Gambling in American History

New Hampshire has prided itself on being a low-taxation state. It is one of a very few states that has never had a state income tax or sales tax. In the 1950s and 1960s, however, the costs of government were going up, and because the state was familiar with gaming – it had legalized both horse-race and dog-race wagering decades before, and charitable bingo games were popular – political leaders felt that there was a better way of raising revenues than raising taxes. In 1963 the legislature came up with a novel idea: sell sweepstakes tickets in the manner used with the Irish Sweepstakes. The state was close to large population concentrations in Massachusetts, Connecticut, and New York. A rationale behind the idea was that the state could gain public revenues from nonresident gamblers. Tickets cost three dollars each, and persons purchasing them had to register their names and addresses for drawings. Winners would have horses assigned to them, and the grand prize winners would be those whose horse came in first. There was considerable interest in the sweepstakes, but the ticket sales fell far below expectations. The state was quick to change the lottery format after New York adopted a more direct lottery ticket sales procedure in 1966, and then after New Jersey revolutionized ticket distribution methods as it began its lottery in 1970.
As New Hampshire modernized its lottery in the 1970s, sales picked up, and revenues became an important part of funding for education in the state. New Hampshire formed a partnership with Maine and Vermont to offer the Tri-State Lotto game. Subsequently, they became part of the Powerball consortium. The state had become a winner through a process of imitation.
The legalization of casino gambling for Atlantic City seemed also to call for imitation in the minds of many. After the momentum for casinos gained speed in the early 1980s, Gov. Hugh J. Gallen appointed a Commission for Gambling in 1982. The commission studied jai alai betting, offtrack betting, and casinos. The commission came out against all three forms of gambling. Its strongest criticisms were aimed at the casino industry, stating, “for the little promise it holds out as a source of state revenue, [the casino industry] will bring with it serous disadvantages. It will burden the state government and local communities with the cost of policing its operations and providing municipal services for the mass of patrons needed to make it run on a paying basis. It will devastate the existing family-oriented vacation industry”. A bill to establish casinos was defeated in the legislature. Since 1982, there has been no serious push to legalize casino gambling. <

During the early 1950s considerable negative attention was cast upon the casino industry as a result of the national Kefauver Committee hearings on organized crime. The state responded with regulatory reforms. Legislation in 1955 established a specialized three-member full-time Gaming Control Board, which was administratively located with the Tax Commission. In 1959 the Tax Commission was eliminated from the state’s casino regulatory picture. A five-member Nevada Gaming Commission was created. This part-time group serves as the final voice for the state on gaming matters. In a sense it is the “supreme court” for gaming.
As a result of these changes, Nevada now has a two-tier structure for regulating gambling. The Gaming Control Board acts essentially like a policeman and a tax collector for the casino industry; the Nevada Gaming Commission makes final decisions on licensing casinos and formulating regulations as well as handling disputes that cannot be resolved by actions of the Gaming Control Board.
The three board members are appointed by the governor for four-year terms. One member is designated as chair by the governor. He or she must have five years of experience in public or private administration. A second member must be a certified public accountant or have expertise in finance or economics. The remaining member must have law enforcement experience. Board members may not be engaged in any partisan political activity during their term of service. They may not have any financial ties to casinos, nor may they be employed by any casino for one year following their board service.
The board oversees the work of a staff of over 400 individuals, who are organized into several divisions. The investigations division checks into the backgrounds of persons who wish to have gambling licenses. The cost of this background check process is paid by the license applicant. An enforcement division works in the casinos to ensure that all the games are honest and that all gaming laws and regulations are being obeyed. An audit division checks accounting procedures in the casinos and makes sure that all flows of money are accurately recorded and reported for purposes of taxation. A tax, license, and administration division collects gambling taxes and publishes reports on casino activity in the state. There is also a corporate securities division that monitors the financial condition of casinos that are owned by publicly traded corporations. An electronic laboratory investigates all gaming devices to ensure their integrity.
The five members of the Nevada Gaming Commission are also appointed by the governor for four-year terms. They, too, must not have an interest in any casinos, nor may they be involved in partisan politics. The commission has no staff.  It gives final passage to rules and regulations and makes final decisions regarding disciplinary action against any gaming interest – action that can also include revocation of a license. In 1969, the legislature created a seven-member Gaming Policy Board headed by the governor. The board was charged with making recommendations to the legislature for reforms in the gaming law. It has met only occasionally over the past thirty years.
Although the state’s gaming regulatory structure is considered one of the finest arrangements for regulating gaming in the world, local governments (counties or cities) are still involved in the process. They must also license casinos, and they collect fees separately from the state fees and taxes. The state gaming tax has risen to 6.25 percent of the gross gaming win, and casinos must also pay a variety of fees based upon the number of tables and machines in the facility. <

