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Mark Balestra

U.S.-Based Live Wagering Returns to the Web

1 October 1999

Indian gaming interests are playing an increasingly significant role in the legal status of Internet gambling in North America. The Mohawk Council of Kahnawake in Quebec appears to be solid in its efforts to facilitate legalized online gambling as a jurisdiction with well respected sovereignty.

Meanwhile in the U.S., where Indian gaming representatives are lobbying for an exemption in the Kyl bill, the Coeur d'Alene tribe of Idaho is struggling to regain the right to operate its Internet lottery. As they battled in '97 and '98 with Missouri Attorney General Jay Nixon, other U.S. tribes offering online gambling quietly closed down operations.

For several months, there were no U.S. tribes formally taking bets over the Internet, but that changed a few weeks ago when a company called Mohawk On Line Computer Services launched a real-money Internet bingo site under a gaming license issued by the Mohawk Nation Longhouse.

Located within the Mohawk nation of Akwesasne, just south of the Canadian border in Upstate New York, the privately funded company operates the site with bingo software designed by Online Gaming Systems Ltd. (formerly Atlantic International Entertainment). Sixty percent of the revenue earned by the site goes to the Indian government, which will use the money to provide goods and services to Akwesasne citizens. The remaining 40 percent goes to the company. There are no restrictions as to where the players are located, although Ray Cook, an administrative advisor to the company, points out that bettors will have to prove that they are 18 years or older (via a credit card check) before they can play.

Meanwhile, a Michigan tribe is intending to go live on the Net using the same bingo software within the next few weeks. The tribe, the Lac Vieux Desert (LVD) Band of the Lake Superior Tribe of Chippewa Indians, obtained software licensing rights from Online Gaming Systems in August. According to the tribe, the system will be implemented under the terms of its Class II gaming license.

If history repeats itself, the LVD and Akwesasne sites will be contested by attorneys general who, like Nixon, consider accepting wagers over the Internet from players within their jurisdictions to be illegal. Robert Rosette, an attorney for Monteaux Peebles & Evan and the lead counsel for LVD, expects to have AGs knocking on the door the moment they go live. And he says the tribe is prepared to battle if necessary. "We can withstand any challenge," he said.

According to Rosette, offering bingo games from tribal land falls under the category of Class II gambling, as outlined by the federal Indian Gaming Regulatory Act (IGRA). "Class II bingo over the Internet can be structured so that all activity is on tribal lands," he said, stressing his firm's confidence in its research on the matter. "LVD would never do anything to jeopardize their gaming license," he added.

Class II bingo via the Internet has been attempted with limited success in the past, however, it was done so by adhering to rigid guidelines. Multimedia Games, a veteran of interactive bingo technology, a few years ago operated an online bingo game that it classified as proxy play, which is clearly legal by the terms of IGRA. They pulled it off by having real people marking cards purchased over the Internet by bettors. According to Multimedia Vice President and Director of Operations Skip Lannert, the company received letters from attorneys general in Minnesota, Missouri, Florida and Massachusetts questioning the game's legality in their states. The company eventually found itself in federal court, where it won two cases decided in January 1998. Still, they discontinued taking bets over the Net due to what Lannert termed a lack of consumer interest in proxy play.

OGS's software is completely automated and it entails no live person playing within tribal territory. According to Lannert, that could present a problem. "Unless they're doing proxy games, I would be very surprised if the NIGC (National Indian Gaming Commission) didn't take a negative stance on this," he said. "If they do proxy play, I'm sure they'll let them do it."

The NIGC authorizes only games which are played within Indian territory. IGRA specifies that Class II gambling requires the "holder" to be located within tribal boundaries (which allows for proxy play). Rosette points out, however, that nowhere does IGRA specify that the holder has to be a person, and that the holder, in the case of OGS's software, is the tribe's computer(s). Thus, according to Rosette, what LVD (and presumably Akwesasne) is doing is clearly within the boundaries of the law.

The target date for live Internet betting based in LVD territory is October 14. Of the ensuing legal confrontation with justice officials, says Rosette, "We're looking forward to it."

Things could get interesting in a hurry.

U.S.-Based Live Wagering Returns to the Web is republished from
Mark Balestra
Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.
Mark Balestra
Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.