Payday Loans, Tribes, Sovereign Nation and Internet Gambling

By | Dec 27, 2011

Washington D.C. and Nevada will soon be offering Internet gambling. More states are certain to follow if only because state tax coffers are running empty. The FED’s next moves aren’t clear. The DOJ just reversed its interpretation of the 1961Wire Act. Meanwhile, more payday loan Lenders are “partnering” with tribes. The legal “templates” for tribal payday loan “partnerships”  are becoming almost robotic. Since the Tribal Business Expo last March in Las Vegas at the Hilton, we’ve helped initiate more than nine tribal agreements.

So, why all the interest by tribes and payday loan management companies to enter into these relationships? Here are just a few:

  • Many federally recognized tribes are poor. Not all tribes are able to participate in energy, gaming…
  • In spite of what payday loan critics say, the industry is highly regulated. Roughly 17 states simply ban payday loans.
  • Consumers by the millions want and need access to small, short-term, non-collateralizedloans. There are payday loan companies exceeding $120M per month in loans!
  • The Internet offers efficiency, speed, and access to payday loan customers
  • Fixed costs foe Internet payday loan Lenders is less than that for “brick-n-mortars.”
  • Tribe gaming revenues are down as much as 30% because of the poor economy
  • The “payout” expectations of tribes by payday loan Lenders has fallen because of competition for payday loan management teams that can bring expertise and capital sources to the tribe.
  • The cost of state-by-state compliance by payday loan Lenders is rising.
  • Sophisticated “money” is sniffing around the industry. They’re looking for significant returns and they are high-risk players.
  • Creative approaches for offering payday loan type products, such as the offshore model, are becoming harder to “digest.” Continued access to the ACH system and sub-prime consumer data are just two issues that could become a problem for the “exotics.”

Bottom line, the AFS  (Alternative Financial Services) space is quite simply ROARING with opportunity, challenges, technology, capital, DISRUPTION…

I’ve been in this game since 1997 and I’ve never been so EXCITED!

Jer@PaydayLoanIndustryBlog.com 702-208-6736

 

 

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3 Comments so far
  1. Keith Kryka December 27, 2011 8:12 pm

    Jer,
    It is exciting for the big players. I’m still trying to line up funding so my store doesn’t go under. I think the opportunities are growing in this industry but I don’t think we can forget about the smaller struggles the mom and pop shops are still having. I can’t get a bank to even entertain lending me money. The only way my stores grow is with my personal money and that’s getting tougher and tougher. Can you do some blogs for the small shops also. Thank you

    Keith Kryka
    Delaware.

  2. Payday Loan Industry December 27, 2011 8:26 pm

    Keith, you’re right! The small guys need attention as well. There is money available by investors “looking” for the “right” situation. After all, returns on CD’s are less than inflation.

    If you have $$ and a desire to partner with an experienced operator, email Email Jer .

    And if you need $$ for your existing operation, let me know as well!

  3. Moses Isaac January 16, 2012 12:49 am

    Very informative post about payday loans. Payday loan lenders are partnering with tribes. This is a very good sign for the industry

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