Indian Gaming Regulatory Law

Historical and cultural

The game is part of many traditional Indian cultures. Tribal games include dice and shell activities, archery competitions, races, etc. When Native Americans moved onto Indian reservations in the mid to late 19th century, most were left with limited economic opportunities. Today, most of these reservations “are located in remote areas with little indigenous economic activity…[They] have some of the highest rates of poverty, unemployment, welfare dependency, school dropouts, alcoholism, and other indicators of poverty and social distress for any US community” 

The use of gambling for profit did not begin until the late 1970s and early 1980s in Indian communities. Several tribes, especially in California and Florida, opened bingo halls as a way to earn income. His actions were related to the search for new sources of income, given the emphasis that the Reagan administration placed on the economic self-sufficiency of the tribes.

Legal

While bingo was legal in California and Florida , those states had strict regulations. Operating on the history of tribal sovereignty, some tribes did not comply with these laws. High-stakes Indian bingo operations soon sprang up in California, Florida, New York , and Wisconsin . The industry grew rapidly. State governments began to argue that revenue from their own gaming operations fell as Native American operations raised potential stakes. 

Various laws influenced the creation of the Indian Gaming Regulatory Act (IGRA). Many of these influential laws stem from US Supreme Court rulings regarding tribal sovereignty. While several court rulings played a significant role in the development of legislation regarding gambling rights on reservations, two landmark cases, Bryan v. Itasca County and California v. Cabazon Band of Mission Indians , provided important legal breakthroughs.

Bryan vs. Itasca County

In the early 1970s, Helen and Russell Bryan, members of the Chippewa tribe, lived on a reservation in Itasca County, Minnesota . In 1972, the county notified them that their mobile home was subject to state property taxes. Unable to pay the tax, they turned to legal services and filed a class action lawsuit against the state, claiming that the state did not have the jurisdiction to tax the personal property of Native Americans living on reservations.

Under the United States Constitution , the federal government possesses the exclusive right to deal with Native Americans. Since then, case law has granted Congress jurisdiction over indigenous reservations. However, Public Law 280, passed by Congress in 1953, transferred criminal jurisdiction over Indian reservations from the federal government to certain states. Although both the district court and the Minnesota Supreme Court originally ruled in favor of the state, the U.S. Supreme Court reversed this decision in 1976. The Court interpreted PL 280 more narrowly, designed to address only “crimes and civil disputes, not a unilateral grant of broad authority to the states.” 

Thus, states were given jurisdiction over criminal reservation laws, but not civil regulation laws. This new interpretation of PL 280 opened the doors to the Indian gaming industry and led to the creation of a variety of economic development companies in the reserves. The game soon became the most successful economic initiative in reservations in the entire country.

California contra Cabazon Band of Mission Indians

Another court case that paved the way for IGRA was in the mid-1980s when the Cabazon Band of Mission Indians started a small bingo hall and card club on their reservation in Southern California. Although the state attempted to shut down these gaming operations, the Cabazon Tribe filed a lawsuit against the state, claiming that such action was illegal in light of previous court rulings and the sovereign rights of the reservation. The state, on the other hand, argued that running a high-stakes gaming organization was illegal and therefore punishable as a criminal violation of the law, according to Public Law 280 . The Cabazon case eventually reached the United States Supreme Court.

The “Native American cause” prevailed when California gambling laws were regulated, not prohibitive. The ruling was made due to the concession of another form of gambling: the state lottery.  This ruling clearly recognized the sovereign rights of Indian tribes living on reservations. By holding that states could not regulate gambling (unless state law prohibited all forms of gambling), the Court opened the door to the Native American gaming industry.

Gambling quickly became a popular tool for economic development on reservations struggling for economic opportunity. However, as the growth of Indian gambling continued into the 1980s (grossing over $110 million in 1988), tensions increased. 

The states began to pressure the federal government to allow them to regulate the Indian games. The states argued that its regulation was necessary to stop the infiltration of organized crime. They also wanted to be able to tax income earned from Indian gambling. Tribes fought states in an effort to both maintain tribal sovereignty and protect Indian gaming revenues to support economic development. Congress responded with the set of compromises that became the Indian Gaming Regulatory Act 1988. 

