BULLETIN

No. 2020-1 January 29, 2020

Subject: IGRA and Sports Book Operations 

The purpose of this bulletin is to provide guidance for tribes considering the operation of 

any sports books on Indian lands. Before conducting any type of Class III gaming on Indian 

lands, a tribe must have a compact approved by the Department of the Interior. Sports betting is 

defined as Class III gaming,1 so each tribe should review its compact to determine whether 

sports betting is allowed. If a tribe does not have an approved compact that allows for sports 

betting, the tribe and respective state must adopt or amend the compact to include sports betting 

on Indian lands.

Options for Sports Books:

Once a tribe ensures that sports betting is permitted in its compact, that tribe should then 

consider how it wants to operate its sports book. There are four options or models for tribes to 

consider: a sports book wholly operated by the tribe; a tribally-owned sports book with data from 

third parties; a managed sports book, or an individually-owned sports book.

The first option a tribe may consider is to own and operate a sports book entirely on its 

own. Under this model, a tribe would take bets, pay the winners, and collect from the losers. The 

tribe would also administer the technical aspects of the book, such as deciding on which games 

to take bets, determining the odds for each wager, deciding when to adjust the odds, and 

determining what bets to take and when to stop taking them. Think of this option as a closedloop sports book where the tribe makes all decisions and generates all information required for 

the sports book in-house. 

The second option is for a tribe to own its sports book, but enter into a consulting or 

vendor agreement for information and recommendations on setting odds and taking bets. Given 

the infancy of sports books on Indian lands, this option is a popular model for tribes as they 

establish sports books and a viable option for those that want to maintain control and 

management over their sports books. There is, however, a danger that this type of arrangement 

can veer into management or violate a tribe’s sole proprietary interest. As discussed below, 

 1 25 U.S.C. §2703(8); 25 C.F.R. § 502.4(c).
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IGRA and NIGC regulations require management agreements to be submitted to the NIGC Chair 

for approval. An unapproved management agreement is void,

2 and managing without an 

approved contract is a substantial violation of IGRA and may result in a civil fine assessment or 

closure order.3 Additionally, tribes are required to maintain the sole proprietary interest in their 

gaming operation.4 Failure to do so may also result in a civil fine assessment.5

A third option is for a tribe to hire an outside company to manage and operate its sports 

book. Under this option, the tribe maintains ownership and ultimate authority over its gaming 

facility, but allows an outside company to manage the day-to-day business of the sports book

under the terms of a management contract. Pursuant to IGRA and NIGC regulations, a 

management contract must be submitted to the NIGC for the Chair’s review and approval.6 As 

part of that review, any person or entity with management responsibility or a direct or indirect 

financial interest is subject to a background investigation and must be found suitable by the 

NIGC Chair.7 The maximum fee that can be paid to the management company is 30% of the net 

gaming revenue, though that fee may be as high as 40% if the Chair finds the higher fee is 

justified.8 The maximum term for the management agreement is five years, but may be extended 

to as long as seven if the Chair finds the longer term is justified.9 A Chair may find that a higher 

fee or longer term is justified if the capital investments and income projections require the 

additional fee or term.10 Finally, the National Environmental Policy Act11 may apply, in which 

case the preparation of an environmental assessment or environmental impact statement may be 

necessary. The NIGC has adopted a categorical exclusion for certain management agreements,12

but the categorical exclusion may not be applicable to every project. Given all of these 

requirements, the management contract review and approval process may take months,

depending on the complexity of the agreement itself, the parties’ engagement in the process, and 

the workload of the NIGC.

The fourth option is for the tribe to allow a non-tribal entity to operate an individuallyowned sports book on the tribe’s Indian lands. Under this option, the tribe does not play any part 

in the management or operation of the sports book, but maintains a regulatory role. Individually 

owned gaming is unlike tribally-owned and operated gaming in a number of respects. Primarily, 

the laws and regulations of the surrounding state have a much larger role in this type of gaming. 

The tribe must apply licensing standards that are at least as restrictive as those imposed by state 

law,13 the tribe cannot license any individual that would not be eligible for a state license,14 and 

 2 25 C.F.R. § 533.7. 3 25 U.S.C. § 2713; 25 C.F.R. §§ 573.4(a)(7), 25 C.F.R. part 575. 4 25 U.S.C. § 2710(b)(2)(a). 5 25 U.S.C. § 2713; 25 C.F.R. part 575.

6 25 U.S.C. § 2711(a)(1). 7 25 U.S.C. § 2711(e)(1); 25 C.F.R. § 533.6(b), (c). 8 25 U.S.C. § 2711(c). 9 25 U.S.C. § 2711(b)(5).

