Your question is very well timed, seeing as we’re observing the 25th anniversary of the Indian Gaming Regulatory Act (IGRA), passed in 1988. It was a law that would alter the face of the United States’ gaming industry in a huge and immutable way. A business that generated $110 million in revenue 25 years ago now rakes in well over $25 billion a year, putting it on a footing with the biggest publicly traded companies in the casino biz.
The actual origins of Native American gambling go back centuries, from a passion for games of chance to the proliferation of bingo parlors on Indian land in the 20th century. Until 1976, states that forbade gambling (i.e., every one except Nevada) could kibosh it on Native American reservations, too. However, in a case regarding Minnesota property taxes, the Supreme Court held that state criminal laws held sway on Indian lands but civil regulatory laws did not. This, in theory, opened the door to tribal casinos.
That portal was forced wide open when the State of California took on – and lost to – the Cabazon Band of Mission Indians. State officials tried to shut down a Cabazon-owned card room and bingo parlor. However, federal courts found a giant loophole: California runs a vast and lucrative lottery. Hence, the courts held that states cannot deny gambling to aboriginals if it is permitted elsewhere in the state. A burgeoning tribal-gambling industry was born, spurred by cutbacks in federal support during the Reagan, Bush I, and Clinton administrations.
It was a powerful engine of financial growth and economic self-sufficiency. However, states did not like being left out in the cold, either as regulatory bodies or tax collectors. Sens. Daniel Inouye (D-HI) and John McCain (R-AZ), and then-Rep. Mo Udall (1922-98), hammered out the compromise that is now popularly known as IGRA. It passed out of Congress and onto the desk of President Ronald Reagan, and became law in October 1988.
IGRA created three tiers of Indian gaming. Class III ("casino-style") is comparable to the Vegas gambling experience. Slots, blackjack, craps, roulette, pai gow … you name it, the tribe can have it … if those same games of chance are legal outside tribal lands, if tribe and state have negotiated a compact, and if the Department of the Interior has approved said compact.
States that have Class III tribal casinos include, for instance, Connecticut and Minnesota. Private-sector competition has been constrained, however, by the terms of the compacts. Basically, in order to get the biggest possible chunk of tribal revenue, states often agree to give tribes exclusive rights to Class III gambling within state lines. In states like Florida, expansion of gambling outside reservations has been accompanied by additional concessions to tribes that left their casinos in a superior competitive position. Thus, states that already have tribal casinos and are considering adding commercial ones (as all Native American gambling revenue goes back to the tribe, which owns the casino) have to weight the tribally generated revenue they already have in hand with the theoretical tax dollars that a Sheldon Adelson or Steve Wynn is promising to generate. (The bird in the hand usually wins.)
Tune in tomorrow for the lowdown on Class II and I casinos.
