Federal lawsuit over new sports betting rule could jeopardize tribal sovereignty, critics say

Debbie Nelson's favorite slot machine at the Nisqually Red Wind Casino is Yogi Bear-themed, complete with spinning picnic baskets and huckleberry pies.

“It keeps me entertained while I'm losing money,” she said. But Nelson also said it eases the pain to know her lost money goes to the Nisqually Tribe.

“To scholarships and to medical care and just to support the families," she said. "I figure if I'm going to give it to anyone, it needs to go to a worthy cause.”

Gaming revenue has helped lift many tribes above the poverty line all over the country. With casino revenue, tribes including the Nisqually are able to invest in things like health care or internet service, much like other local governments do.

Here in Washington, 29 tribal casinos operate under agreements or "compacts" with the state. Revenue from those casinos totaled nearly $3 billion in 2021.

One reason why Washington's tribal casinos are so successful is that they are the only venues in the state to allow certain lucrative games of chance, especially slot machines. Earlier this year, a new Washington law took effect that allows tribal casinos the right to give their customers the chance to gamble on sports.

In contrast, the state's non-tribal gambling venues aren't allowed to offer sports betting. That's the subject of a federal lawsuit filed earlier this year by Eric Persson, the CEO of a corporation called Maverick Gaming, which owns more than a dozen commercial "card rooms" in the state.

“The tribes want everything for free, and they want to be bullies, and they ran into the wrong person to bully,” Persson said.

Persson believes his gambling locations should have the right to offer sports betting, just like tribal casinos.

But legal experts and tribal leaders KUOW interviewed said this lawsuit — which was first filed in a D.C. court, then moved to Washington state's Western District — doesn't just challenge the exclusive right of tribal casinos to offer sports betting in Washington. They said the suit, if successful, could slash revenue for tribal casinos across the country and ultimately undermine tribal sovereignty.

Casino revenue has been transformative for tribes like the Nisqually, according to Hweqwidi Hanford Mccloud with the Nisqually Tribal Council. The reservation, which is on a portion of the Nisqually River near Olympia, didn’t even have running water or reliable electricity until the 1970s.

“For the longest time here, and I could probably say across a lot of reservations, we weren't living life, life was being lived upon us,” he said.

Mccloud said casino profits gave tribal leaders “the choice and the free will to do what you need to do for your community and your people.”

“Not having to be told by an agency how and when your people can live, eat, drink, whatever it may be. Because that’s the rule we were under before gaming got here," he said.

That principle of sovereignty is also baked into the Indian Gaming Regulatory Act, Mccloud and other tribal leaders said. In essence the act says if a state allows gambling, then tribes can run casinos in that state.

Eric Persson’s lawsuit with Maverick Gaming claims, in part, that the federal government is misinterpreting the Indian Gaming act as applied in states like Washington. The suit claims commercial venues should be able to offer the same types of gaming as tribal casinos.

There's a twist to this story. Persson is himself an enrolled member of the Shoalwater Bay Tribe of Washington state. But to be clear, he’s not running a tribal casino where the money goes to native government.

Maverick Gaming owns more than a dozen commercial card rooms in Washington, which currently can only offer games like blackjack or baccarat by state law.

Persson argues he’s not trying to undermine tribal sovereignty. He says he’s just trying to make money for Maverick Gaming by getting into sports betting, which would increase revenue and help draw a crowd.

“As the tribes have gotten sports betting, what's happened is our business isn't the same on Sundays, when people want to watch football,” Persson said.

If his lawsuit with Maverick is successful, the fallout could be much bigger than just adding sports betting to card rooms in Washington state.

The suit claims, for example, that Washington’s agreements with tribes to allow sports betting are monopolistic. And it argues that that monopoly violates the U.S. Constitution’s guarantee of equal protection, which says you can’t discriminate based on race. The lawsuit goes on to argue that tribal membership is race-based.

Matthew Fletcher, an expert on tribal law at Michigan State University, disagrees with the legal reasoning in the suit. He said this case is not about race, it’s about tribal sovereignty. Tribal nations, he said, are government bodies.

“Whenever you hear a company like Maverick bring a claim saying, 'Hey, this is racially discriminatory,' the real answer is that tribes negotiated for that that privilege, that place, as compensation,” Fletcher said.

As it turns out, the firm bringing the lawsuit for Maverick Gaming, Gibson Dunn, has made a similar argument about race and tribal rights in a legal case that challenges the Indian Child Welfare Act.

That act says tribes have jurisdiction over adoptions or foster placements involving Native children. The U.S. Supreme Court has agreed to hear that case.

Fletcher argues both cases are part of a larger, conservative legal attack on tribal sovereignty and treaty rights.

“Ultimately these theories are existential threats to Indian tribes around the country,” Fletcher said.

Fletcher also points out that, prior to colonization, all of what is now the U.S. was tribal land.

“What they're saying is we've taken 99 percent of what Indian tribes and Indian people had, and the 1 percent that's left protected by federal Indian law, we're coming for that next,” he said.

For his part, Persson says he expects the case to eventually make it to the U.S. Supreme Court.

In the meantime, sports betting operations are up and running in some locations in Washington, including one of the most visible, the Emerald Queen Casino on I-5 South of Seattle. Other tribal venues, including the Nisqually Red Wind Casino, are still waiting for their new sports betting agreements with Washington state to be finalized.