DoJ's Internet Gaming Green Light to States is 'No Big Deal for Tribes

Cash-strapped states grappling with big budget deficits may welcome a Justice Department opinion that they can offer online lotteries and gaming, but tribes greeted the news with a virtual shrug of the shoulders, according to Indian gaming experts.

The Justice Department released a legal opinion stating that the 1961 Wire Act prohibits online betting only for sporting events and contests, not lotteries. The opinion has caused a flurry of interest in states looking to bolster revenues in the face of a projected collective budget gap of $31.1 billion in 2012, according to the National Conference of State Legislatures.

In Connecticut, for example, Malloy welcomed the Justice Department news. Malloy has talked about the need to increase state gaming revenue especially with shrinking revenues from the state's two signature Indian casinos – the Mashantucket Pequots' Foxwoods Resort Casino and the Mohegan Tribe's Mohegan Sun – and the prospect of competition from increased gaming in nearby Massachusetts and Rhode Island.

"Obviously, gaming is an important part of our economy. It appears that [online] interstate and intrastate gaming is going to be allowed," Malloy told the Hartford Courant. "It appears that the only thing the Justice Department has ruled is off the table is sports betting, with the exception of horse betting. So with that one exclusion, everything is up for consideration by the states."

Last year, Internet gaming reportedly generated more than $25 billion worldwide with $7 billion in wagers from U.S. bets on Internet sports, poker, and casino games with 10 million U.S. citizens playing poker online.

Melissa Riahei, general counsel of the online gaming firm U.S. Digital Gaming, told The Hill that the Justice Department "has finally confirmed what we believed in Illinois to be true all along—that intrastate gambling is an issue that is within the sole discretion of a state to regulate, as it deems appropriate." She said states can now "comfortably" begin to implement Internet gaming programs to generate revenue to fund "essential government services."

That won't be as easy or quick as Riahei implies, according to Indian gaming expert Joe Valandra. Before moving ahead, states have to pass legislation to allow Internet gaming and that may present some barriers, Valandra said.

"I don't think (the Justice Department opinion) is a big deal for the tribes because there's only one state that has enabling legislation and that's Nevada. Other states have talked about it, but haven't passed anything. It has to go through a whole legislative cycle before any state besides Nevada will be able to offer intra-state online poker."Valandra said.

A citizen of the Sicangu Lakota, Valandra is principal owner and president of VAdvisors, LLC, chairman and CEO of Tehan Woglake, Inc., and former chief of staff of the National Indian Gaming Commission. "It's something I'm sure the tribes in general are looking at but I don't think it has any particularly negative implication in and of itself."