California and Florida — combined home to nearly 20% of the American population — are stuck in a dance of death when it comes to online sports betting and online casinos. Why? Because of ongoing battles between the state government, tribal governments, and Big Gaming.
In short: Everyone wants their share of the online gambling world, and no one is willing to budge. In Florida, the entire online gaming industry waits for court cases to inform where it’s headed. In California, dueling initiatives will be on the ballot this November.
And then there’s Michigan, where the tribes, the government, and the operators are all happily doing the tango — and printing money while they’re at it.
That was, more or less, the vibe at the SBC Summit North America in New Jersey last week, when Soaring Eagle Casino CEO Melinda Coffin led a panel titled, “Tribal-led iGaming – Is Michigan the Blueprint for Online Casino?”
Joined onstage by fellow Michigan mainstays David Murley, the deputy director of the Michigan Gaming Control Board, and Jim Wise, the vice president of sports and online gaming at Firekeepers Casino Hotel, the panel — which also included Aspire Global US Managing Director Quency Raven and Playtech CCO Marcus Yoder — laid out just why, exactly, Michigan can, and probably should, be seen as the model for combining tribal and state governmental forces.
“Brandt Iden, now with Sportradar, was the one who saw a possibility here when everyone else was laughing at him,” Murley said. “That Michigan would launch iGaming and internet sports betting and involve the commercial casinos as well as the tribal casinos. It took a lot of work, and there was a veto along the way, but what Michigan did was go out of its way to make sure everyone’s interests were aligned. This is not a matter of the tribes vs. commercial casinos, or casinos against the revenue that might come from our lottery programs. We had to find a way to get the various interests on the same page.”
For Murley, a key element was the state’s tribes all coming together as one bloc — and the state government realizing they were dealing with equals.
“It started with tribes presenting a united front, that this was something they were interested in, and it involved a compromise on revenue with some people paying more taxes than they originally wished they would, but not as high as some other states,” Murley said. “And it also involved the state realizing it can’t treat a tribal casino as it does a commercial casino. It was going to take sensitivity to the tribes and their sovereignty in figuring out a way it was going to work for everyone involved.”
Good relationship to start
As far as Wise is concerned, the tribes vs. state vs. operators battle was short-circuited even before negotiations began.
“The tribe and the state always had a positive working relationship prior to iGaming,” Wise noted. “There was a pre-established positivity between the tribe and the state that maybe doesn’t exist to that degree [in other states]. But that created a great kind of groundwork to build upon so that we could go forward. So far it’s been a real positive relationship for us.”
Jim Wise with @FireKeepers discusses the future of sports betting in West Michigan.
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As for other states, like Florida, California, and others that need to navigate tribal concerns vs. state concerns? Murley thinks the Michigan way is the best way forward.
“One lesson we learned is that tribes are sovereign governments, they are the equivalent of the state. One does not get to tell the other what to do,” he noted. “But since this was a state license, we asked for a limited waiver of immunity just as it relates to internet gaming. We made it as narrow as possible, working with the tribes, understanding each is its own government and they may have things they want to put in. And then for most tribes who choose to work with a platform provider, a DraftKings, things like that, it really put the regulatory emphasis on the platform provider. The tribe is the government, they have the license, they essentially sublease the platform provider, and the state looks to the platform provider to solve issues or if something goes wrong. We keep the tribe informed, but put our emphasis on holding the platform provider accountable. That way we allow tribes and the state to continue their cordial relationship.”
In short: The state and the tribes work together to hold the line against the operators.
Best way forward? It depends …
As for those operators, and how to deal with them? Wise noted some tribes partner up, others go it alone, and the decision there depends on numerous factors.
“For tribes in a state that has not yet established iGaming, you need to figure out what is going to work for you,” Wise said. “Is your tribal council going to be comfortable giving away your brand to someone else? Do you have the wherewithal to hire a staff and manage what is an extensive process on your own? We were able to do that, but it is a lot of work. In some cases it might be better to simply sign the best deal you possibly can and hand off that business to someone else.”
In the end, Murley and Wise — who, in other states, might be at each other’s throats — had nothing but pleasant things to say about the state of Michigan’s online gaming world.
“We knew the pie would be big. We didn’t know how big it would be,” Murley said. “There’s enough to go around for everybody. The state gets most of the money, the city of Detroit gets a portion, and then we actually gave the tribes a percentage of the tax revenue. It makes them more of a partner in the whole operation and what it does, even for those tribes that might be getting relative crumbs from their platform provider, the tribes can sometimes make more from their cut of the tax revenue than they do from the profits of online gaming. Anyone considering doing this has to figure out how the tribes can get the revenue source through the tax payments in addition to iGaming.”
Wise explained it all in much simpler terms.
“The state of Michigan did a great job,” he said.