"Some proponents of internet gaming have used what I will refer to as the “Netflix argument” to urge Indian tribes to support various proposals to legalize internet gaming, even if the terms of the legislation are not particularly favorable to tribes. According to this argument, internet gaming is “inevitable” and unless tribes embrace it they will be left behind. They cite the example of Blockbuster, which they note failed to adapt quickly enough to changes in the movie rental industry introduced by companies such as Netflix. As a result, it is now in bankruptcy, forced to close many of its brick-and-mortar stores, while Netflix, which offers flat-rate online video rental and on-demand video streaming, is prospering. The proponents argue that tribes that fail to embrace internet gaming by supporting its legalization will face a similar fate. However, there is a fundamental flaw to this argument.

When Netflix began offering its flat-rate rental service in 1999, no change in the law was necessary to allow it to implement its new business model. Instead, Netflix came up with an approach that was more convenient for consumers and the marketplace rewarded it accordingly. In contrast, internet gaming in the United States is generally illegal as a matter of federal law. Other than companies operating illegally, internet gaming companies will be able to compete with tribal brick-and-mortar casinos only if there is a change in the law to allow such competition. The recent indictment of individuals associated with three major off-shore internet poker companies by the U.S. Department of Justice dramatically underscores this point.

Thus, the real question is whether Indian tribes should support a change in the law to allow competition from gaming offered via the internet. While internet gaming legislation may or may not be “inevitable,” the specific content of that legislation is far from certain. Some of the proposals that have been advanced would effectively exclude many tribes or force them to participate under conditions that are not at all favorable."

Get the Story:
Joseph H. Webster: The Power of Indian Tribes in the Debate Over Internet Gaming (Indian Country Today 4/19)

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