Chris Stearns: The healthy state of tribal gaming in Washington

Chris Stearns: The healthy state of tribal gaming in Washington

Tuesday, January 23, 2018 Posted by Luke Massey
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Tribal gaming in Washington last year generated a GGY of £3 billion

Tribal Gaming generated $31.2 billion in 2016, as reported by the National Indian Gaming Commission, yet many people outside of the United States are still unaware of the size of the market.

We caught up with Chris Stearns, Commissioner of the Washington State Gambling Commission, to discuss tribal gaming in his state, the impact of increasing the availability of sports betting across the country, and the biggest regulatory challenges for those entering the sector.

Totally Gaming: It is now 20 years since the Indian Gaming Regulatory Act was signed into law by Ronald Reagan. Two decades on, what condition does the Washington tribal gaming sector find itself in?

Chris Stearns: The tribal gaming sector is very healthy, with an estimated gross gaming revenue in excess of $3 billion for 2017. The WA State Gambling Commission commissioned an economic market study in 2016, which found that the tribal gaming market will continue to grow and also that 90 percent of Washington State residents live within a one-hour drive of a tribal Class III casino.

There are 29 federally recognized tribes in Washington State and all 29 of those have Class III gaming compacts. Twenty-one tribes operate 28 casinos through gaming compacts. The tribes that do not operate a casino still benefit through the lease of their allocation of gaming machines to other tribes.

TG: How important to the state's tribal nations' economies is gaming? Would the increased availability of sports betting across the US impact the tribal gaming sector?

CS: Our sense is that gaming plays a critical role in the economies of tribal nations in Washington State. Tribal gaming has allowed tribes to invest hundreds of millions of dollars into tourism, health care, law enforcement, environmental stewardship, and real estate, as well as employ over 25,000 people in the gaming industry and add over $6 billion to Washington’s economy. It’s not just the tribal economies that thrive, however. It’s the tribal cultures and the quality of life of indigenous peoples that truly benefit.

The availability of sports betting likely would have an immediate effect on the larger market tribal casinos located near large populations. But that is all dependent upon the type of sports betting that, if authorized, would be permissible in Washington State. A widespread commercial authorization throughout the State, though hard to imagine, could provide a boon to non-tribal commercial operators, which would come at the expense of tribal casinos.

On the other hand, enactment of a more limited sports betting law, one that restricts sports betting to brick and mortar casinos of a certain size, would undoubtedly place tribes in an advantageous situation where they could offer a new product to bring in new customers or expand the gaming experience for existing customers.

Washington does not allow internet gambling in the State, so operators located away from large populations would not be able to offer an internet wagering product unless the State changes the law by a 60 percent supermajority. And, of course, the type of sports betting that tribes could offer would also depend upon the outcome of tribal-state compact negotiations.

TG: How are changes in the broader US gaming sector affecting the tribal nations (i.e. the increased availability of online gaming)?

CS: The presence of internet gaming in other states has not greatly affected tribal gaming in Washington, most likely due to the great geographical distance between the State and Nevada and the Northeast states. Tribes in Washington State offer gaming on a Tribal Lottery System (TLS) device rather than a slot machine.

My sense is that the projected overall decline in slot machine play will likely affect play on the TLS machines as well. Thus, there will be continued pressure on tribal gaming operators to offer new gaming products to reach new players.

TG: From a gaming regulators’ perspective, what are the key challenges of regulation that you see in relation to the new trends now emerging in the sector, whether tribal or commercial gaming?

CS: The biggest challenges for us as regulators is keeping up with the array of new, and creative, gaming products that are designed to conform with the laws of Washington State. Games of skill, wide area progressive games, and the conversion of traditional games that rely upon paper and/or physical objects into computer-based games is both a legal and technological challenge for regulators.

We also face the challenge of maintaining a stable agency budget that is funded enough to allow us to investigate new forms of illegal gambling. New sectors include investigations into e-sports and skins betting, for instance. As technology grows, there will continue to be new forms of gambling that will tax the resources and resolve of gaming regulators across the world.

TG: In California, the online poker debate hit the buffers over the likely introduction of PokerStars to the market, with some tribal nations opposing the move. Do you think the gaming sector across the US (including tribal locations) can resist brands like PokerStars, or should they embrace them?

CS: My sense is that tribes in each state will make the determination of what’s best for their markets and their people. If there is one thing that I hope is a hallmark of the Washington State Gambling Commission, it’s that we respect and honor the sovereignty of the tribes in our state.

They were here for tens of thousands of years before the State was formed and will likely outlast us by millennia too. We stand upon their land and have been gifted by their contributions and stewardship.

TG: It will be your first time at ICE – what brings to the show in terms of your learning, networking and product needs?

CS: I am really looking forward to attending ICE.  Among the many great attractions is the opportunity to meet regulators from jurisdictions around the globe. ICE offers the Commission a chance to speak with regulators from overseas who are tackling areas like skins betting. 

Some, like Integrated Resorts operators in Japan, have been exploring the possibility of working with indigenous people, which is highly successful in the United States. The great diversity of gaming products is another major attraction. We will be able to see products that are not currently offered in the United States as well as learn about the regulation of those products. And there is the well-known success of the United States Tribal Gaming program that has quickly become a must-attend event around the globe.

On a personal note, I remember when I joined the Gambling Commission I had the pleasure to attend Victor Rocha’s Tribal iGaming summit in Sacramento where I heard the great Richard Schuetz offer gaming regulators four pieces of advice. The last of which was to make sure attend ICE one day.

Stearns will be speaking about 'Diversified Business' in the Tribal Gaming Exchange at this year's ICE London. The three-session seminar, first initiated a few years ago, will be focused on the state of gaming in America, partnerships and business exchange.

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