Oklahoma Tribes File Lawsuit Against Federal Government Over Online Gambling Site

Federally recognized Indian tribes, Cheyenne and Arapaho, have sued the Oklahoma Department of Interior over objections to their PokerTribes.com website.  The site was designed to offer real-money casino and poker games only to foreign customers, while keeping with federal regulations and blocking U.S. residents.

Last April, officials authorized the online site to operate with 20% of revenues going to the state.  The terms of the agreement differed from those in the 2005 tribal-state compact which covered brick-and-mortar outfits and designated the state’s share to be 4% of the first $10 million in revenue from online gambling, 5% of the next $10 million, 6% over $20 million, and 10% from poker games.

The tribes had invested significant resources in preparation of the website launch.  It has been reported that Universal Entertainment Group (UEG) was paid upwards of $6.8 million to develop the site.

Assistant Secretary of Indian Affairs at the Department of the Interior, Kevin Washburn, said the proposed site “did not expand the scope of gaming authorized under the existing compact.”  Thus the state could not offer “meaningful concessions” to the tribes in exchange for an enlarged revenue share, as stipulated under the Indian Gaming Regulatory Act (IGRA).

In response, the tribe and state agreed to share online revenue based on the same rate for land-based casinos.  However, Washburn replied with a contradiction saying: “The agreement modifies the existing compact by expanding the scope of the games the tribe is currently operating to include internet gaming as part of the compact’s covered games.”

“The state cannot control, nor can it offer, exclusive access to a market of patrons located entirely outside the United States and its territories,” Washburn added. “As such, the state’s concession is illusory. Therefore, the revenue sharing requirement for the proposed internet gaming activities amounts to an impermissible tax in violation of IGRA.”

As such, Washburn said that the Department of the Interior can’t approve a compact that violates the IGRA.