Nevada became “the” gambling state by a series of historical accidents as well as by deliberate policies. As late as the 1840s, Nevada was basically an unexplored region of barren desert and mountains. Paiute, Washoe, and Shoshone Indian tribes had traversed parts of the state and established some communities, but their numbers were small, and their lifestyle was often nomadic, as they would live in the climatically comfortable mountains during the summer and then descend to the desert floor in winter months. The climate and terrain made the area one that most people moving westward sought to avoid or to cross in great haste. Mark Twain described the journey with humorous detail in Roughing It (Twain 1872).
One critical aspect of Nevada’s geography that is pertinent to its economic development is its proximity to California. The two states have the longest land border of any two states in the United States. People rushed to California in the late 1840s as gold was discovered. The new state of California was populated by all sorts of prospectors and other independent get-rich-quick entrepreneurs during the 1850s. The area that became Nevada was made part of Utah Territory in 1850. The volume of gold strikes in California began to wane in the late 1850s just as the great Comstock Lode was discovered near Virginia City, Nevada, in 1859. A mad silver rush paralleled the earlier California gold rush, except this time the fortune hunters came to Nevada from California. The first waves of population left an indelible mark upon the character and outlook of politics in the state. The influx of the new population was accompanied by desires to cut off political relationships with Utah Territory and its religiously oriented government. President Buchanan signed a bill on 2 March 1861, just two days before he left office, which established Nevada Territory out of the western one-third of Utah Territory. Buchanan had been rather hostile to the nature of Utah society throughout his presidency, and the new status for Nevada was his parting shot against a community that seemed almost diametrically opposite to that found in Nevada.

Slot machines are found throughout the state in bars, taverns, restaurants, convenience stores, and grocery stores.

The issue of gambling was quickly placed on the public agenda of the new state. President Lincoln appointed New Yorker James Nye to be territorial governor. Nye was not a prospector, and Nye did not care for gambling. He recoiled at the prevalence of sin institutions when he settled down in Nevada and persuaded the new legislature to prohibit gambling. A person who operated a game could be charged with a felony; a person who played at a game could be charged with a misdemeanor.  In spite of the law, the games continued.
After statehood was achieved in 1864, the legislature reversed its thinking. In the 1867 session a law was passed legalizing casino games. It was vetoed by the first elected governor, H. G. Blasdel. Two years later, the legislature repeated its action, and when the bill was vetoed again, they overrode the veto. The new law barred local governments from passing ordinances against gambling. Any person was able to get a license to operate a game from the county sheriff for a fee ranging from $1,000 to $1,600 (depending upon the population of the county). The fee was split equally between the state and county treasuries.
By the turn of the twentieth century, the Populist movement was gaining strength across the United States and in the Silver State. In concert with temperance organizations, civil leaders attacked the local sin industries. A ballot initiative sponsored by such groups sought to make both gaming and prostitution illegal in Reno. When the voters turned down the measure in 1909, the sponsors approached the state legislature. There they were successful, and gaming ceased to be legal on 30 September 1910. Another way of saying the same thing was that illegal gambling began on 1 October 1910.
By 1911, the legislature had second (and third) thoughts. Certain card games were legalized, only to be made illegal again in 1913. In 1915 limited gaming was permitted again. Enforcement of the gaming limits was sporadic at best and nonexistent as a rule. In lieu of fees when gaming was legal, operators now paid bribes to local officials, who pretended that gaming did not take place.
A move to legalize gambling was revived in 1931 when state assemblyman Phil Tobin of Humboldt County introduced the legislative measure. Although opposition was voiced by religious groups, Tobin’s bill passed the assembly on a 24–11 vote, and the state senate on a 13–3 vote. On 19 March 1931, Governor Balzar signed both the six-week divorce law and the measure to legalize casino gambling. A second law passed later in 1931 permitted local governments to regulate gambling and fixed fees for gaming statewide.  The fees were shared, with 75 percent going to local governments and 25 percent to the state. Licenses were granted by county commissions, and all regulations were enforced by the sheriffs.
In 1945, the state legislature decided that state control was necessary, as several outside operators were planning larger and larger casino projects. The state Tax Commission was given the authority to license casinos, which had previously received licenses from county boards. Subsequently the process became one of dual licensing. The state also imposed a 1 percent tax on the gross gaming wins of the casinos. The Tax Commission was empowered to collect the tax. Two years later the state attorney general ruled that the Tax Commission could deny a license based upon its assessment of the character of the applicant. In 1949 the requirement that applicants must be of good character was written into the law. The Tax Commission was given a staff for casino regulation for the first time.

