The National Law Review
Introduction
As this firm discussed in a prior client alert, the Department of the Interior (DOI) published proposed amendments to 25 Code of Federal Regulations (CFR) part 293, which governs the review and approval of tribal-state gaming compacts for Class III gaming.1 The public comment period was extended and DOI was still taking comments into late June.2 These proposed amendments remain pending, but if finalized, are likely to result in an historic expansion of online tribal gaming.
Passed in 1988, the Indian Gaming Regulatory Act, 25 U.S.C. § 2701, et seq. (IGRA) was meant to “provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments.”3 IGRA was intended to balance the interests of the tribes, the states, and the federal government with respect to Indian gaming and apportion responsibility for regulating it accordingly. To do this, IGRA divides Indian gaming into three classes:
- Class I includes traditional or social gaming and is subject to exclusive tribal regulation;
- Class II covers games of chance, including bingo, and similar games and is subject to tribal regulation and oversight by the National Indian Gaming Commission (NIGC); and
- Class III includes all other gaming, including house banking card games, casino or Las Vegas-style gaming, slots, sports betting and parimutuel wagering, and lotteries.
Notably, in order for a tribe to conduct class III gaming, the tribe must first enter into a compact with the state in which its lands are located.4
Advancements in gaming technology and changes in state and federal gaming law as a result of the U.S. Supreme Court’s 2018 repeal of the Professional and Amateur Sports Protection Act (PASPA)5 have significantly impacted the compact negotiation process since the passage of IGRA. This evolution has resulted in tribes and commercial operators directly competing for market share with states being forced to choose winners and losers. For example, Connecticut has created a closed master licensee system wherein only the State’s two tribes and the lottery corporation can offer Class III gaming and commercial enterprises are only eligible to serve as concessionaires to these three master licensees. Compare this to Arizona, where tribes are placed on equal footing with the “owners and operators of Arizona professional sports team or franchise, an operator of a sports facility in this state that hosts an annual tournament on the PGA tour or a promoter of a national association for stock car auto racing national touring race in this state”6 when it comes to eligibility to offer retail and/or mobile sports wagering.7 Class III gaming compacts have expanded in scope and complexity as the tribes and states seek mutually beneficial terms. As the DOI’s proposals explain: “IGRA did not anticipate the compact negotiation process would be between competitors, rather sovereign governments seeking to regulate gaming.”8
This article will address the two most notable components of the proposed regulatory amendments: (1) the enlargement of the scope of Class III gaming negotiations under IGRA’s attendant regulations;9 and (2) the expansion of statewide remote wagering for tribes.10 The first section of this article examines the proposed amendment to 25 CFR 293.27, which codifies the Second Circuit’s holding in Mashantucket Pequot Tribe v. Connecticut, 913 F.2d 1024 (2d Cir. 1990) (affirming DOI’s interpretation of §?293.27). In that case, DOI argued, and the Court agreed, that §?293.27 should be read to mean “if a State allows any form of Class III gaming, it is regulating all forms of Class III gaming, which are a subject for good faith negotiations.”11 In addition, the first section of this article provides additional analysis of new “good faith negotiation” requirements found in DOI’s proposed rules that states must adhere to when negotiating Class III compacts with tribes. The second section of this article examines the proposed amendments to §?293.29, which address expansion of tribal iGaming and clarifies that a compact may allow for statewide tribal iGaming.
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