacent state government did not require the tribes to alter their gaming compact to operate sportsbooks.

Still, that is the extent of tribal sports betting in the United States as of December 2018. For most other tribes, the low margin of sports betting is not enough of a temptation to flout state-tribal gaming laws. For them, renegotiating their gaming compact with the state — or worse, going to court over a possible violation of the compact — is a risk to be avoided.

Pearl River Resort Sportsbook

Neil Atkinson, the Mississippi Band of Choctaw Indians’ director of gaming, said sports betting makes good sense for the Pearl River Resort, which comprises the Silver Star Hotel & Casino and the Golden Moon Hotel & Casino. Proximity to several states full of SEC fans with few local competitors makes the reward potentially great.

Mr. Atkinson said, “We are basically two hours from Tuscaloosa, Alabama, and then, we are just an hour from Mississippi State. We have Ole Miss just to the north of that, and we have Southern Miss — they’re not SEC, but they are a player. We are not that far from Louisiana.”

Santa Ana Pueblo Sportsbook

The Santa Ana Pueblo is near Albuquerque and not that far from Santa Fe, so it makes sense for their tribe to promote sports betting. Even then, the Santa Ana Sportsbook does not take bets on games involving the University of New Mexico or New Mexico State University. It precludes potential scandals involving point-shaving or match-fixing — or outright legal challenges to their gaming activities.

For many tribes which are not near population centers or have fierce local competition, opening a sportsbook does not make sense. The margin is small on sports betting. Nevada casinos generated only 2.4% of their revenues last year from their sportsbooks.

To operate an efficient sportsbook, a casino needs to hire expensive specialists called oddsmakers to set the odds. It is a painstaking process to stay ahead of the professional gamblers called handicappers, much less the mass market bettors.

Changing the Gaming Compacts

Beyond that, most tribes would need to change their gaming compact with the state to have a sportsbook. Tribes only pay enough casino taxes to offset the expenses a state incurs by regulating tribal gaming. If a state wants to share some of the profits, it has to negotiate concessions with the tribe — exclusive rights to certain types of games, for example.

Negotiating a gaming compact is difficult in the best of times, because the state officials have to balance the potential tax revenues against other political considerations. Tribes might compete against commercial casino interests or deal with politicians concerned about the optics of giving a minority population too many economic concessions.

In Florida, negotiations on a new gaming compact between the Seminole Tribe and the state government have gone on for years with resolution. In New York state, Gov. Andrew Cuomo and the Seneca Nation are in a two-year battle over tax revenues. California tribes and the state legislature have spent the better part of a decade battling over online poker laws.

Chris Stearns on Tribal Compacts

Chris Stearns, a second-term member of the Washington State Gambling Commission and a Navajo, said that changing a gaming compact is fraught with peril. Stearns told WoodTV.com out of Las Vegas, “Tribal leadership is extremely protective of what they have because it’s meant so much to us, and there’s always a risk of upsetting the apple cart. Is this going to help us? Is this going to hurt us?”

“That’s really at the heart of why you see Indian tribes gently venturing into sports betting….In a lot of states, tribes write a check out to the state in exchange for exclusivity. So, any time there’s a new gambling product, and you ask the state to authorize it, there is a risk the state will say ‘Sure, but it is going to cost you.'”

State Constitutions and Sports Betting

The legal hurdles can be great, no matter the sentiment of tribal leaders. To legalize sports betting, Washington state requires a supermajority vote of 60% or a statewide voter initiative. In California, the voters would have to approve an amendment of the state constitution.

In South Dakota, a public vote would be needed to change the constitution. The same is needed in state after state.

Kenny Weston on Sports Betting’s Advantages

The legal and political hurdles have not stopped some tribes from pushing for an amendment. The Flandreau Santee Sioux Tribe in South Dakota is pushing for a statewide vote to legalize sports betting. Kenny Weston, a tribal councilman and spokesman for the Flandreau Santee Sioux, said that a sportsbook would draw customers who might not normally stop at a casino.

Weston said sports betting brings more advantages than the low margin reported. It brings in a younger demographic and sports fans.

The South Dakota tribal spokesman said, “Normally, with the brick-and-mortar casino like we have, we attract a lot of older crowds and retired people. I think with sports betting we can bring a different age demographic and different people…and have the opportunity to do the same that they do in Vegas.”