The state of Nevada is clearly the primary gambling state in the United States. For almost half of the twentieth century it was the only state to permit casino gambling. Even today, nearly one-third of the casino gambling activity in the United States occurs in Nevada. The state has over 300 unrestricted casino license holders offering both table games and machine gaming, and 235 of these have gaming wins in excess of $1 million dollars per year. Another 2,000 restricted locations each have fifteen or fewer gaming machines. The casinos are found in each of the seventeen counties of the state and in every city of the state except for Boulder City – which was a federal enclave until the 1950s. No other North American jurisdiction allows such widespread locations for casinos; instead, most confine casinos to specific communities. The casinos produce revenues of approximately $8 billion per year from gambling and $6 billion more from other sources. The casinos employ nearly 200,000 persons, representing one-third of the employment in the state. The taxes from gambling and other aspects of casino enterprises constitute approximately half of the public revenues of the state and its local governments. No other jurisdiction in the world receives as large a share of its public budgets from gambling taxes.
Although casino gambling is found in all but one jurisdiction in the state, there are certain important concentrations of casinos in the state. Of course, the primary gaming center is the Las Vegas Strip, a four-mile-long section of Las Vegas Boulevard, which has 19 of the 20 largest hotels in the world – all with casinos. Downtown Las Vegas has a dozen large properties located around Fremont Street. The town of Laughlin on the Colorado River at the southern tip of the state has 10 casinos. In the northern part of the state, the traditional gaming city of Reno (and its suburb, Sparks) has 35 major casinos, and the Lake Tahoe resort area has 5. <

The Netherlands Antilles consist of two of the three “ABC” islands (Aruba, Curaçao, and Bonaire) of the southern Caribbean and the Dutch half of the island of St. Martin/Sint Maarten. These islands are autonomous in their domestic affairs, but they report to the government at The Hague in matters involving international affairs. Casino policy is in the latter category. St. Martin/Sint Maarten is an island of thirty-seven square miles; sixteen square miles (Sint Maarten) are on the Dutch side, and twenty-one square miles (St. Martin) are controlled from Paris as a subperfecture of Guadeloupe. The casinos on the French side have not been developed to attract large numbers of tourists; on the other hand, the Dutch casinos operate within large resort hotels. The seven Dutch casinos have gambling junkets and offer credit for high-stakes gamblers.
Bonaire and Curaçao were governed jointly with Aruba until that island won independent national status in 1986. Bonaire has two casinos, one of which – the Flamingo Beach Casino – is the only casino in the world where players may be barefoot. The dealers too may be barefoot, but they always wear black ties. Curaçao has six casinos, all of which are in resort hotels and are located on beaches or next to the harbor. <

Nebraskans voted for a lottery in 1993. The state has also permitted live keno gaming statewide. As a result of these decisions, the Santee Sioux, Winnebago, and Omaha tribes have won the right to have casino table gambling on their small reservations.
For many years Omaha was the site of the very successful Aksarben thoroughbred racing track. Competition from a dog track in nearby Council Bluffs, Iowa, as well as from Iowa riverboats destroyed the prospects for profits at the track. Efforts for full casino gambling at the track failed (although it has been the site of a keno game). The track is permanently closed. <

