Will the state get a cut of tribal Internet gambling?

There is one thing everyone in the gambling business seems to agree on: legal Internet gambling is coming, and it's going to be big.

Gov. Dannel Malloy appeared to be out in front of this issue as early as January, when he revealed that the state was in talks with Connecticut's two gambling Indian tribes about legalizing their proposed Internet wagering.

Lt. Gov. Nancy Wyman told me last week that there was an assumption that the tribes would share some of their new Internet revenue with the state, just like they do under their exclusive slot machine agreement.

She added that no exact amount of tribal contributions was discussed.

In the end, though, the issue died in the General Assembly, soon after lawmakers began to take it up.

In general, lawmakers seemed cranky about the idea of legalizing any form of Internet gambling, despite the governor's warning that other states are hard at work at this.

That delay might just have killed the state's opportunity to share in at least some tribal Internet gambling.

The issue is now percolating in Washington, and last week, Mohegan Chairman Bruce "Two Dogs" Bozsum testified before the Senate Committee on Indian Affairs, which has crafted proposed legislation that would make sure that tribes get a piece of the Internet gambling action without being taxed.

Bozsum compared the current developments in Internet gambling to the 1987 Supreme Court decision that set the stage for casinos on reservations around the country, including Connecticut.

The Mohegan chairman argued for federal legislation on Internet gambling, including by tribes, instead of allowing a patchwork of state laws around the country.

"Tribes should be extremely hesitant to entrust their economic futures to the tender mercies of the 50 states, many of whom are still in financial crisis and looking for new sources of revenue," Bozsum said.

The chairman went on to reveal that the Mohegans are considering working with a consortium of other tribes around the country to develop an Internet gambling system that could compete with other big commercial companies.

Indeed, Chuck Bunnell, chief of staff for external affairs, told me last week that the Mohegans have taken the development of new Internet gambling business very seriously.

"The Mohegan Tribal Council has been working on this issue for a number of years," he said. "It's the only tribe to have testified on the issue three times in Washington."

A decision by the Department of Justice in December, saying not all Internet gambling would violate the federal Wire Act, breathed new life into the issue of formally legalizing and regulating it.

The Justice decision indicated states could regulate Internet gambling that occurs within their borders.

That led to the discussion in Connecticut between the governor and the tribes about legalizing and regulating Internet gambling within the state.

But it appears that federal legislation, which could come up as soon as the lame duck session of Congress reconvenes after the fall election, might make state laws moot.

Legal Internet gambling appears to be on the way, and not only is it unlikely that Connecticut lawmakers opposed to it could stop it, but it appears they may have also lost an opportunity to profit from it.

This is the opinion of David Collins.


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