Will Tribal Sports Betting Mean Slot Machines in Seattle?

written by I. Nelson Rose
2021

“All we want is a level playing field.”

 

I always like working with Washington State card clubs, gaming tribes and charities because I can make one of the strongest arguments a gaming operator has on their behalf: Government is giving an unfair advantage to their direct competitors.  I helped a charity, for example, that got in trouble trying to compete with tribal bingo when they paid out prizes which were too large under the state’s charity bingo law.

 

When I conducted a seminar for the Washington State Gambling Commission, I warned them they would hear the level playing field argument from every operator, and that there was nothing they could do about it.  It is impossible to make everyone completely equal, starting with location and the forms of gambling which are allowed.

The stakes just got raised again.  The State Legislature authorized, and Governor Jay Inslee approved, amending 15 tribal-state compacts to allow those tribes to have sports betting. 

 

It will be interesting to see if this latest development will give Washington’s cardrooms the ammunition they need to get slot machines.

 

Of course, the 31 tribes with casinos do not have “slot machines.”  According to the tribal-state compacts, they have “electronic scratch ticket video player terminals,” a form of Video Lottery Terminals (“VLTs”). 

 

Usually there are legal and public relations reasons for names like this.  In a friendly lawsuit, a federal court ruled in 1997 that Washington State was not required to negotiate slot machines with its tribes, but did have to allow the tribes to have gambling devices that did not accept money and where players did not play against the machines; in other words, VLTs.

 

The no cash in or out restriction only lasted ten years.  The no play against the machine rule is still in place, but from the players’ point of view it does not matter that “slot machines” have internal random number generators, while winners and losers for these VLTs are decided by a single remote computer.

 

But the fact that Washington tribes are operating machines that are part of a tribal lottery network and technically not slot machines strengthens their rival card clubs’ demand for a level playing field.  Putting slot machines in the clubs would be a big deal.  But merely allowing the tribes’ direct competitors to also be allowed to sell lottery tickets through terminals sounds more than fair; it would allow a level playing field.

 

The level playing field arguments have been going on for decades.  Before there were any tribal casinos, Washington State had small, licensed card rooms.  These were allowed to offer blackjack to their patrons, but only with a rotating deal.  The house was not allowed to participate in the game, let alone be the banker.

 

When tribal casinos opened, even before they got gaming devices, their house-banked blackjack decimated the card club industry.  The clubs demanded a level playing field.  So, the State Legislature changed the law, allowing the clubs to offer blackjack with a house bank – the same casino game being dealt by tribal casinos.

 

But reservations in Washington, as in most parts of the country, are located in remote locations.  The tribes argued that they now needed a level playing field.  Patrons would not drive three extra hours and use a ferry crossing just to make the same bet they could make with a ten-minute drive.

 

The State Legislature and Governor understood and agreed.  Compacts were signed allowing tribes to also have VLTs.  Of course, not all tribes were so remote.  Those near cities seized their opportunity and expanded into enormous Nevada-style casinos.

 

The result is that the largest tribal operation is Tulalip Casino Resort, with more than 2,200 VLTs and dozens of table games.  Only the half-dozen largest casinos in Las Vegas have more gaming devices.  The largest card room, on the other hand, now has gross gaming revenue of less than $12 million a year.

 

According to the Washington State Gambling Commission, the state’s 35 Indian casinos had net gambling receipts of $2.824 billion in 2020, ten times the total for all the state’s card clubs.

 

And more of the players’ losses reach tribal casinos’ bottom lines.  Blackjack is expensive to operate, requiring live employees to deal cards; VLTs, like slots, cost little to run.  And tribes, being self-governing sovereigns, do not pay taxes.

 

At least one non-tribal casino company remains optimistic.  Maverick Gaming has been buying up Washington’s card clubs:  It now owns 19.  The company is currently lobbying for a level playing field on sports betting.  It does seem unfair:  The tribes will soon have two advantages, VLTs and sports betting, to offset their more remote locations.  And their sports betting will also be online, where location does not matter.

 

Last summer, card clubs thought they would be included in the tribal sports betting bill, but the State Legislature left them out.  Money equals power, and casino money equals political power.  The tribes have made so much money from their gaming machines that they have become the most powerful special interest group in the state, when it comes to legal gaming.

 

The card clubs probably aren’t going to get sports betting or VLTs.  The political playing field is now so tilted in the tribes’ favor that the cards clubs are almost no longer in the game.

 

© Copyright 2021, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, www.GAMBLINGANDTHELAW.com.

I. Nelson Rose

Prof. Rose is recognized as one of the world’s leading experts on gambling law, and is a consultant and expert witness for governments and industry. His latest books, INTERNET GAMING LAW (1st and 2nd editions), BLACKJACK AND THE LAW and GAMING LAW: CASES AND MATERIALS, are available through his website, www.GAMBLINGANDTHELAW.com.

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