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Tribe Deals a Setback to Frank Bill

Online gambling operatives and their backers in the financial services industry may have a new stumbling block in getting legislation passed that would reverse a ban on Internet gaming: the Morongo Band of Mission Indians.

While lobbyists for online gambling interests have been upping their ante inside the Beltway since last summer to help create momentum behind House Financial Services Chairman Barney Frank’s (D-Mass.) bill that would legalize online gambling, the Morongo tribe’s aggressive opposition has dealt those supporters a new, bum hand.

The tribe, which runs one of the oldest casino operations in California, believes Frank’s legislation would put it at a competitive disadvantage.

“There are deep concerns that [the bill] would throw stuff so wide open that it would have a deleterious impact on the investments they have made,” said Jim Wise, a contract lobbyist for the Morongo, noting the financial investment that the Morongo made in the brick-and-mortar casino after Congress passed the Indian Gaming Regulatory Act in 1988.

But in an interesting twist, just as the Morongo tribe is opposed to federal legislation, it has been heavily lobbying in support of creating an in-state online gambling infrastructure in California. While no bill has been produced, the cash-strapped state held a hearing last week in the state Legislature to discuss the possibilities.

Wise said the pro-state, anti-federal approach isn’t inconsistent.

The tribe supports the intrastate approach because it would operate within the framework of the current ban, known as the Unlawful Internet Gambling Enforcement Act of 2006, Wise said. The law would prohibit banks and other financial institutions from accepting credit card payments or electronic fund transfers to settle online wagers.

But Frank and online gambling proponents would like to pass new legislation before the UIGEA rules go into effect. Last fall, the Obama administration delayed implementation of the UIGEA by six months, until June 1.

Frank is expected to move quickly to mark up his legislation in the next few weeks, according to lobbyists tracking the issue.

So far, the Morongo tribe hasn’t moved into full-on, kill-the-legislation mode yet. The tribe is “still talking and trying to figure out where we have common ground” with Frank, Wise said.

This isn’t the first time opponents of online gambling have flexed their muscles. In 2007, efforts were stopped short in the House Financial Services Committee, after the National Football League lobbied against removing the ban largely for business reasons, while the Christian Coalition of America and Focus on the Family lobbied against the Frank bill on mostly ethical and moral grounds.

The Morongo tribe is not a newcomer to inside-the-Beltway politics. It has long had the lobbying firepower of Indian lobbyists Wise and Scott Dacey of the firm PACE. Morongo spent $280,000 in lobbying last year, according to Senate lobbying disclosure reports.

Still, there is hardly consensus in Indian country about the potential threats and business opportunities associated with legalizing online gambling.

Morongo has unsuccessfully tried to persuade the National Indian Gaming Association to oppose the Frank bill.

Many tribes in remote places view online gambling as an untapped revenue source. The United South and Eastern Tribes went so far as to support a study of Internet gaming and its potential benefit for Indian tribes in a resolution last fall.

Poker Players Alliance Executive Director John Pappas said he believes that any differences on policy issues regarding tribes can be dealt with before Frank moves to mark up the bill.

“Really it just comes down to that they are opposing it for business reasons,” Pappas said. “They want to preserve the monopoly in their home state, and they perceive the Frank bill as a threat to that.”

The Poker Players Alliance, long the largest K Street force in favor of legalizing online gambling, spent more than $2 million on lobbying last year. The group has several power players on retainer, including Park Strategies, the Smith-Free Group, Ogilvy Government Relations and Ryan, MacKinnon, Vasapoli and Berzok.

The poker players have been joined recently by several other companies and entrepreneurs — including California-based — that are interested in taking a slice of what is expected to be a multimillion-dollar revenue generator.

“Additional people have joined the fray in support of this legislation,” Pappas said. “People see an opportunity here to essentially regulate and create a new industry here in the U.S.”

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