ALBUQUERQUE, N.M. — A proposed new gambling compact between the Navajo Nation and the state could effectively close the door on state authorization of Internet gambling.
Under the proposed compact, the Navajos could stop sharing their slot machine revenues with the state if the state legalized any form of Internet gambling, including poker.
The tribe would be required to enter “good faith negotiations” — and arbitration, if needed — on a new revenue-sharing agreement with the state that reflected the impact of Internet gambling on its casinos.
“This provision was intended to discourage the adoption of Internet gaming in the state, while ensuring that, if Internet gaming is adopted, revenue sharing continues in light of any new benefit/detriment to the (Navajo) Nation,” said Enrique Knell, a spokesman for Gov. Susana Martinez.
If approved by the Legislature, the proposed compact with the Navajos could become a model for new compacts with the state’s other gambling tribes.
The Martinez administration negotiated the proposed compact with the Navajos and sent it to lawmakers for approval with a little more than a week left in the Legislature’s session.
The proposed compact was endorsed by a joint Committee on Compacts, but it never made it to the floor of the House or Senate for a final vote before the session ended March 16. The compact could be resubmitted to legislators when they meet next.
The proposed compact’s provisions on Internet gambling were pointed out to the Committee on Compacts when it met to consider the deal but they were not discussed at length.
“While the impact of Internet gaming is uncertain, the state believes that brick and mortar (tribal) facilities will provide for more jobs and better serve the interests of New Mexico economic development,” Knell wrote in an email.
“It’s also reasonable to believe that social and financial problems related to gambling could be worse if Internet gaming is allowed,” Knell said.
The current compacts between the state and gambling tribes don’t specifically address the issue of Internet gambling.
State authorization of Internet gambling became a possibility in late 2011 when the U.S. Justice Department reversed its long-held legal view that the federal Wire Act prohibits all forms of Internet gambling. The department said the act applies to only sports betting.
At least three states — New Jersey, Delaware and Nevada — have since passed laws legalizing Internet gambling, and many more states have been debating the issue.
One possibility is several states banding together to offer Internet poker to their residents. The multistate Powerball lottery could be a model for such an alliance.
The American Gaming Association has estimated Americans spend $4 billion a year to gamble online, much of it illegally with offshore operators, and that legalized Internet poker alone could generate $2 billion in tax revenue.
Under the current compacts, the gambling tribes share a percentage of their slot machine revenues with the state. In exchange, the state limits its Class III, or casino-style, gambling to a state lottery, horse racing and slot machines operated by racetracks and fraternal and veterans organizations.
It’s pretty clear the tribes could stop sharing slot machine revenue if the state authorized Internet wagering on Class III gambling like slot machines, roulette, craps and blackjack. But poker isn’t considered Class III gambling, because it is banked by players and not the house.
Under the proposed new compact with the Navajos, the tribe could stop making revenue-sharing payments to the state if the state authorized Internet wagering on any casino or poker games or entered a multistate Internet gambling agreement.
The current compacts with tribes allow them to conduct all forms of Class III gambling but only on Indian lands.
In the proposed new compact, the Navajos agreed not to engage in Internet gambling as long as the state didn’t authorize it and as long as Congress didn’t pass a federal law to legalize Internet gambling on non-Indian land.
If the Navajos were to go into Internet gambling, they would be required to share revenues from the gambling with the state, with the exception of earnings from poker.
So far, there are more questions than answers when it comes to legalizing Internet gambling in New Mexico:
♦ Given the explosion in the number of mobile computer devices, what is the market in New Mexico for Internet wagering on casino games? What is the market for just poker?
♦ Could the state make more money from authorizing Internet gambling than it is taking in under the current compacts with tribes to share their slot-machine revenues?
♦ What would be the impact of Internet poker or other gambling on tribes?
♦ Would Internet gambling be in the best interest of New Mexico residents, including members of tribes that have sunk hundreds of millions of dollars into casinos and related development?
Sen. George Muñoz, D-Gallup, who chairs the Committee on Compacts, says that the committee will meet this summer and that Internet gambling will be among the issues discussed.
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