The main legislators involved in drafting the Act were Senator Daniel Inouye of Hawaii, Representative and later (beginning in 1987) Senator John McCain of Arizona, and Representative Mo Udall of Arizona. Representative Udall had previously sponsored numerous bills on Native American issues and rights. At the time, Senator McCain was serving as a member of the Committee on Indian Affairs, of which Senator Inouye was the chairman. As S.555, the bill passed the United States Senate on September 15, 1988.  The House approved the bill on September 27.  ^ThePresident Ronald Reagan signed it into law on October 17, 1988. 

Some aspects of the law were later clarified through court cases. Whether Indian casino income was subject to other government taxes was determined in Chickasaw Nation c. United States . ^[11] And, in 2009, the Supreme Court ruled in Carcieri v. Salazar that the Department of the Interior could not take in trust land that was acquired by recognized tribes after 1934.

Clase I

Class I games are defined as (1) traditional Indian games, which may be part of tribal ceremonies and celebrations, and (2) social games for minimal prizes. Regulatory authority over Class I gaming is vested exclusively in tribal governments and is not subject to IGRA requirements. ^[12]

Class II

Class II gaming is defined as the game of chance commonly known as bingo (whether or not electronic, computer or other technological aids are used in connection therewith) and, if played at the same venue as bingo, tab strip, punch board, tip jackpots, instant bingo and other bingo-like games. Class II games also include unbanked card games, that is, games played exclusively against other players rather than against the house or a player acting as the bank. The Act specifically excludes slot machines or electronic facsimiles of any game of chance from the definition of class II games.

Tribes retain their authority to conduct, license, and regulate Class II gaming as long as the state in which the tribe is located permits such gaming for any purpose, and the tribal government adopts a gaming ordinance approved by the Commission. National Indian Games (NIGC). . Tribal governments are responsible for regulating Class II gaming with oversight from the Commission. Only Hawaii and Utah continue to ban all types of gaming. ^[13]

Class III

The definition of class III play is broad. Includes all forms of play that are not class I or class II. Games commonly played in casinos, such as slot machines, blackjack, craps, and roulette, are clearly in the class III category, as are gambling and electronic facsimiles of any game of chance. Class III is generally referred to as casino-style gaming. As a compromise, the Act restricts tribal authority to conduct Class III gaming.

Before a tribe can legally conduct class III gaming, the following conditions must be met:

• The particular form of class III gambling that the tribe wishes to engage in must be permitted in the state in which the tribe is located.
• The Tribe and the state must have negotiated a compact that has been approved by the Secretary of the Interior, or the Secretary must have approved the due process.
• The Tribe must have adopted a tribal gaming ordinance that has been approved by the Chairman of the Commission.

The regulatory scheme for class III games is more complex than a casual reading of the statute might suggest. Although Congress clearly intended regulatory issues to be addressed in tribal-state compacts, it left a number of key functions in federal hands, including approval authority over tribal compacts, management contracts, and gaming ordinances. Congress also gave the Commission broad authority to issue regulations to accomplish the purposes of the act. Consequently, the Commission plays a key role in the regulation of class II and III games.

India’s gaming industry has grown from one that produced almost $100 million in total revenue in its first year, to one that exceeds $22 billion annually. This total exceeds the combined gaming revenues of Las Vegas and Atlantic City. This growth, coupled with confusing jurisdictions and limited regulatory resources, has raised serious concerns about the potential for large-scale criminal activity and influence in the Indian gaming industry. Recent allegations of large-scale fraud and corruption have led to extensive media scrutiny and investigations by congressional leaders into the FBI’s response to these allegations. ^{[ citation needed ]}

Tribal casinos located in the eastern United States generated approximately $3.8 billion in fiscal year 2002. Those located in the central United States reported gross receipts of approximately $5.9 billion, while those located in the western United States Together they generated about $4.8 billion. Most of the revenue generated in the Indian gaming industry comes from Indian casinos located in or near large metropolitan areas. Currently, 12% of gaming establishments in India generate 65% of gaming revenue in India. Indian gaming operations located in the populated areas of the West Coast (primarily California) represent the fastest growing sector of the Indian gaming industry.

There are 565 federally recognized tribes in the United States. While not all tribes will seek to establish tribal gaming establishments, it is likely that more will. In addition, many of the non-federally recognized tribes seek federal recognition to gain access to Indian gaming opportunities and other benefits of federal relationship.

