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Monday, August 23, 2010

California Indian Tribes Going All In For Online Gambling In A Double Dip Recession?

The State of California, like many states in the current economic climate, is strapped for cash and tax revenue. It is no secret that legalized and controlled online gambling could result in meaningful revenue contributions to the states coiffures. Thus the online gambling bill SB 1485, proposed by State Senator Wright to legalize online gambling under state control.

One of the major state lobbying groups opposed to this legislation is the state's Indian tribal community.

While attending the 2010 GIGSE conference in Montreal I received an education on the California Indian nation's position concerning the legalization of online gambling in California. I was surprised that the tribes were actually opposed to the legislation. It really made absolutely no sense to me why this would be the case. The tribes are currently heavily invested in land based casino operations and have built up an economy and expertise in this area. Their sovereign nation status provides them with a unique opportunity to extend their land based success to the Internet. It is no secret that the future growth of online gambling is on the Internet. Why would they kill the goose that laid the golden egg?

It appears there are two issues contributing to the tribes position.

Competing Indian Tribes - There are several Indian factions competing for the online wallets of California consumers. This is a battle within the Indian nation for ownership and dominance of Internet gambling in California. The individual Indian factions do not want online gambling to happen unless their faction gets a part of the action. This debate is healthy and at the same time concerning. Land based casino operations clearly allow each tribe to physically locate gambling facilities within their communities. Internet gaming is a different story requiring a different model to distribute the benefits to all Indian tribes. In a way the benefit distribution for online gaming may be more equitable then the current offline gambling model. If the Indian nation is trying to use their current land based casino wealth distribution model as a proxy for the Internet model we could be in for a long and confusing battle.

The State Of California As Primary Beneficiary - All of the tribes are concerned that the current legislation proposed by State Senator Wright favors the State Of California as the primary arbitrator, operator and beneficiary of online gambling operations. This is a valid concern with only three gambling hubs proposed by the legislation. Who decides who will get them and how? The Indian tribes are rightfully suspicious of the states final legislation given the impetus behind the legislation.

What Is the Solution? The tribes do need to get their act together sooner rather then later. If they do not they may be responsible for the entire state missing the window of opportunity and a potential big source of revenue for all state residents. They should "bury the hatchet" so to speak, within their own ranks. Getting the Indian tribes moving into cyberspace can only help their community and provide their constituents with skills and job training they desperately need. A model for distributing benefit to all Indian tribes is the way to go to resolve a potentially prolonged battle.

The State of California should allocate one of the hubs to be managed by the Indian nation. This has a few interesting consequences. The tribes will have to cooperate to determine how they can all benefit from the legislation. They will also have to propose a plan on how individuals within these tribes will benefit. Can this lead to cyberspace jobs and job training for American Indians? Will it result in a general fund to manage the distribution of online gaming proceeds to the tribes? Should one of the hubs actually be hosted on Indian land helping the tribes develop an Internet infrastructure that can be leveraged in other ways?

In conclusion, the legalization of online Internet gambling in California has the potential to change the Indian nation in a positive way, providing the tribes can bury the hatchet and work together to make it happen. This may be a once in a lifetime for the Indian nation. It would be a shame if tribal squabbling get in the way of legislative enactment.

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