Long before the ships of Columbus brought playing cards to North America, the indigenous peoples engaged in gambling activities. The Native populations of the Western Hemisphere have been no different than other populations since the beginning of time. They have had games and have wagered valuable possessions on the outcomes of the games.
Stewart Culin’s Games of the North American Indians classifies hundreds of Native games into categories of (1) games of chance, including dice games and guessing games, and (2) games of dexterity, encompassing archery, javelin and darts, shooting, ball games, and racing games. All categories were found among all North American tribes at the time of contact with the European intruders upon the continent.
Guessing games usually involved sticks that one person would hold in his or her hands behind the back. Another person would seek to determine which hand held the most sticks or held a stick with a particular marking. Other guessing games would involve having to find a hidden object such as a stone or a ball that might be placed into one of several moccasins or in some place in a room.
The most prevalent game of chance involved objects that had characteristics of today’s dice. Tribes of every linguistic group had dice games. Most often the dice were stones with two distinguishable sides. They were tossed by hand into baskets or bowls, and counting systems were used to keep score for two individuals or two groups competing with one another.
All tribes in North America had some game involving throwing or shooting an arrow, spear, or dart through a hoop placed at a distance. A variety of other targets would be used as well. Also, some contests involved keeping arrows in the air for a long time or achieving great distances with shooting. Ring and pin games were also quite popular. A ring (the target) was tied to a stick by a string. The string was then used to swing the stick into the air with the object of having the stick go through the ring.
Although most arrow-type games and running games were based upon individual skills, Native Americans also had a wide range of team games involving kicking balls or moving balls toward goals by means of rackets or clubs.  Europeans learned the game of la crosse from the indigenous populations of the North American continent. In addition, all tribes had varieties of running games involving individual runners as well as teams of relay runners.
Wherever there was a game or a contest, schemes existed to place wagers on the results. In most of the skill games the participants in the games were men; however, those making wagers would often include both men and women, and the betting activity could become rather excessive.
Culin relates some harmful effects of tribal gaming, citing an account of a bowl and stick-dice game among the Assiniboin of the northern plains: “Most of the leisure time, either by night or by day, among all these nations is devoted to gambling in various ways, and such is their infatuation that it is the cause of much distress and poverty in families”. He suggests that if a young man gained a reputation for being a heavy gambler that this would be an obstacle in the way of gaining a wife. Many arguments ensued among the people because of gambling. Culin writes, “We are well acquainted with an Indian who a few years since killed another because after winning all he had he refused to put up his wife to be played for”.
According to Culin, among the Assiniboin women could become as addicted to gaming as the men; however, as they usually did not control property resources as much as men, their losses were not as “distressing”.
Other accounts of Native American games have been more positive. Burt and Ethel Aginsky found that among the Pomo of California, gamblers were a highly honored group and that a family would happily welcome an apprentice gambler as a son-in-law. The gaming was also sanctioned by tribal religion, and the full society participated in games that involved wagers. Tribal members, however, were cautioned against winning too many possessions from one another as this would cause “hard feelings”.
Henry Lesieur and Robert Custer reviewed several studies of Native American gaming and found patterns of activity that mitigated the possibilities of the development of pathological gambling behaviors: (1) Games were formalized rituals with many spectators, (2) players could not go into debt as a result of the games – they could wager only those possessions they brought with them to the games, and (3) individuals had to have permission of their family in order to make wagers.
Although the modern era has seen a massive expansion of Native gaming facilities in North America, today’s Native games are patterned almost exclusively upon games developed by Asian and European newcomers to the continent. Similarly, while the new Americans very early established contact with Native peoples and also incorporated gambling practices into the life of their new communities, there is very little evidence that they borrowed games from Native peoples, la crosse being one exception.
The lack of a general cross-fertilization of game development among tribes and settlers of European origin is evidenced in the almost complete lack of mitigating controls over pathological gaming, such as those identified by Lesieur and Custer, in modern Native American casinos. Today’s Native American gaming is simply an outgrowth of emerging patterns of non-Native gaming.

