Undeterred by all the brouhaha surrounding interstate gambling, the Coeur D'Alene Indian tribe in Idaho is going for broke with what it claims is the first US-based online lottery.
USLottery, which is open for business although it won't "officially" launch until fall, says it can bypass the chaos surrounding gambling legislation because it exists on Indian territory. But the commission overseeing Indian gaming said Friday that it hasn't determined that the argument will hold.
"We believe we are legal," explains David Krietzberg, treasurer of Executone, which manages USLottery for the tribe. "But we would expect there's going to be opposition from other states." Already the state of Missouri has filed suit against the tribe.
The Coeur D'Alene tribe brings in only US$8 million a year from its reservation casino; it expects USLottery, on the other hand, to deliver $200 million annually. Only 50 people currently play the online lottery, which offers a scratch-off game and standard lottery ticket gambling, but Krietzberg anticipates an audience of 200,000 by the end of the year.
The overall legality of online gambling, however, remains dubious. Currently, there are no federal laws specifically monitoring online gambling; the closest semblance is the Interstate Wire Act, which makes it illegal to send wager information across state lines using wire communications.
US companies offering online gambling have based their operations overseas to avoid potential lawsuits. Similarly, the Coeur D'Alene tribe claims that its server rests off US soil since its reservation is "sovereign territory." The tribe operates under the same principles as offshore casinos, but can offer the legitimacy of US banking services. In order to avoid trouble, only residents of the 36 states where gambling is legal will be allowed to play USLottery, which will be closely enforced by the registration and check-issuing departments.
Despite Krietzberg's assertion that USLottery has received approval from the National Indian Gaming Association, NIGA is turning to Idaho for a decision. The association sent a letter to the state of Idaho on Friday asking it to determine whether it considers Internet gaming to be covered in its agreement with the tribe.
"There are a lot of issues that are going to have to be looked at," said Charlotte Hrncir, director of congressional and public affairs for NIGA. "The intention of the state and the tribe in the compact is a good place to start."
In the absence of federal legislation covering Internet gaming, states are claiming their own jurisdiction. Already, Minnesota last week won a suit against the online casino WagerNet. Although the casino was based offshore with offices in Nevada, it was argued that by virtue of its online presence, the Web site was advertising to residents of Minnesota, where gambling is not legal. The Missouri attorney general has filed a similar suit against the online casino IGC.
And now that one tribe is online, it's likely that other tribes with gambling operations will follow suit.
"Everyone's been talking about online gambling," explains Valeria Burmesper, editor of Indian Gaming Magazine. "They were waiting for one tribe to start doing it. When one does it, then they all try it."