Regulations

The purpose of the Act is to provide a legal basis for the operation of gaming by tribes to promote tribal economic development, self-sufficiency, and strong tribal governments. IGRA provides a basis for the regulation of Indian gaming suitable for: protecting it from organized crime and corrupting influences; ensure that the tribe is the primary beneficiary of gaming revenue; and ensuring that India’s gaming operations are fair and honest to the operator and players.

Indian gambling revenue grew from $100 million in 1988 to $16.7 billion in 2003. Since 2009, more than $26.5 billion a year has been generated. ^[14] More than 220 tribes in 29 states currently run 350 Indian gaming operations. ^[14] Although gambling has sparked economic growth among many tribes, it has also become an attractive target for criminal groups hoping to profit from illegal gambling, embezzlement, etc. Tribes are responsible for keeping their casinos honest and in control; however, with the rapid growth of Indian gambling, federal agencies became involved in keeping Indian casinos crime-free. ^[14]The IGRA also established an independent federal regulatory authority for gaming on Indian land, federal standards for gaming on Indian land, and the National Indian Gaming Commission (NIGC).

NIGC’s headquarters are located in Washington, D.C. It is led by a president, appointed by the President of the United States, and has five regional chapters. NIGC regional headquarters are located in Portland, Oregon; Sacramento, California; Phoenix, Arizona; St. Paul, Minn.; and Tulsa, Okla. The mission of the NIGC is to regulate gaming activities on Indian lands for the purpose of protecting Indian tribes from organized crime and other corrupting influences. It also seeks to ensure that Indian tribes are the primary beneficiaries of gaming revenues and to ensure that gaming is conducted fairly and honestly. To accomplish this, “the Commission is authorized to conduct investigations; take enforcement action, including issuing violations, the imposition of civil penalties and/or the issuance of closure orders; conduct background investigations; perform audits; and review and approve Tribal gaming ordinances.”

NIGC auditors and investigators ensure that gaming establishments in India meet the minimum gaming standards outlined in IGRA. To achieve this, NIGC auditors conduct annual audits of gaming records maintained by Indian gaming establishments and, where appropriate, investigate regulatory matters. The NIGC bears a huge responsibility in India’s growing gaming industry. As per his Congressional mandate, he relies on the FBI and/or other federal agencies to investigate allegations of criminal activity in Indian gaming establishments.

The National Indian Gaming Association (NIGA)

The National Indian Gaming Association (NIGA) is a non-profit organization founded in 1985 made up of 184 Indian nations, with additional non-voting associate members. ^[17] The purpose of the NIGA is to “protect and preserve the general welfare of tribes striving for self-sufficiency through gaming enterprises in Indian Country” and to “maintain and protect Indian sovereign governmental authority in Indian Country” . The NIGA seeks to advance the lives of Indians economically, socially, and politically. To fulfill its mission, NIGA works with the federal government and members of Congress to develop sound policies and practices and to provide technical assistance and advocacy on gaming issues. ^[14]The NIGA office building is located in Washington, DC The NIGA headquarters building was purchased by a tribal collective. It is the first structure to be owned by Native Americans in Washington, DC ^[17] NIGA is chaired by Ernest L. Stevens, Jr., who serves as president, and Andy Ebona as treasurer. 

The Indian Games Working Group (IGWG)

