California Tribe, Thwarted in State, Is First to Have Online Gambling in New Jersey

Thursday, November 27, 2014

Two bills to legalize some aspect of online gambling died in the state Legislature this year, but that didn’t stop a California tribe from going cross-country and opening a website for East Coast gamblers.

The Pala Band of Mission Indians in Northern San Diego County became the first Native American tribe in the country to receive permission to open an Internet gambling site, in New Jersey, one year after that state legalized online wagering. The poker-only site is expected to be up and running next year.

New Jersey, Nevada and Delaware are the only states with online gambling and California was expected to join them this year.

That didn’t happen.

Neither Assembly Bill 2291 nor Senate Bill 1366, both of which would have allowed some form of online poker, got as far as a committee vote. The bills ran afoul of anti-gambling sentiment, questions about what the sites would offer and who could play, antagonism from some brick-and-mortar casinos and infighting between tribes.

There is also pressure from some members of the federal government not to go there. U.S. law basically bans online gambling but currently allows states to pass laws superceding federal law  Billionaire casino and hotel owner Sheldon Adelson pushed hard this year for an ironclad federal ban on Internet gambling sponsored by Senator Lindsay Graham (R-South Carolina) and supported by Dianne Feinstein (D-California). The Restoration of America’s Wire Act was introduced in the Senate in March but didn’t go anywhere.  

Feinstein’s support of the ban didn’t sit well with Leslie Lohse, chair of the Sacramento-based California Tribal Business Alliance, who said, “We're concerned that there appears to have been no consultation before she decided to support this bill, which would have direct impacts on California tribes.”

Tribal casinos are big business. Gaming revenue at the 468 facilities run by around 243 tribes in 28 states was approximately $28.1 billion in 2012, according to a report from Casino City’s Indian Gaming Industry Report. About a quarter of that revenue was generated in California, where tribes have exclusive control of the industry by law.

Native American gaming generated approximately 43% of all U.S. casino gaming revenue in 2012 from 346,000 gaming machines and 7,700 table games. Local, state and federal governments pulled in $9 billion in taxes and revenue sharing payments.

The Pala Indians got the go-ahead to launch their website with Atlantic City's Borgata Hotel Casino & Spa on Friday. Online gambling in New Jersey has been a bit disappointing so far, with revenues of $111 million falling far short of a projected $1 billion. New Jersey online gambling sites can only take bets from  customers within the borders of the state.

Highlighting a split among tribes over Internet gambling, the Tribal Business Alliance announced its opposition to New Jersey’s gambling law just prior to its passage. “Online gaming is a slippery slope, and putting at risk a multimillion-dollar industry, the associated jobs and the revenue interests to impacted states, without safeguards, is a gamble no one should be willing to take,” former Alliance chairman Robert Smith said in a statement.

The online gambling arena is host to a range of contestants vying for a place at the table, literally and figuratively. It’s gamblers versus non-gamblers, tribes versus nontribal operators, brick-and-mortar establishments versus online, state versus state and tribe versus tribe with the federal government looming above it all.

–Ken Broder


To Learn More:

California Tribe Becomes 1st to Launch Online Gambling In NJ (by Wayne Parry, Associated Press)

Indian Tribes, States Eye Online Gambling (by Pamela Prah, Stateline)

American Indian Tribes Oppose New Jersey's Internet Gambling Measure (by Hoa Nguyen, Press of Atlantic City)

Legalized Online Gambling Stays On Hold in California (by Darren Heitner, Forbes)

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