10 25 U.S.C. § 2711(b)(5), 2711(c)(2). 11 42 U.S.C. § 4321 et seq. 12 See Protocol for Categorical Exclusions Supplementing the Council on Environmental Quality Regulations 

Implementing the Procedural Provisions of the National Environmental Policy Act for Certain National Indian 

Gaming Commission Actions and Activities, 82 Fed. Reg. 35,542 (July 31, 2017). 13 25 U.S.C. § 2710(b)(4); 25 C.F.R. § 522.10(e). 14 25 C.F.R. § 522.10(f).
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state law standards apply with respect to purpose, entity, pot limits, and hours of operation.15 In 

addition to those restrictions, the operator of an individually owned gaming operation must pay 

60% of the net revenues to the licensing tribe, as well as fees to the NIGC.16 IGRA and NIGC 

regulations also require that individually owned gaming be permitted by the licensing tribe’s 

gaming ordinance.17

Sports betting is a data heavy industry that requires constant processing of a significant 

amount of sports related statistics. As discussed above, a tribe may consider hiring a third-party 

vendor to provide such services. The NIGC encourages tribes considering entering into a vendor 

or consulting agreement to send proposed contracts to the Office of General Counsel for review.

The Office of General Counsel regularly reviews proposed agreements, such as financing 

documents, consulting contracts, and vendor agreements, to provide a non-binding opinion 

whether an agreement implicates management or violates IGRA’s sole proprietary interest 

requirement. These opinion letters, known as “declination letters,” are a valuable compliance 

tool for tribes that are considering entering in to a contract with a third party to receive sports 

book related services.18 The Office of General Counsel has reviewed several sports book 

agreements. Below are some of the unique aspects of a sports book operation on Indian lands 

that tribes should be aware of and consider.

Management Contracts:

NIGC regulations define the term “management contract,”19 and NIGC Bulletin 94-5 

addresses some characteristics of a management contract.20 Additionally, the Office of General 

Counsel has also issued declination letters providing further insight into the characteristics of a 

management contract.

21 Generally, if a contract requires or permits the performance of any 

management activity with respect to all or any part of a gaming operation, the contract is a 

 15 25 C.F.R. § 522.10(f). 16 25 U.S.C. § 2710(b)(4)(B)(i)(III-IV); 25 C.F.R. § 522.10(c), (d). 17 25 U.S.C. § 2710(b)(4); 25 C.F.R. § 522.10. 18 The Office of General Counsel provides advisory opinions on certain discrete legal questions from the gaming 

industry or other interested parties. The overwhelming majority of these requests seek declination letters from the 

General Counsel. As a general matter, legal opinions are issued by the General Counsel as a courtesy, and neither 

IGRA nor NIGC regulations require the General Counsel to issue a legal opinion on any matter. Further, a legal 

opinion provided by the General Counsel is not agency action and the issuance of a legal opinion is a voluntary 

process, both for the party making the request and the Office of General Counsel. Documents submitted to the 

Office of General Counsel for review should be submitted prior to their execution, as the General Counsel is not 

inclined to provide a legal opinion on executed documents. Executed agreements that may violate IGRA will be 

referred to the NIGC Compliance Division. For further information about requesting a legal opinion from the Office 

of General Counsel, see “Helpful Hints for Submitting Requests for a Legal Opinion to the NIGC Office of General 

Counsel (Dec. 2013) available at https://www.nigc.gov/images/uploads/gameopinions/SubmittingRequestforLegalOpinionDec112013.pdf. 19 See 25 C.F.R. § 502.15; see also 25 C.F.R. § 502.5 (definition of “collateral agreement”). 20 See NIGC Bulletin No. 94-5, “Approved Management Contracts v. Consulting Agreements (Unapproved 

Management Contracts are Void),” (Oct. 14, 1994), available at 

https://www.nigc.gov/images/uploads/bulletins/1994-5mgmtvconsult.pdf. 21 See generally NIGC Office of General Counsel Declination Letters available at https://www.nigc.gov/generalcounsel/management-review-letters.
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management contract within the meaning of IGRA and requires the Chair’s approval.22 An 

unapproved management contract is void.23

Management Analysis Applied to Sports Betting Agreements:

If a third party has any explicit or implicit authority to manage all or any part of a gaming 

operation, the agreement is likely a management contract. The same reasoning applies to sports 

book agreements. The Office of General Counsel reviews sports book agreements to ensure that 

the scope of services to be provided under the contract is well defined, compensation is tied to 

specific work performed, and the third party does not have the ability to manage any aspect of 

the sports book.

For example, in the second model discussed above, a vendor may provide sports betting 

data and services to a tribe so the tribe can assess its risk and set the betting lines on sporting 

events accordingly. The sports betting data supplied by the third-party vendor includes, but is not 

limited to, setting and adjusting odds, deciding which sporting events to offer, deciding when to 

suspend betting, alerts on player betting limits, and analysis on betting patterns. To prevent 

management, the tribe must make the final determination as to when and how to use or not use 

the sports betting data. The tribe must also be able to alter the line or suspend betting for 

whatever reason, including instances where the tribe disagrees with the third party’s data. 

Essentially, the third party should only provide information to the tribe and should not have any 

control over how the tribe uses that information. The tribe must exercise complete control over

the use of the sports betting data and always be the final decision maker as to its use.