Native American Gaming: Contemporary – Selected Developments

Every state with organized and recognized Native populations has had a special history with its tribes over gambling, with one exception – Utah. As that state has no legal gambling, the federal law is clear that the tribes in the state may not have any Class II or Class III gambling operations. Tennessee and Hawaii, also states without any non-Native gambling (except a provision for pari-mutuel betting in Tennessee), have no Native lands. Certain state situations deserve extra attention.
Negotiations in Connecticut took many unusual turns on the way to creating the largest casino in the world, Foxwoods. Originally, the Mashantucket Pequot tribe sought a compact so that they could have table games only, as the state did permit charities to use table games in their fund-raising events Gov. Lowell Weickert refused to negotiate, however, claiming that the games were commercially illegal in the state. The tribe won a court mandate ordering the governor to negotiate. He refused. A mediator was appointed, to whom the tribe and the governor both submitted proposed compacts. The governor’s proposal actually included provisions for allowing the games. The mediator selected the governor’s proposal. The state then appealed the selection, asking the secretary of the interior to reject its own proposal. The secretary instead signed the proposal, which became the compact. The state lost its further court appeals.
It was clear that the state did not permit anyone – charities or commercial operators – to have slot machines. Also, the IGRA clearly says states cannot tax tribal gaming. Nonetheless, in 1993 the state and its governor reached a “side agreement” with the tribe to allow them to have as many slot machines as they wanted, providing they paid the state 25 percent of the revenue for the machines.
The agreement was never approved by the secretary of the interior (it could not be; it was patently illegal), but the casino offers 5,500 slot machines for its customers. The 25 percent tax was called a monopoly fee that would go to the state only as long as the Mashantucket Pequots had a monopoly on the machines (which could not be possible, as the law would allow machines only if they were permitted for others). The monopoly ended in 1996 when a second tribe opened a casino, and the 25 percent share was renegotiated with the governor’s office, without the approval of federal authorities. The state of Connecticut receives nearly $200 million a year as its share of the tribes’ slot revenues. The state certainly has not sought to appeal the slot agreement. While of dubious legitimacy, the gambling situation in Connecticut has widespread support.
The most protracted battles over Native American gambling have occurred in California, one of the states to pioneer Native American gambling.  After the federal court rulings in the Seminole and Barona cases in the early 1980s, gambling expanded on California Native lands. The tribes went beyond bingo and player-banked games and started offering games that appeared to have the qualities of Class III games. After 1988, California governors George Deukmejian and Pete Wilson declined to negotiate compact agreements to allow tribes to have Las Vegas–style slot machines and house-banked casino games, however, claiming that casino-type gambling was unconstitutional in California. As all enforcement of gambling laws on tribal lands was placed into the hands of the federal government, the governors could not demand closure of tribal casinos. An impasse ensued for several years during which the tribes expanded machine operations, operating as many as 15,000 of them outside the boundaries of the federal law.
Eventually the tribes turned to the ballot to win their compacts. In 1998 they sponsored Proposition 5, and in 2000 they sponsored Proposition 1A. Governor Wilson opposed Proposition 5; Gov. Grey Davis helped design Proposition 1A, and he supported it. Both passed, but a court ruling held that a 1984 constitutional ban on casinos precluded enforcement of Proposition 5. Hence, Proposition 1A was initiated as a constitutional amendment. The measure allows individual tribes to have casinos with up to 2,000 slot machines in each, with an overall state limit of approximately 43,000 machines. This represents a doubling of the number of existing machines in the state.
The 1998 Proposition 5 in California presented the greatest threat to Nevada casinos since the Kefauver hearings of the 1950s. The Native Americans in California wanted a compact and felt they were being stonewalled by Governor Wilson. But in their proposition they did not stop at merely asking for a compact. They asked for wide-open unlimited casino gambling on all 100-plus reservations in the state. The Native interests put almost $70 million into the campaign—one tribe in San Bernardino contributed $26 million of the amount. Nevada casinos responded with $25 million in opposition. Money won the contest, as the voters gave the proposition over 60 percent approval. Unfortunately the proposition was in the form of a legislative initiative, and the courts found it to be constitutionally defective. Nevada paid for the court challenge. The tribes quickly gathered and lobbied the California governor for support of a constitutional initiative to grant them compacts. The new compact (Proposition 1A) limited the numbers of slot machines that the tribes could have and provided for more definitive regulations – including the possibility of having labor unions for employees. Nevada interests had been stung by the amount of money that the Natives were willing to spend on the campaign in 1998. They were happy with the Proposition 1A compromises, and they were happy that they did not have to advance money against casinos again – a position that makes them feel somewhat hypocritical – but a position they had to take. It is possible that 1A will now allow the casinos of Nevada and the Nevada political establishment to build important bridges to California tribes.

