Native American Rights

In recent years, gaming has become one of the most important areas of economic development for Native American tribes. Since 1979, when the federal courts ruled that tribal-sponsored gaming activities were exempt from state regulatory law, the Indian gaming industry has grown tremendously, with more than 200 tribes operating gaming establishments. These operations have been extremely lucrative for the tribes running them; in 1993 the gross gambling revenues from class II and class III tribal gaming operations amounted to approximately $2.6 billion. By comparison, Atlantic City had revenues of $3.3 billion the same year. Tribe members benefit from the creation of jobs on the reservation and from the cash generated, which some tribal governments choose to distribute through direct payments to tribe members and others choose to reinvest in improving reservation infrastructure, educational facilities, and other programs and services designed to benefit tribe members.

The impetus for the growth of Native American gaming began in the late 1970s, when the Oneida tribe in Wisconsin and the Seminole tribe in Florida sought to open high-stakes bingo operations on their reservations. The applicable laws in those states imposed limitations on the size of jackpots and the frequency of bingo games. The tribes asserted, however, that as sovereign nations, they were not bound by such limitations; they claimed that they could operate bingo games and regulate them under tribal law, deciding for themselves how large prizes could be and how often games could be played. Both suits ended up in federal court, and both tribes won (Seminole Tribe of Florida v. Butter worth, 658 F. 2d 310 [5th Cir. 1981]; Oneida Tribe of Indians v. Wisconsin, 518 F. Supp. 712 [W.D. Wis. 1981]). The rulings in both cases hinged on whether the states' laws concerning gaming were criminal laws that prohibited gaming, or civil laws that regulated gaming. If the laws were criminal-prohibitory, they could be applied to activities on Indian reservations, but if they were civil-regulatory, they could not. The courts ruled that because the states allowed bingo games in some form, the laws were civil-regulatory and thus did not apply to gaming operations on Indian reservations.

Other tribes subsequently sued in federal court on the same issue and also won. The issue finally reached the U.S. Supreme Court in California v. Cabazon Band of Mission Indians, 480 U.S. 202, 107 S. Ct. 1083, 94 L. Ed. 2d 244 (1987). In that case, the Court accepted the criminal-prohibitory/civil-regulatory distinction of the lower courts, ruling that the Cabazon Band of Mission Indians in California had the right to operate high-stakes bingo and poker games on its reservation because the state's gaming laws were civil-regulatory and thus could not be applied to on-reservation gaming activities.

Concern over Indian gaming had been building in Congress during the 1980s, and Congress responded to California v. Cabazon by passing the Indian Gaming Regulatory Act (IGRA), (25 U.S.C.A. §§ 2701 et seq.) in 1988. The IGRA specifically provides that Indian tribes "have the exclusive right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of CRIMINAL LAW and public policy, prohibit such gaming activity." The sponsors of the IGRA claimed that one of the bill's main goals was to use gaming as a means of "promoting tribal economic development, self-sufficiency, and strong tribal governments." Nevertheless, many tribal leaders were opposed to the provisions of IGRA, regarding them as infringements on tribal sovereignty.

The IGRA provides the general framework for regulating Indian gaming. Its principal provision is the classification of Indian gaming, with each category of games being subject to the different regulatory powers of the tribes, the states, and federal agencies, including the National Indian Gaming Commission (NIGC), which was created by the IGRA. The IGRA classifies games into three types. Class I games are traditional Indian games, such as those played in connection with tribal ceremonies or celebrations; those games are regulated exclusively by the tribes. Class II games include bingo and related games; those games are regulated by the tribes, with oversight from the NIGC. Class III games include all games that do not fall into classes I and II, including casino-style games, parimutuel wagering, slots, and dog and horse racing. Class III games, according to the IGRA, may be conducted if three conditions are met: if the state in which the tribe is located permits any such games for any purposes; if the tribe and the state have negotiated a compact that has been approved by the secretary of the interior; and if the tribe has adopted an ordinance that has been approved by the chair of the NIGC.

Indian gaming and the IGRA continue to face opposition from various quarters. Tribal leaders view state regulation as a violation of their tribal sovereignty. The proprietors of non-Indian gaming establishments have attempted to slow or to stop the growth of Indian gaming, viewing it as a threat to their own enterprises. In some cases, tribal and state governments have had great difficulties negotiating the details of tribal-state compacts. These areas of difficulty and dissatisfaction suggest that Indian gaming may be subject to further legislation in the future.

Gaming has led to unprecedented growth for tribal economies, providing thousands of jobs for Indians and non-Indians and drastically improving the financial well-being of the tribes that have operated successful gaming establishments. Although some legislators have expressed concern over the expansion of gaming activities and the problems associated with increased gambling, Indian gaming generally enjoys broad public support. Native Americans have described it as "the return of the white buffalo," a traditional Native American symbol of good fortune.

The U.S. Supreme Court has stepped in to resolve several controversies regarding gaming rights. In Chickasaw Nation v. United States, 534 U.S. 84, 122 S. Ct. 528, 151 L. Ed. 2d 474 (2001), the Court held that revenues from pull-tab games, similar to lottery tickets, at Chickasaw Nation gaming operations could be taxed under Chapter 35 of the INTERNAL REVENUE CODE. The ruling also applied to the Choctaw Nation, which offered a similar type of pull-tab game. The U.S. Court of Appeals for the Tenth Circuit, in reviewing the Chickasaw Nation's gaming activities, ruled that revenue from these games amounted to gambling revenues, rather than lottery revenues. The Federal Circuit, however, reached an opposite conclusion with respect to the Choctaw Nation in Little Six, Inc. v. United States, 210 F.3d 1361 (Fed. Cir. 2000).

The U.S. Supreme Court, per Justice STEPHEN BREYER, found that the INTERNAL REVENUE SERVICE had properly levied a tax on these gaming activities. Although states are not required to pay these taxes, the applicable provisions in the tax laws applied specifically to the Indian tribes. Although Court precedent suggested that statutes regarding Indian tribes should be construed liberally in favor of the Indian tribes, Breyer found the statute to be unambiguous by its terms.