North Dakota is negotiating terms for a compact with five tribes in the state. The tribes seek exclusive rights to offer internet gambling and sports betting in the state.
Such a deal would be worth many millions of dollars for all parties. However, the current negotiations follow a string of failed legislative attempts that led to lawmakers abandoning their effort last year. One way or another, negotiations should conclude within a month, according to Governor Doug Burgum.
The tribes face some stiff opposition to their proposal. In addition to the usual anti-gambling voices, officials from several charities told the governor the move would effectively end charitable gambling in the state.
Mike Motschenbacher, Executive Director of the North Dakota Gaming Alliance, told Burgum that the move would “absolutely devastate” the industry. He also claims that tribal casinos already have enough of an advantage over charitable gaming.
Similar problems crop up in any state where both tribal and non-tribal gaming interests are present. Each sees competition from the other as an existential threat. The California sports betting fiasco is currently the most extreme example of that dynamic.
The North Dakota Tribes’ Proposal
The tribes want the two-term Republican governor to approve tribe-state agreements known as compacts. The Indian Gaming Regulatory Act (IGRA) formalized tribal gaming and established the compact framework, requiring states to negotiate such agreements “in good faith.”
North Dakota’s first tribal casino under the IGRA opened in 1993. The current compacts expire at the end of this year, and only Burgum can approve new ones.
The animosity North Dakota’s charitable gaming organizations have for tribal casinos runs both ways. The tribes, for their part, argue that their casinos have been hurt by the charities’ introduction of electronic pull-tab machines in 2017. In a state with fewer than 1 million residents, these machines see over $1 billion in betting activity annually, though most of that goes back to players as prize money.
According to Deb McDaniel, a state gambling regulator, the amount of revenue going to charities from gambling this year will be about $75 million. The state itself receives an additional $24 million in tax revenue from charitable gambling activities.
For the tribes, casinos are one of their most significant sources of employment and community revenue. Money from the casinos goes to help fund social programs on reservations in the state.
If the governor approves the compacts the tribes have proposed, gamblers in North Dakota could place bets anywhere in the state on their mobile devices. The bets would be received by servers located on tribal land. However, Florida is currently fighting a legal battle over whether this on its own is enough for betting to be considered to take place “on reservation.”
Like Florida and California, North Dakota has a constitutional prohibition on gambling that requires a ballot question to change the existing laws. However, tribal sovereignty avoids that issue.
Could Online Casinos be Coming to North Dakota?
It’s unclear what type of games the tribal casinos could provide over the internet. Half of their retail casinos in the state are Class III facilities, meaning they can offer a full range of games. Legally speaking, if online sports betting is possible through a compact, online casino gaming would be too.
However, for a state like North Dakota, gambling opposition is fierce enough that online casinos would be sure to create a firestorm. Online poker might be more doable, but the state doesn’t have the population to support a site on its own. It’s not clear what chances a tribal poker operator would have of being able to enter the Multi-State Internet Gaming Agreement to share traffic with state-regulated poker in New Jersey, Nevada, Delaware, and (soon) Michigan.
Hypothetically, if North Dakota tribes managed to secure online casino gaming rights, they’d be joining an elite club. Currently, only West Virginia, Michigan, New Jersey, Delaware, Connecticut, and Pennsylvania allow online casinos.
Combined September revenue generated by iGaming operations in those states amounted to $430 million. Annual growth rates for this new form of gambling have tended to be north of 20%, so the market is hot at the moment.