Native American Gaming: Contemporary – A Canadian Note

The situation in Canada has some parallels to that in the United States. Native peoples (or First Nations) in Canada are the poorest residents of the country. They want to have gambling operations to help them deal with problems arising from their impoverished situations. There is no national Canadian law on Native gambling, unlike the situation in the United States.
It had been well established that all relationships between Native bands (tribes) and non-Native peoples must be conducted with the federal government in Ottawa. In 1985, however, the federal government delegated all authority over gambling to the provinces. Since then the Native bands have felt like political footballs, as provinces say “go talk to Ottawa”, and Ottawa says “go talk to the provinces”. In the mid-1990s, however, several provinces entered into agreements somewhat similar to compacts in the southern U.S. states. Tribal casinos are operating in Alberta, Saskatchewan, Manitoba, and Ontario. Disagreements persist between bands and provincial authorities in several of the other provinces.
A unique arrangement was negotiated in Ontario, as one band (Rama) was permitted to have a casino at Orilla, as long as it shared revenues with other bands in the province. Another casino in Ontario, the Blue Heron Casino in Port Perry, has also been authorized to operate under the control of a Native band. The tribes in the United States have generously shared their revenues with many charities in many communities.  No tribe, however, has willingly allowed any other tribe to have a precise share of its gaming revenues.
In 2000, the Alberta government provided guidelines for Native casino operations. At the same time, the Manitoba government held hearings and took advice from people throughout the province before designating five communities as sites for Native casinos. In one case there was no band in the community, and arrangements had to be made to create First Nation land for the casino. Saskatchewan created four Native casinos when it established its own provincial casino in Regina. All participate in revenue-sharing provisions.

The U.S. government recognizes 558 Native American tribes. In 1990 there were almost 2 million Native Americans. An equivalent number of First Nation bands is found in Canada. Of the tribes in the United States, 198 had some kind of gambling operation in 1999.  The operations included bingo games, which are considered Class II games, and various kinds of casino-type games, or Class III games (classifications found in the Indian Gaming Regulatory Act of 1988). The Class III operations are found in twenty-four states. As described in this entry, these games are conducted in accordance with agreements made between the tribes and the state governments.
Since 1990 Native American gambling has been the fastest-growing sector of casino gambling in the United States. Tens of billions of dollars are gambled at the Native American bingo halls and casinos each year. As a result, tribes take in approximately 15 percent of all the gambling revenues in the United States. In 1999, the gambling facilities had wins of $8.26 billion. The revenues support over 200,000 employees as well as critically needed social programs for many Native Americans who have collectively been the most economically deprived subpopulation in the United States. Gambling monies have also been vitally important for economic development projects, making many tribes self-sufficient. Gambling has not been a panacea for all, however, as a majority of the revenues go to only twenty-two casino operations out of more than 150 casinos. Some of the largest tribes have no gambling operations.
One of the tribes, the small Mashantucket Pequot tribe of Connecticut, has the largest casino in the world. The 300 members of this community control a casino that wins over $1 billion a year, or about 12% of the Native gambling money. Their casino, Foxwoods, is located in Ledyard, Connecticut, near the interstate highway that links New York City with Boston. For most of the 1990s, the casino was the only casino in all of New England. The facility has more than 250,000 square feet of gambling space, with a casino with more than 5,500 machines, 200 table games, and a bingo hall. The gaming resort complex also has two hotels, several theaters, amusement game rooms, and a sports arena. The facility is larger than any casino in Las Vegas, and it earns twice the revenues of the largest Las Vegas casino. Except for the state government itself, the casino is the largest employer in Connecticut.
Other leading Native American casinos are found on Oneida reservations in both Oneida, New York, and Green Bay, Wisconsin; on Chippewa reservations at Sault St. Marie and Mount Pleasant, Michigan, and Mille Lacs, Minnesota; on a Dakota Sioux reservation at Shakopee, Minnesota; on the Choctaw reservation near Philadelphia, Mississippi; and on the Ft. McDowell Apache reservation north of Phoenix, Arizona. Any of these gaming facilities could be transplanted to the Las Vegas Strip, and customers would be hard-pressed to notice the difference in gambling operations, although their markets all tend to be contained within areas of a one-day car drive, and few have large hotels.