In February 2003, in an effort to identify and direct resources to Indian gaming issues, the FBI and NIGC created the Indian Gaming Working Group (IGWG). The purpose of the IGWG is to identify the resources needed to address the most urgent criminal violations in the area of ​​gaming in India. This group is made up of representatives from a variety of FBI subprograms (i.e., Economic Crimes Unit, Money Laundering Unit, Organized Crime/LCN Unit, Asian Organized Crime Unit, Government Fraud/Public Corruption Unit, Racketeering Cryptographic Analysis Unit and Indian Country Special Jurisdiction Unit) and other federal agencies, including the Department of the Interior, the Office of the Inspector General (DOI-OIG), the NIGC, the Internal Revenue Service Tribal Government Section (IRS-TGS), Treasury Department Financial Crimes Enforcement Network (FINCEN), Department of Justice (DOJ), Office of Foreign Assets Control (OFAC), Department US Treasury and Bureau of Indian Affairs Bureau of Law Enforcement Services (BIA-OLES). The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation. the Department of the Treasury Financial Crimes Enforcement Network (FINCEN), the Department of Justice (DOJ), Office of Foreign Assets Control (OFAC), the U.S. Department of the Treasury, and the Office of Law Enforcement Services of the Bureau of Indian Affairs (BIA-OLES). The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation. the Department of the Treasury Financial Crimes Enforcement Network (FINCEN), the Department of Justice (DOJ), Office of Foreign Assets Control (OFAC), the U.S. Department of the Treasury, and the Office of Law Enforcement Services of the Bureau of Indian Affairs (BIA-OLES). The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation. Office of Foreign Assets Control (OFAC), US Department of the Treasury, and Bureau of Indian Affairs, Bureau of Law Enforcement Services (BIA-OLES). The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation. Office of Foreign Assets Control (OFAC), US Department of the Treasury, and Bureau of Indian Affairs, Bureau of Law Enforcement Services (BIA-OLES). The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation. The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation. The IGWG meets monthly to review Indian gaming cases that are considered to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been launched. The IGWG through its member agencies has provided financial resources, travel funds, liaison assistance, staff resources, coordination assistance, and consultation.

The IGWG works as follows:

1. If criminal activities are suspected to be taking place in the Indian gaming industry and the office/agency concerned does not have adequate resources to investigate this matter, the office/agency contacts the Indian Country Special Jurisdiction Unit , FBIHQ, at 202-324-3666. This contact may come from the FBI or from an outside source or agency.
2. A small group of IGWG members will meet to determine whether the alleged criminal offense is a matter of “national importance” in its effects on the Indian gaming industry. If so, the IGWG will invite representatives from the affected FBI division, other federal agencies (if applicable), the affected United States Attorney’s office, and IGWG member agencies to meet and further review the case.
3. During this review, the agency that obtains the support of the IGWG will make a case presentation. After a full review, the IGWG will assist the requesting office/agency in identifying and obtaining resources to assist in the investigation.
4. Throughout the investigation, the IGWG will assist by providing “experts” to assist in the investigation; allocate special funds (ie, facilitate TDY travel, Title III support, special forensic exam, etc.); liaise with other federal agencies; facilitate the establishment of working groups on Indian gaming and/or provide consultation.

In order to properly detect the presence of illegal activity in the Indian gaming industry law enforcement offices with jurisdiction over Indian gaming offences, you must:

1. Identify the Indian gambling establishments in your territory.
2. Liaise appropriately with Tribal Gaming Commission (TGC) members, State Gaming Commission Representatives, State Gaming Regulatory Agency Representatives, and Casino Security Personnel.
3. Liaise with representatives from NIGC and regional gaming intelligence committees in India. Both will provide valuable information about scams, criminal charges, and other patterns of illegal activity.
4. Make proactive attempts during crime surveys to identify criminal activity in Indian gaming establishments.
5. Send investigators and financial analysts through training that gives them the knowledge and skills they need to effectively investigate criminal activity in India’s gaming establishments. ^{[ citation needed ]}

According to the US Census, 24 percent of Native American families lived in poverty in 1979. Ten years later, following the passage of IGRA, Native American poverty rates were 27 percent. .  Similarly, the 2010 census estimated that 26.6 percent of American Indians were below the poverty level, the highest of any ethnicity.  In 2011, the Government Accountability Office (GAO) reported that of more than 4 million Native American citizens, nearly 30 percent live in poverty, often without basic infrastructure. 

Additionally, Native Americans continue to have the highest unemployment rates of any ethnicity in the US According to the first Bureau of Indian Affairs report from 1982, the level of unemployment for American Indians living on a reservation or close to her it was about 31 percent. In 1987, just before the IGRA, unemployment was 38 percent. By 1989, the year after the IGRA was enacted, it had risen to 40 percent. The most recent BIA report from 2005 found that American Indian unemployment stood at a staggering 49 percent. The 2010 US Census reported unemployment for Native Americans (including those living on and off reservations) and Alaska Natives at 17.9 percent, tied with African-American unemployment as the highest of any race in ^the US USA ^.

