American Indian tribes have made millions putting casinos on their reservations, but they’re finding it a lot harder to make money with Internet betting.
Industry officials blame the problem on legal challenges and a public mistrust of Internet gambling.
Idaho’s Coeur d’Alene Tribe, which started a national lottery earlier this year, drew just 1,400 customers in its first five months and won’t break even before next year at the earliest. Two states, Missouri and Wisconsin, have sued to stop the operation.
Meanwhile, tribes that have been offering bingo over the Internet since 1996 are drawing only a few customers a day.
“Our activity is extremely small,” said Gordon Graves, chairman of Tulsa, Okla.-based Multimedia Games Inc., which operates the Mega Bingo operation that links Indian bingo halls in 17 states.
Federal regulation is needed to assure potential gamblers that they won’t be cheated by Internet operations, Graves told the National Indian Gaming Commission on Friday.
“Consumers question the legitimacy of Internet games,” he said.
Dave Matheson, who runs the Coeur d’Alene Tribe’s lottery, said his tribe hopes to start making a profit from its lottery in the first quarter of 1998.
The tribe has put off promoting the lottery while the federal lawsuits are pending, he said. About 8,000 people had registered with the lottery’s World Wide Web site through September, and 1,400 actually put down money, he said.
While insisting that the lottery is adequately regulated, Matheson acknowledged that the tribe must overcome a public perception that it isn’t.
Attorneys general from 35 states, including North Dakota, have asked the National Indian Gaming Commission to shut down the lottery.
They argue the lottery violates a federal law that restricts tribal gambling operations to the reservation. The commission responded by holding Friday’s hearing.
Meanwhile, the lawsuits have discouraged other tribes from starting Internet operations.
“They’re watching to see what happens with us, whether we take a bullet to the heart,” said Matheson.
Internet gambling has been seen as a potential economic boon for tribes whose reservations are too remote to attract many customers to casinos.
Indian gambling has grown into a $6 billion-a-year business over the past decade, with small tribes located near New York, Minneapolis-St. Paul and other metropolitan areas the most successful by far.
The General Accounting Office found that 40 percent of Indian gambling revenue nationwide goes to just eight casinos.
“Internet gaming could provide many rural tribes with an opportunity which has never previously existed to reach an immense population and result in revenue never before realized,” said Richard Hill, chairman of the National Indian Gaming Association, an industry trade group.