Oklahoma Tribes Ditch Fight Over PokerTribes.com Internet Site

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Friday, March 14th, 2014 | Written by Adam Brown

Almost a year after the administration of Oklahoma Gov. Mary Fallin exceeded its mandate by granting the ‘Cheyenne & Arapaho Tribes’ permission to offer online gambling internationally but not within the country’s borders, the tribes have now ditched plans to pursue their PokerTribes.com online gaming site.

Brief history of Indian gaming

The Native Americans tribes took their first major step into the gambling industry in 1988, after President Reagan signed the Indian Gaming Regulatory Act (IGRA). By 2011, 240 tribes were running 460 casinos across 28 states and generating $27 billion in revenues each year. In Oklahoma, tribal casinos accounted for $3.5 billion of those revenues, second only to California, with $134 million subsequently collected by the state as part of its revenue sharing agreement.

In respect to federal law, the Indian tribes also enjoy a privileged situation in that IGRA exempts them from The Interstate Wire Act of 1961 and the 2006 UIGEA, which forbids online gambling in the United States.

PokerTribes.com, an international online gambling site

The Cheyenne and Arapaho Tribes of Oklahoma operate four brick-and-mortar casinos inside the Sooner State, and in mid-2012 their PokerTribes.com site appeared online offering free-play games with the promise of real-money action at a later date. It was the tribes belief that a new gaming compact it had signed with the state last April would have permitted them to operate such a site, in return for concentrating on the international market and furnishing the state with 20% of the proceeds. At the time, Brian Foster, Cheyenne & Arapaho CEO and Oklahoma Indian Gaming Association chairman, stated the following:

“I applaud the dual effort between the State of Oklahoma and the Tribes to open the pathway for international gaming.. We look forward to adding to millions of dollars in education revenue, millions of dollars in goods and services, and the over 80 thousand jobs that have been created, much of which are in rural areas outside of the already blossoming metropolitan areas.”

The compact was later amended in September 2013 to include a complicated revenue share deal in which Oklahoma would then receive 10% of online card game revenues and around 6% from online bingo, lottery and other gambling games. According to estimates, tribal leaders were hoping to capture around 2% of the global online gaming market by 2018, generating around $132 million annually.

“It’s pretty groundbreaking. In Oklahoma, we have the Native American culture we can sell to the world, and the state and the tribes can really benefit,” explained tribal attorney representative Richard Grellner.

Tribes blindsided by Oklahoma Department of Interior

Unfortunately for the Cheyenne & Arapaho Tribes, last November, after sinking $9.5 million into the site, the Oklahoma Department of Interior told them that state officials had no authority to grant such an exclusive arrangement and so the tribal leaders then filed a federal lawsuit on December 26th against the U.S. Department of Interior hoping to move the agreement forward.

Now, however, the battle seems to be over, especially after new Cheyenne and Arapaho Governor Rollin “Eddie” Hamilton, who took over the tribes last month, decided not to throw good money after bad by pursuing an international only online gambling site. It appears the decision was made after the federal government raised objections to the terms of the deal struck between the two parties, rather than the internet gambling activity itself. The federal authorities asserted that the Cheyenne & Arapaho Tribes had been given a raw deal and that “the State has not offered a meaningful concession” in order to justify sharing online revenues.

As a result incoming Gov. Eddie Hamilton has now severed links to the PokerTribes.com site, and recently directed attorney Richard Grellner to drop the tribes’ lawsuit against the Department of the Interior. In addition, Hamilton has arranged some high profile management changes, including replacing Lucky Star Casino’s CEO, COE, as well as the tribe’s attorney general responsible for facilitating the PokerTribes.com contract.

Tribe may sue to recover funds

In addition to possibly filing charges against any individuals deemed at fault in the purchase and running of PokerTribes.com, a tribal council meeting has also authorized investigators to review the tribes’ expenditure and potentially pursue recovery of monies. Originally, the tribes paid Universal Entertainment Group (UEG) to create the site, and any legal actions taken against the company risks further damaging its credibility. As UEG managing director Isaias Almira, explains:

“We spent close to $40 million on this project. The Cheyenne and Arapahos spent close to $10 million on this project. And due to the political agenda taking office, they are destroying everything. It just doesn’t make sense. It’s not right what they are doing. It’s not like we sold them phony software or a phony website that doesn’t exist. We did everything right for them.”