Published on December 9, 2012 by Amy
Native American gaming refers to casinos, bingo halls, and other gambling operations on Indian reservations or other tribal land in the United States. Because these areas have tribal sovereignty, states have limited ability to forbid gambling there, as codified by the Indian Gaming Regulatory Act of 1988. According to Indian Gaming CPA Firm Joseph Eve’s 2012 Indian Gaming Cost of Doing Business Report, average revenues of Indian Casinos across the United States is at about US $77 million.
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In the early 1970s, Russell and Helen Bryan, a married Chippewa couple living in a mobile home on Indian lands in northern Minnesota, received a property tax bill from the local county, Itasca County. The Bryans had never received a property tax bill from the county before. Unwilling to pay it, they took the tax notice to local legal aid attorneys at Leech Lake Legal Services, who brought suit to challenge the tax in the state courts. The Bryans lost their case in the state district court, and they lost again on appeal in a unanimous decision by the Minnesota Supreme Court. They then sought review in the United States Supreme Court. The Supreme Court granted review, and in a sweeping and unanimous decision authored by Justice Brennan, the Supreme Court held not only that states do not have authority to tax Indians on Indian reservations, but that they also lack the authority to regulate Indian activities by Indians on Indian reservations. As Gaming Law Professor Kevin K. Washburn has explained, the stage was now set for Indian gaming. Within a few years, enterprising Indians and tribes began to operate Indian bingo operations in numerous different locations around the United States.
Under the leadership of Howard Tommie, the Seminole Tribe of Florida built a large high-stakes bingo building on their reservation near Fort Lauderdale, Florida. The tribe planned for the bingo hall to be open six days a week, contrary to Florida state law which only allows two days a week for bingo halls to be open, as well as going over the maximum limit of $100 jackpots. The law was enacted from the charity bingo limits set by Catholic Churches. The sheriff of Broward County, where the Indian reservation lies, made arrests the minute the bingo hall opened, and the tribe sued the county (Seminole Tribe v. Butterworth), stating that Indian tribes have sovereignty rights that are protected by the federal government from interference by state government. A District court ruled in favor of the Indians, citing Chief Justice John Marshall in Worcester v. Georgia. Here began the legal war of Indian gaming with a win for the Seminoles.
Controversy arose when Indians began putting private casinos, bingo rooms, and lotteries on reservation lands and began setting gaming prizes which were above the maximum legal limit of the state. The Indians argued for sovereignty over their reservations to make them immune from state laws such as Public Law 280, which granted states to have criminal jurisdiction over Indian reservations. States were afraid that Indians would have a significant competitive advantage over other gambling establishments in the state which were regulated, which would thus generate a vast amount of income for tribes.
In the late 1970s and continuing into the next decade, the delicate question concerning the legality of tribal gaming and immunity from state law hovered over the Supreme Court. The Court addressed the potential gambling had for organized crime through the Organized Crime Control Act of 1970. A report by the Department of Justice presented to the Senate Select Committee on Indian Affairs on March 18, 1992 concluded that through several years of FBI investigation, that organized crime had failed to infiltrate Indian gaming and that there was no link between criminal activity in Indian gaming and organized crime.
In the early 1980s, the Cabazon Band of Mission Indians, near Indio, California, were extremely poor and did not have much land because of neglected 1850s treaties by state senators. As Stuart Banner states, the Cabazon Band and the neighboring Morongo Reservation had “some HUD buildings and a few trailers, but that was about it. There was nothing really there. The people simply didn’t have a lot.” The Cabazon Band turned to casino operations, opening bingo and poker halls in 1980. Shortly thereafter, the Indio police and the Riverside County Sheriff shut down the gambling halls and arrested numerous Indians while seizing any cash and merchandise held in the tribe’s possession. The Cabazon Band sued in federal court (California v. Cabazon Band) and won, as did the Seminole Tribe in Florida. Although the tribe won in the lower courts, the Supreme Court reviewed the case in 1986 to reach a decision over whether Indian reservations are above state law. The Court again ruled that Indian gaming was to be regulated exclusively by Congress and the federal government, not state government; with tribal sovereignty upheld, the benefits of gaming became available to many tribes.
In 1988 Congress passed the Indian Gaming Regulatory Act (IGRA) (signed by President Ronald Reagan) which kept tribal sovereignty to create casino like halls, but the states and Indians must be in Tribal-State compacts and the federal government has the power to regulate the gaming. These compacts have been used by state officials to confiscate Indian casino revenue which serves as a “special” tax on Indian reservations. Essentially, the tribes still have “exclusive right” to all classes of gaming except when states do not accept that class or it clashes with federal law.
Class III Indian gaming became a large issue for the states and federal government, because of these court cases, as Congress debated over a bill for Indian gaming called the Indian Gaming Regulatory Act.
There are currently a number of lawsuits pending which challenge the Indian Gaming Regulatory Act on constitutional grounds (see e.g. Warren v. United States)
When President Reagan signed the IGRA, Indian gaming revenue skyrocketed from $100 million in 1988 to $16.7 billion in 2006. Following the IGRA, the National Indian Gaming Commission was created as a federal agency in 1988 to regulate high-stakes Indian gaming.
The Commission consists of three members: a chairman who is appointed by the US President with consent of the Senate, and two associate members appointed by the Secretary of the Interior. Each member serves a three year term and must pass a detailed background check by the US Attorney General.
The NIGC withholds certain powers over Class II and Class III gaming. These include budget approval, civil fines, fees, subpoenas, and permanent orders. The NIGC monitors Class II gaming on Indian lands on a continuing basis through inspection, investigation, access to records, and contracts. As for Class III gaming, all contracts must be approved by the chairman of the NIGC. 200 of the 562 federally recognized tribes created Class III gaming of large casinos and high jackpots.
This rise of gaming not only brought great revenue, but also corruption. In January 2006, a court case involving lobbyists convicted of felonies such as conspiracy, fraud, and tax evasion. This was known as the Jack Abramoff Indian lobbying scandal. These lobbyists, Jack Abramoff, Ralph Reed, Jr., Grover Norquist, and Michael Scanlon, bribed members of Congress when lobbying for Indian casinos then they over charged their Indian clients; this generated around $90 million dollars in fees from the Indians.
In 2006, Congress introduced legislation to protect their own casino interests from those tribes that are outside reservations. Further, the Bureau of Indian Affairs (BIA) has faced increasing pressure to tighten regulatory policy and oversight of casino approvals. In particular, the BIA has been instructed by Congress to implement new procedures after two decades of IGRA’s existence. These procedures would allow local communities to have more influence in the siting of casinos in their community, and would make the process of casino approval more transparent. To many tribes, however, the proposed regulations will further encroach on tribal sovereignty.