Sole Proprietary Interest:

IGRA requires a tribe to possess “the sole proprietary interest and responsibility for the 

conduct of any gaming activity.”24 “Proprietary interest” is not defined in IGRA or the NIGC’s 

regulations. Black’s Law Dictionary defines a “proprietary interest” as an “interest held by a 

property owner together with all appurtenant rights....”25 An “owner” is “one who has the right 

to possess, use, and convey something.”26 “Appurtenant” means “belonging to; accessory or 

incident to ....”27 Case law similarly defines “proprietary interest” as “one who has an interest in, 

control of, or present use of certain property.” 28

To determine whether an agreement violates the sole proprietary interest requirement, the 

NIGC analyzes three criteria: (1) the term of the relationship; (2) the amount of revenue paid to 

the third party; and (3) a third party’s right to exercise control over all or any part of the gaming 

 22 25 U.S.C. § 2711. 23 25 C.F.R. § 533.7; see also Wells Fargo Bank, Nat’l Ass’n v. Lake of the Torches Econ. Dev. Corp., 658 F.3d 684, 

688 (7th Cir. 2011).

24 25 U.S.C. § 2710(b)(2)(A); see also 25 C.F.R. § 522.4(b)(1). 25 BLACK’S LAW DICTIONARY (10th ed. 2014). 26 Id. 27 Id. 28 See Evans v. United States, 349 F.2d 653, 659 (5th Cir. 1965).
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activity.29 Accordingly, if a party, other than the tribe receives a high level of compensation for a 

long period of time and possess some aspect of control, an improper proprietary interest may 

exist.

Sole Proprietary Interest Analysis Applied to Sports Betting Agreements:

The terms for sports book agreements vary depending the unique needs of the parties. 

The Office of General Counsel has issued declination letters for sports book agreements with 

terms ranging from less than 5 years to more than 15 years. The longer the term, the higher the 

risk for a violation of the sole proprietary interest requirement. However, sometimes longer 

terms are balanced by other contract terms. For example, a longer term, when paired with a zone 

of exclusivity, or high initial capital costs, may not violate IGRA’s sole proprietary interest 

requirement.

Generally, tribes pay a percentage of the sports book revenues to third-party vendors in 

exchange for sports book data and services. The NIGC has seen a variety of fee structures. But, 

in general, the higher the fee, the higher the risk for a proprietary interest. The NIGC understands 

that sports books are relatively new amenities to tribal gaming operations and there can be a 

premium to be first to market. The NIGC also understands that there can be an economic benefit 

to locking in rates in case rates fluctuate. Also, the NIGC understands that although a fee may be 

based on a percentage of the sports book revenues, a tribe may receive benefits that extend 

beyond the sports book. For example, a tribe may receive incremental revenue in other areas of 

its gaming floor by virtue of the operation of a sports book, and/or increased marketing exposure 

by virtue of a tribe’s relationship with a well-known third-party vendor, as well as access to 

patron information. The NIGC recommends that tribes perform their due diligence to ensure a 

third party’s fee is reasonable compared to competitors in the industry.

The operation of a sports book may or may not make sense for tribes depending on their 

compact, the market, and other considerations. However, if a tribe decides to open a sports book

and purchase data from a third party, it is important that the third-party vendor does not have 

explicit or implicit control over the sports betting operation. Instead, sports book agreements 

should include express provisions that only the tribe may accept or reject the sports book data 

and recommendations from the third party. The agreements should also prohibit third parties 

from controlling the sports book or acting on behalf of the tribe.

The Office of General Counsel reviews each agreement on its own terms. Even though 

the Office of General Counsel has issued declination letters with the contract terms and 

conditions discussed above, this does not mean that the Office of General Counsel will reach the 

same conclusion for every agreement with similar terms.

 29 See NIGC NOV-11-02 (July 12, 2011); see also City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 

830 F. Supp. 2d 712, 723 (D. Minn. 2011), aff’d in pertinent part, 702 F.3d 1147 (8th Cir. 2013) (discussing NIGC 

adjudication of proprietary interest provision).
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Freedom of Information Act:

All advisory opinions generated by the Office of General Counsel, including advisory 

opinions about sports book agreements, are releasable to the public after a review has been 

conducted for material exemptions pursuant to Freedom of Information Act.30 The Office of 

General Counsel provides declination letters as a courtesy to the tribal gaming industry. 

Declination letters are not required by IGRA. The Office of General Counsel provides 

declination letters to accomplish two primary functions: (1) to assist the parties involved in the 

agreements, and (2) to inform the tribal gaming industry at-large. Therefore, when parties to the 

agreements request redactions to a declination letter that, in effect, result in an opinion that 

provides little to no additional guidance to the tribal gaming industry, the declination process is 

undermined. Accordingly, submitters should keep these concepts in mind when submitting 

documents for declination review. If a declination letter is issued, submitters should only propose 

redactions when necessary to protect commercial and/or proprietary information.

If you have any questions about the declination letter process, please contact the Office of 

General Counsel at 202-632-7003.

 30 5 U.S.C. § 552. The NIGC posts the General Counsel’s advisory opinions to the NIGC’s website at 

https://www.nigc.gov/general-counsel/legal-opinions.