The NBA’s and MLB’s so-called sports betting “integrity fee” would be illegal under federal law if it were imposed on the tribal gaming sector, a prominent expert in gaming law said Friday.

NIGA chairman Ernie Stevens

NIGA chairman Ernie Stevens’s organization announced last week it had passed a resolution to safeguard Indian gaming interests should sports betting become legal across the US. While tribal operators broadly support regulation, many are concerned they will lose out to commercial operators. (Image: YouTube)

Speaking at the 2018 National Indian Gaming Association (NIGA) Tradeshow & Convention in Las Vegas, Aurene Martin, president of Spirit Rock Consulting and a member of the Bad River Band of Lake Superior Chippewa, said the fee was problematic for a future US sports betting market in which the tribal sector would play a prominent role.

The leagues, longtime opponents to regulated sports betting in the US, have now sensed the tide is turning, with a possible SCOTUS decision on the legality of sports betting expected as early as tomorrow (April 24).

The leagues say they now support regulation, but only on their terms – a one percent cut on all bets taken on their games made payable to the NBA and MLB.

Tribal Operators Can’t Be Taxed

But critics say integrity is more effectively monitored by regulatory bodies working in partnership with regulated bookmakers themselves, who are best positioned to spot suspicious betting patterns and anomalies.

They say the integrity fee is nothing more than a tax or a royalty payment in disguise, and one that translates in real terms to a 20 to 25 percent levy on gross gaming revenues, which would strangle the market before it had a chance to take root.

Martin agrees with this definition.

“IGRA (the Indian Gaming Regulatory Act of 1988) is very clear that tribes can’t be taxed and can only have fees put upon them that they agree to, with the state, to pay for regulator activities,” she said.

“Nowhere are tribes allowed in IGRA to pay third parties this type of fee. There are real questions about whether it can be imposed on them. Tribes want to be responsible and make sure games have integrity, so I don’t know what the answer is.”

Tribes Nervous of Sports Betting

NIGA is an intertribal association comprising 184 federally recognized tribes. It announced last week that it has passed a resolution asking Congress to repeal PASPA – the federal law that prohibits sports betting in all but a handful of states – and to pass a law that would allow tribal operators to offer both land-based and online sports betting.

The motion comes as many tribes voiced their fears at the convention that they will be overlooked by if SCOTUS repeals PASPA, as it is widely tipped to do.

The motion calls for lawmakers to protect tribal operations and sovereignty should state compacts have to be rewritten to accommodate sports betting. It asks that wagering operations, online and off, are not taxed by states that choose to regulate sports betting, in line with the spirit of IGRA.