From: Cecilia Partner 


Sent: Tuesday, February 4, 2021 09:11 AM

To: New Associate


Subject: Fwd: Tribal March Madness

New Associate,

I am forwarding an e-mail from a client and long-time law school friend Sarah.  She is the GC of a tribe that hires me to do natural resources work.  She wants to talk about an issue that apparently may have some gaming dimension.  I remember from your interview that you took an American Indian or Federal Gaming Law class, so you may be the one to help me with this. 

Please review her e-mail and provide me with a written overview of the issues and some advice for her.  I need it later today so we can discuss it before my call tomorrow.  Also, I may need you available for the call.

Thanks,

Cecilia. 


——–Begin Forwarded E-Mail

From: SarahB@Littletribe.com 


Sent: Tuesday, February 4, 2021 08:11 AM


To: Cecilia Partner


Subject: Tribal March Madness

Cecilia,

I have an odd one for you, my old friend, and I know you may need to ask others in your firm, but I know your firm does gaming work so I am reaching out to you first.

As you know our tribe in Texas does not have any regulated gaming, no bingo, no casino.  There has long been opposition in the tribe to operating bingo or any other form of gaming.  Our tribal leaders were approached by a company that wants to operate an online March Madness college basketball bracket tournament from our reservation.  They picked our reservation, so they say, because of the good internet lines here and because they think they can work out a deal with us that will cost less to them than state taxes, fees and permits.  Also, they believe it isn’t gambling because Yahoo and ESPN do it, and even if it is gambling, they believe that the tribe, as a sovereign authority, can authorize the activity.

Given the publicity of Warren Buffet’s billion-dollar bracket, and the popularity of the brackets in offices, our leaders think it’s ok and a high-tech internet business on reservation would be good for economic development.  It is the kind of thing the leadership can point to and show that modernization and economic development are occurring on our land.  However, something doesn’t feel right to me, but maybe it is my cautious nature.  You know, if something is too good to be true, it probably is. 

The proposal is currently that they convert an old feed store into a data center for their servers.  They will run and operate a national online March Madness Tournament with a $200 entry fee. After expenses, 80% of the entry fees will be returned as winnings to participants, 10% will be their profit and 10% will go to the tribe (we are essentially splitting the profit 50/50).  Many in tribal government that have heard about this think this is fair, since the operator is not making any more than the tribe, yet the operator is making all the investment.  The operator has already stated that if it does well, they would like to offer daily fantasy sports contests to U.S. players from the datacenter.

They want an answer within a week, as they need to site select soon to be ready for the March tournament next year.  Therefore, the questions I need answered are:

1. Are pay-to-play and win March Madness bracket contests gambling? 
   1. If so, could the contests as proposed be considered Class 1 or Class 2 gambling, why or why not?
   1. If not, why not?
2. If this goes well, would national Daily Fantasy Sports contests be considered gambling?
   1. If so, could the contests as proposed be considered Class 1 or Class 2 gambling, why or why not?
   1. If not, why not?
3. If we do this, do you have any issues with the proposed financial model?
   1. If so, what issues?
   2. If not, why not?

Thank you.

Sarah