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