TRIBAL GAMING
Realities and Opportunities
Building An Internet Economy for Indian Country T By Katherine Spilde
ribal governments and organizations around the country have been very active in tracking and shaping the
multitude of state and federal government pro- posals contemplating the legalization of online poker. As a guidepost, the National Indian Gaming Association has memorialized six princi- ples of sovereignty that many tribal governments find essential for fairness in any online gaming legalization regimes. These activities and documents represent the
efforts of tribal governments to accomplish a number of important goals, including the protec- tion of land-based casino revenues, defense of tribal sovereignty and existing tribal-state gaming compacts, and strengthening of economic devel- opment for tribal governments generally. State and national efforts to legalize online
poker involve numerous communities of interest, and will ultimately produce a political compro- mise that may or may not incorporate any or all of NIGA’s important principles or tribal govern- ments’ many priorities. As governments, it is most important that tribes continue to partici- pate in the political process and to represent their unique objectives for pursuing legal online gam- ing rights, most notably to generate tribal govern- ment revenues.
PARALLEL TRACKS, CREATING LEVERAGE In addition to participating in the political process as governments, however, tribal leaders and organizations should consider the business case for building an internet-based economy that does not rely on the potential for online poker legalization and that does not require approval from (or partnership with) other governments, whether state or federal. Given the unpredictability of the legislative
process in both timing and outcome, tribal gov- ernments should focus on what is actionable today; that is, tribal governments can and should be entering the already-thriving internet economy by leveraging their existing brand identities through a range of lucrative non-gaming e-com- merce opportunities.
36 Entering the internet economy immediately is
not simply a business move, however. Building a successful presence in the internet economy— now, before legalization of online poker or any other gaming product—will allow tribal govern- ments to create economic and political leverage for a more forceful voice in any future legal online poker or gaming environment. Importantly, building an internet economy also stimulates eco- nomic development independent of (and separate from) the political process, and represents a true diversification of land-based tribal government gaming revenues. As tribal governments realized so clearly as
they developed land-based gaming, creating politi- cal leverage goes hand in hand with demonstrat- ing economic success. Building an internet-based economy has some
immediate benefits for enhancing tribes’ land- based operations, including operational efficiency, lead generation for building a potential new cus- tomer base, retention models for understanding current and future players better, 100 percent player tracking for online play and purchasing, and the ability to sell non-gaming products or drive players to land-based casinos for prizes or other incentives. These economic payoffs provide much-needed political leverage wherein tribal gov- ernments and organizations like NIGA have a new ability to demonstrate that the tribal internet economy has a thriving marketplace, reliable sys- tems and robust revenues. Ultimately, tying the tribal internet economy
to land-based operations also affords tribal operators the opportunity to demonstrate ways to regulate access to future legal online poker sites by underage players through a link to the property’s players club and utilizing a personal identification number or other protective feature. Developing tribal systems for oper-
ating in the internet economy demon- strates capacity, and may also represent an important distinction for tribal gov- ernments with regard to meeting suit- ability criteria for an online gaming
Global Gaming Business • November 2011
license or making a case for inclusion in the “expe- rienced operator” category that has been developed in various legislative proposals.
THE TIME IS NOW One obstacle to building a tribal internet economy has been the steep learning curve for entering the electronic commerce (“e-commerce”) business structure, also known as the “click-through” econo- my. Many of the recent conferences addressing internet gaming issues have either been hosted by online gaming vendors with a narrow sales agenda or have been focused on the complexities of the political process, whether intrastate or interstate. In the meantime, high-profile and costly mis-
takes have been made by various companies, including Las Vegas casino executives who feared they would be left behind if they did not create partnerships with existing vendors. Given the lack of accurate or relevant information, many tribal governments have adopted a “wait-and-see” busi- ness approach that mirrors the lengthy political process. Adding to the delay, when and if online poker
is legalized in particular states or the nation, the process for establishing a legal online gaming industry will be time-consuming and politically fraught. As the chart below demonstrates, legaliza- tion is but the first step for establishing a regulated online gaming industry. As with legal land-based gaming, there are multiple systems to be developed and implemented before a single dollar can be earned from legal online gaming in the United
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