DOI Rule Endorses Seminole Tribe’s Model of Remote Wagering

The DOI’s new rule restates and expands 25 CFR Part 293, providing new clarity and detail about what a gaming compact between a tribe and a state may (or must) include in order to obtain DOI approval. It follows the June 2023 opinion by the D.C. Circuit in West Flagler Associates, Ltd. v. Haaland, 71 F.4th 1059, 1067 (D.C. Cir. 2023), where the court upheld the DOI’s decision to approve a compact allowing electronic wagers with a sportsbook operated by the Seminole Tribe of Florida, even if the players are not located on the tribe’s lands. That court opinion left unanswered certain questions about how existing law does and should apply to remote or internet gaming (i-gaming). The new rule published by the DOI represents an initial step by the U.S. federal government to answer those questions, ensuring that all tribes have a clear path to participate in the growing internet gaming industry.

Brief Background
The Indian Gaming Regulatory Act (25 U.S.C. 2701-21) (IGRA) is the federal statute that regulates tribal gaming. Under IGRA, certain forms of gaming, known as “Class III” games (including sports betting, casino table games and banked card games), may only be offered by a tribe if the tribe has entered an agreement, or “compact,” with the state where the tribe’s lands are located. IGRA expressly identifies what topics and provisions may and may not be included in such compacts, and requires that each compact (and any amendment thereto) be reviewed and approved by the DOI before the compact takes effect. The DOI has established rules and protocols explaining how its review and approval process works, including the rules set forth in 25 CFR Part 293.

Gaming Compacts and Internet Gaming
The most significant aspect of the new rule is Section 293.26, titled, “May a compact or amendment include provisions addressing statewide remote wagering or internet gaming?” Consistent with the West Flagler decision (and with the DOI’s previous but then-uncodified interpretation), the DOI’s answer is “yes.” The rule thus clarifies that remote wagering is among the “other subjects that are directly related to” gaming, which IGRA allows to be negotiated and addressed in gaming compacts.

The rule provides basic restrictions on what tribes and states may negotiate with respect to remote wagering and i-gaming. First, and most fundamentally, the rule confirms that compact provisions regarding remote wagering must directly relate to the operation of gaming activities on the tribe’s lands (which include a tribe’s reservation lands and certain other lands owned or controlled by the tribe or its members), and may not alter any otherwise applicable federal law (including, for example, the Unlawful Internet Gambling Enforcement Act (31 U.S.C. 5361-67) (UIGEA)). In addition, compact provisions may allocate jurisdiction over remote gaming between the state and the tribe so long as the following three conditions are met:

(a) Both state law and the applicable gaming compact deem that, when a person places a remote wager with the tribe from anywhere within the state, the location where that gaming “takes place” is where the server accepting the wager is located;

(b) The tribe regulates the relevant gaming activity; and

(c) The player placing the wager is not located on the Indian lands of another tribe within the state, unless that tribe has “lawfully consented.”

The original proposed rule text did not provide a mechanism for third-party tribes to consent to the placement of remote wagers from within their Indian lands, but after receiving public comment requesting such a mechanism, the DOI added it to the final rule. Without that mechanism, Indian lands under the jurisdiction of any third-party tribe within the same state would become “dead zones” for remote gaming. In the notice of the final rule, the DOI acknowledged that providing this flexibility could open the door for tribes to enter agreements, through which “novel solutions may emerge that allow for more tribes to benefit from i-gaming.”

The phrase “lawfully consented” in Section 293.26, clause (c), is important. For a tribe’s consent to be lawful, the tribe must comply with applicable federal law, particularly IGRA and UIGEA. UIGEA prohibits some forms of internet gambling, but it does not apply to wagers placed and received within Indian lands, so long as the tribes having jurisdiction over the Indian lands where the wager is both placed and received have each enacted an appropriate ordinance permitting the activity, and providing for age and location verification, along with certain data security standards. The consenting tribe, therefore, must ensure it has enacted an appropriate ordinance (or entered its own gaming compact with the state) to avoid violating UIGEA. Furthermore, if the third-party tribe is too involved in the gaming, or receives too much benefit, it may cross the line from merely “consenting” to gaming that takes place elsewhere, to actually permitting and regulating gaming itself, which, under IGRA, is only permissible if the tribe has its own gaming compact with the state. Tribes interested in offering gaming to people located within another tribe’s jurisdiction, and tribes interested in consenting to such gaming activities within their own jurisdiction, should take care to review the requirements of UIGEA, IGRA and applicable state law (as well as their own compact language, where applicable) to avoid inadvertent violations on federal law.

Significance
In the published notice of the final rule, the DOI explained that the revisions to 25 CFR Part 293 were largely intended to codify and clarify the Department’s existing and longstanding interpretation of IGRA’s requirements relating to the review and approval of gaming compacts. A draft of the new rule was initially proposed in December 2022, one week before the DOI argued the West Flagler case before the D.C. Circuit, and six months before the court released its opinion. In its publication of the draft rule, the DOI wrote “[t]he Department’s position is that the negotiation between a Tribe and State over Statewide remote wagering or i-gaming falls under [the] broad categories of criminal and civil jurisdiction [which IGRA permits to be addressed in a compact].” (Class III Tribal State Gaming Compacts, 87 Fed. Reg. 74942 (December 6, 2022).) The West Flagler decision affirmed that interpretation. The compact at issue in West Flagler included an agreement by the tribe and state that when a player within the state placed a remote wager with the tribe, the state and the tribe would consider that gaming activity to be taking place at the location where the wager was received (i.e., on the tribe’s land). The Department argued (consistent with its draft rule) during the litigation that such a provision was consistent with IGRA because it did not seek to authorize or regulate any gaming activities occurring outside Indian lands, and instead simply permitted the tribe to operate its gaming facilities and receive wagers, while allocating regulatory responsibility between the state and the tribe.

The court agreed with the DOI on this point. (West Flagler, 71 F.4th at 1065.) The new rule thus codifies the DOI’s existing, and now court-approved, interpretation of IGRA. By codifying that understanding (and expressly referring to the West Flagler decision), the DOI has ensured that all tribes, not just the Seminole Tribe, have clear guidance about how they may begin offering remote wagering.

As remote wagering and internet gaming grow in popularity and technological complexity, the new rule represents an important step by the DOI to clarify the process by which tribes can participate in and benefit from the i-gaming boom. That said, the rule does not change existing law with regard to where gaming activities may take place, and in what format. As explained above, the ability of players to place wagers with a tribe from outside of tribal lands depends on whether the applicable state law permits such gaming generally, and whether the state and tribe have agreed that any such wagers should be considered as taking place at the location where they are received, not placed. Furthermore, existing federal law continues to limit how and where tribes may offer certain gaming activities.