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Josh Moon

Analysis | The myth of the “simple lottery bill”

Josh Moon

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There is no such thing as a “simple lottery bill” in the state of Alabama.

You hear this phrase a lot from state lawmakers, as they field the inevitable questions about gambling that pop up prior to each legislative session or prior to elections in which one candidate — usually a Democrat — has proposed a lottery to raise state revenues.

And right on cue, with Walt Maddox running for governor and the state facing huge budget deficits in 2019, the lottery question has surfaced again.

And again, state lawmakers have proclaimed that the only thing that will pass in this state is a “simple lottery bill.”

What they mean by that, of course, is they want to pass a bill that approves only a statewide lottery, with no provisions for legalizing other gambling, such as electronic bingo, video lottery terminals or table games. (Also, keep in mind that any legislation passed by lawmakers would have to go on a ballot and be approved by state voters, since the state’s constitution outlaws gambling.)

The problem with that is it ignores the very complicated, very nuanced world of Native American gaming law.

To put it simply: Because Alabama has a federally recognized tribe, the Poarch Band of Creek Indians, that’s already operating casinos, the implementation of a lottery would almost assure the Poarch Creeks the right to operate casinos with a higher class of casino games, and would likely lead to the tribe operating full-fledged casinos, complete with table games and real slot machines. 

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While that would be great for the Poarch Creeks, it wouldn’t be the best path for the state, at least from a revenue standpoint. Non-Indian casinos can be taxed at much higher rates and stand to bring the state much higher revenue numbers.

To understand why a “simple lottery bill” is a misnomer, you have to read about three dozen federal court and U.S. Supreme Court decisions, the Indian Gaming Regulatory Act (IGRA) and a number of news stories on the fights between states and tribes. It also wouldn’t hurt to talk to a few attorneys, and read a few legal opinions, from people who have no dog in Alabama’s fight.

Luckily for you, I’ve done all of that. And while I’m no attorney, and don’t even play one on TV, I am pretty good at repeating stuff I’ve been told and acting like I know what I’m talking about.

So, here’s the condensed version of all that.

IGRA breaks gambling into three categories: Class I, which is social games such as raffles and junk; Class II, which is bingo and lotto; and Class III, which is everything else, including table games, slot machines and — here’s the biggie — lotteries.

Under IGRA, in order for a tribe to be able to offer any sort of Class II or Class III gaming, games that fall into those categories must be legal elsewhere in the state where the tribe’s lands are located. (This is why the Poarch Creeks can offer electronic bingo, a Class II game, in Alabama — because bingo is legally played in Alabama elsewhere, and the federal government, unlike Alabama’s courts, determined that the game can be played electronically.)

Also, IGRA requires that states and tribes enter into compacts before the tribes can offer the games that fall in Class III. That requirement provides some protections to states, ensuring that it can have some say-so over the more serious casino-style gaming.

But there’s also a protection built in for tribes, and this is where the lottery component opens things up for the Poarch Creeks.

IGRA, enforced by the National Indian Gaming Commission and the Department of the Interior, requires states that offer Class III gaming to negotiate in good faith with tribes seeking a compact. Until a recent federal court ruling in Florida, tribes could compel states to negotiate through the use of the courts, but a sovereign immunity ruling in Florida’s favor upended that avenue.

Instead, now, if a state refuses to negotiate with a tribe, the Secretary of the Interior can simply implement a gaming plan on his own for that tribe, legalizing Class III gaming with or without the state’s consent.

So, what does all of that mean for Alabama?

It means that approving a lottery for the state opens up other possibilities for the Poarch Creeks, and could result in the state being either forced into a compact or forced to allow some form of Class III gaming.

I say “some form,” because generally speaking, the NIGC will not allow the tribes to offer games that are not offered in the state. But as we’ve seen with the electronic bingo v. traditional bingo argument, there is some wiggle room in the definitions.

Most likely what we could bank on is this: If a lottery passes, the Poarch Creeks would then have the right to operate their own lottery. Just like with the liberal definitions of “bingo,” the NIGC has also been flexible on lottery games, such as video lottery terminals (VLTs), allowing them in most cases. And the courts, with a few nuanced exceptions, have mostly backed the tribes in any disputes.

VLTs operate similar to slots and mimic the paper scratch-offs. They’re faster than electronic bingo games, and due to their popularity in other states, the VLT games and machine offerings are much more advanced and nuanced.

That would, of course, automatically give the Poarch Creeks a leg up over non-Indian casinos. As if the tribe needs another one at this point.

But it would also severely limit the state’s ability to earn revenue from both its lottery and the revenue available from gaming.

And it’s why there is no such thing as a “simple lottery bill” in Alabama.

 

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