State rights

Wayne Stein, a professor of Native American Studies at Montana State University, says that the purpose of states is to benefit their citizens, especially in economic matters. According to his article titled “Gaming: the cusp of a long struggle”, the states are probably the biggest “opponent of the Indian nations, their governments and their new gaming endeavors”.  States, likely concerned with their own interests, are criticized for taking a position that opposes tribal sovereignty. Stein argues that Native Americans remain citizens of the state, regardless of their tribal affiliation, and thus, like any other citizen of the state, should benefit from the state. 

Because Native Americans are technically part of a state, they are required to pay federal and state income taxes. The only exception is when an Indian works and lives on a reservation. In that case, Indians are exempt from income tax. Native Americans are also exempt from paying taxes on gaming income.  Recognizing that they are losing tax-free income, states often try to gain more control over Indian gambling. 

Individual states have protested their own lack of control over the games. Some even cite the 10th amendment – the right of states to have all other powers not specifically designated for the federal government – to fight gambling. Others feel that the federal government is forcing states to enter into unfair gaming-related compacts with Native American tribes. Some states, like Utah and Hawaii, do not allow gambling or casinos. State officials generally do not believe that Native Americans should be exempt from state laws. 

Another reason states argue that they have the right to regulate gaming has to do with the negative effects associated with gambling. Gambling, in general, is known to lead to “compulsive addiction, increased drug and alcohol abuse, crime, child and spousal abuse and neglect, and lost work days.” ^[27] These problems affect the communities around India’s casinos. Many believe that because states are being forced to deal with the negative consequences of Native American gaming, states should have more power to regulate the gaming industry in India. 

Tribal rights

The other side of the issue, tribal rights, also carries important points of consideration. Native American tribes enjoy limited status as sovereign nations, but are legally considered “domestic dependent nations,” as the Marshall Court held in 1829. Native Americans have always had difficulty finding a stable source of income. Traditional Native American ways of life had been eliminated, so a new way of being economically independent was needed. Widespread poverty among Native Americans continues today, nearly two hundred years later. Gambling is a way to alleviate this poverty and bring economic prosperity and development to Native Americans. Naomi Mezey, a professor of law and culture at Georgetown, argues that as the Native American rules of the game currently stand, the IGRA does not provide Indians with economic independence. The law requires tribes to report to the state and federal governments. Many Native Americans give up their rights to receive financial assistance from the government. “The federal right of Native Americans to play on tribal lands is not just about economic development policy and wealth distribution. By redistributing culture and sovereignty, IGRA has fueled the tribe’s longstanding battle for cultural survival.” and political autonomy. 

Tribal-State Compact is a form of cooperation commonly used in Class III gaming. These compacts affect the balance of power between state, federal, and tribal governments. Although the compact must receive final approval from the US Secretary of the Interior, the compact demonstrates a state’s ability to regulate and even tax Class III tribal gaming within its borders. ^[29]In addition, covenants often include language related to a state’s right to criminal and civil law enforcement and prosecution for gambling-related crimes. This right may conflict with law enforcement jurisdictions and tribal legal procedures. Since enforcement of gaming-related laws requires resources, states make sure to include language in the compact that requires tribes to financially compensate the state for regulation and enforcement.  As problems often arise due to covenants, the IGRA seeks to carefully define what the covenants entail.

Some public voices oppose the current government practice. One of the reasons for the opposition stems from the fact that the Bureau of Indian Affairs gives taxpayer money to tribes for economic development purposes. Some tribes take that money and use it to create casinos and other gaming establishments. Some citizens balk at the idea of ​​using taxpayer money to build tax-exempt tribal casinos that generate tax-exempt income. ^[30]Another complaint from other US citizens is the negative effects casinos have on nearby neighborhoods. They argue that casinos increase the amount of traffic, pollution and crime. As a result, cities find themselves paying the cost of dealing with these problems. 

Because Indian casinos pose a threat to non-Indian casinos, a gaming competition has developed between the two types of casinos. This high-stakes tribal gaming and tax-exempt policy gives Indian casinos a huge advantage in this competition. Consequently, non-Indian casinos have lobbied the government to strengthen the states’ regulatory power towards Indian gaming. 

The Indian Trust Land Reform Act was introduced in 1995 and 1997, marking an attempt to deny the Secretary of the Interior the power to take additional land into trust for Native American tribes if it were for “commercial” purposes (such as games of chance). Several members of Congress have expressed concern about the lack of regulation related to the sharing of revenue from funds generated by gambling.  It is important to note that Indian gambling regulations and methods are still evolving and changing.