The Indian Gaming Regulatory Act
Up until the landmark case California v. Cabazon Band of Mission Indians was decided by the Supreme Court of the United States, it was assumed that the states retained the right to regulate gaming within their borders, in keeping with the provisions of the Constitution which grants this power to individual states generally.
However, Indian lands are treated differently, and they are semi-autonomous areas under the jurisdiction of the federal government, and are therefore more proper seen as federal and not state lands.
So when Indian tribes decided that they would go against the wishes of the State and operate unlicensed and unapproved gaming operations, the states looked to shut them down, and as it turned out, it was found that they do not have the legal authority to do so, and cannot regulate these gaming operations at all, provided that the gaming in question is legal in the state in some manner.
The easiest way to understand the difference between criminalization and regulation is that criminal acts are prohibited generally, whereas acts that are regulated are permitted with the government’s approval.
So you can’t steal someone’s car, and this isn’t a regulatory matter because the state doesn’t issue licenses to steal cars, but they do issue licenses to operate gambling, and in this case the issue is that they do not have permission to do so, where in criminal matters there is no permission granted at all.
So this takes the issue from a criminal to a civil matter, and it is these civil matters that states do not have standing with as far as looking to enforce their regulations on Indian reservations.
So after California v. Cabazon was decided, this did create a void in regulating Indian gaming, and although the Supreme Court did make some suggestions as how this could be regulated, for instance the requirement that a certain form of gambling be already permitted in a state under certain circumstances, but the Court does not have the ability to make laws, and this would require a statute to be passed by Congress.
So in other words, the states assumed they could regulate Indian gaming, and it turned out that they couldn’t, but the reason why they couldn’t is that this power had not been given over to the states by the federal government. The federal government, on the other hand, does have the ability to regulate these Indian tribes on their reservations, so Congress quickly got busy to come up with some regulations so that the whole matter would not remain unregulated.
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The Indian Gaming Regulatory Act
A bit more than a year after the Cabazon decision, in 1988, Congress did indeed pass a statue which provided a framework for the regulation of Indian gaming, called the Indian Gaming Regulatory Act. In doing so, they aimed to reach a balance between the sovereignty rights of tribes, and the interests of the state. They clearly struck a great compromise between the two competing interests, and both allowed Indian tribes to take advantage of their sovereignty, but in a restricted way, by having to enter into compacts with their states under the supervision and guidance of the federal authority.
Such laws also offer states a means to gain revenue from these activities, as part of the agreements, and in particular when the state is prepared to extend what they are willing to tolerate beyond what is prescribed by the act. This point raises questions about the state's own interests. For example, casino gambling is not an option that is legal in California, and one of the provisions of the act states that if a certain type of gambling is legal in a state, it must be permitted. However, this does not limit the state to only include these types in their agreements, as they may for example allow casino gambling like they have done in California, provided that the tribes remit a certain amount of funds to the state in return.
The Act indeed defines three separate classes of gaming, with Class I denoting traditional Indian gaming, basically among members themselves. Class II incorporates offering games of odds such as bingo as well as non banked card games, the kind that are already legal in California for example, where the house charges by the hour and not by portion of wagers.
Class III describes all gaming not categorized by the first two classes, games of chance whereby the house does take a cut, as they do with games normally referred to as casino games, such as slot machines, blackjack, craps, and so on. These games pose interesting legal challenges.
It’s the Class III games that have drawn all the focus in compacts, and one of the terms is that the state must permit this previously or consent to permit these games within the agreement with the tribes. All of this proposal is subject to the approval of both the state and the tribes, as well as the Secretary of the Interior, who supervises this undertaking.
Class III involves all gaming not covered by the first 2 classes, games of chance whereby the house does take a percentage, as they do with games normally thought of as casino games, such as slot machines, blackjack, craps, and so on.
It’s the Class III games that have attracted all the attention in compacts, and one of the conditions is that the state must permit this already or agree to permit these games within the compact with the tribes.
All of this is subject to the approval of both the state and the tribes, as well as the Secretary of the Interior, who oversees this process.
Life After the Indian Gaming Regulatory Act
While Indian gaming was set to explode anyway after California v. Cabazon Band of Mission Indians, this legislation at least looked to place some restrictions on its proliferation.
At the time of its passing in 1986, revenues from Indian gaming in the United States only amounted to about $100 million a year, and with the door open to Indian tribes building not only high stakes bingo and card rooms but full fledged casinos, or at least close to full fledged in some cases, the industry exploded, and is now hundreds of times bigger than it was back then.
States still had some say in all of this, which was the point of the Act, and in California for instance they initially limited the amount of slot machines at a given casino at 2,000, although since the original compact two more were entered in with tribes which allow an unlimited amount in exchange for higher contributions to the state’s general fund.
In addition, the state of California requires Indian casinos to offer casino games that only involve the use of playing cards, which has resulted in games like craps and roulette being played with cards, even if this means putting playing cards on a roulette wheel, that apparently satisfies the State’s penchant for card games.
Many Indian tribes across the country have taken advantage of this new law, and many have gone from poverty to economic self sufficiency and even a life of wealth and opulence, in stark contrast to their living conditions for centuries.
This is now a $30 billion dollar a year business, with California continuing to dominate the scene, but with some very large East coast casinos having a large impact as well. Everyone wins in this new scenario, players don’t have to travel as far to play anymore, the state makes more money, and the tribes certainly are greatly benefited.
More and more states are expanding their view on casinos in light of this, and at the time there were only two states that permitted casino gambling, Nevada and New Jersey. That list has expanded quite a bit since and is set to continue to do so, and the end result is that casino players can expect even more options down the road from both Native and non Native casinos, and it all started when two small Indian tribes in California decided they would take on the government.