Historical Development

In the 1970s many Native American tribes began to participate in charity gambling in accordance with state rules regarding how the games would be played and the types of prizes that could be offered. In 1979, the Seminole Nation decided to do something different for the bingo hall on its reservation in Hollywood, Florida. Faced with considerable competition from other charities, the tribe threw aside the state’s prize limits and began a high-stakes game with prizes in the thousands of dollars. The Broward County sheriff filed criminal charges and sought to close down the Seminole bingo game. His actions led to a series of law cases, culminating in the 1981 approval of the games without state limits by a federal court of appeals (Seminole Tribe v. Butterworth, 658 F. 2d. 310). In 1982 the U.S. Supreme Court refused to review the ruling. In a very similar case in 1982, another federal court of appeals permitted a California tribe to conduct bingo games and other card games in manners that violated state rules. Key to the cases was the fact that in both Florida and California the games themselves were legal and could be played. The tribes were only violating the manner in which the games were played. The courts of appeals ruled that states did not have regulatory authority over Native nations’ activities unless the activities were totally prohibited by the states as a matter of public policy.
Tribes across the United States took notice of the very successful gambling activities of the tribes and especially of the legal cases, which seemed to affirm the special status the tribes enjoyed in this realm of economic enterprise. During the early years of the 1980s, gambling began to appear on most of the reservations of the United States. Except for internal tribal regulations, there was almost no oversight for the gambling activities. As the activities involved larger and larger sums of money, there were both perceived and real problems.  There were cases of non-Native managers setting up games and then taking the bulk of the revenues. Evidence of cheating emerged. Members of organized crime families made their presence felt on some reservations. There were also some unscrupulous tribal members who used gaming for personal advantages in ways adverse to their tribes’ interests. Organized commercial casino interests, especially those in Nevada and New Jersey, expressed fears that corruption and organized crime activity on the reservations could result in a popular backlash against all casinos along with calls for federal regulation of commercial casinos. Of course, they also had concerns about the competitive positions held by unregulated casinos in monopoly-like markets. Congress began to explore the manner in which the Native gambling could be regulated.
Congressional action was held back, however, as the U.S. Supreme Court had not ruled on the legality of Native gambling, and many state governments sought to have the highest court overrule the previous decisions of lower federal courts. This did not happen. In 1987 the U.S. Supreme Court upheld the earlier rulings by a six to three vote in California v. Cabazon Band of Mission Indians. Moreover, the Court endorsed Native gambling as being consistent with federal policies designed to promote self-sufficiency for tribes. The Court pointed out that the Bureau of Indian Affairs had actually given grants for construction of some of the gambling facilities, that gambling revenues were accomplishing goals for federal policy, and that gambling revenues “provide the sole source of revenues for the operation of tribal governments, and the provision of tribal services. They are also major sources of employment on the reservations”. The Court added, “Self-determination and economic development are not within reach if the Tribes cannot raise revenues and provide employment for their members. The Tribes’ interests obviously parallel the federal interests”. The Court added that state regulation or any other regulation by a nontribal entity could take place only if there were a specific act of Congress authorizing the regulation. Now the states besieged members of Congress to act. Conversely, the tribal interests were less inclined to endorse congressional action, as the status quo was quite acceptable to their desires. A compromise was reached with the passage of the Indian Gaming Regulatory Act of 1988, signed into law by President Reagan on 7 October 1988.

The Indian Gaming Regulatory Act of 1988

The l988 Indian Gaming Regulatory Act (IGRA) established a three-member National Indian Gaming Commission. Two of the three members must be enrolled members of Native tribes. The chairman is appointed by the president and the two other members by the secretary of the interior. The commission is given some direct regulatory authority over bingo-type gaming. It is also empowered to make general rules for gambling operations. The chairman has subpoena powers, and the commission may assess fines against tribal gambling operations and even close them if it feels they are not sufficiently abiding by the rules. The commission approves all agreements outside operators make with Native gambling establishments and conducts background checks on gambling personnel.
Casino-type gambling was to be regulated in accordance with rules established in negotiations between the tribes and the state governments. These negotiated compacts would be given the force of law by the secretary of the interior. If the states refused to negotiate compacts in good faith, tribes could sue the states, and the states could be mandated by federal courts to negotiate. On 27 March 1996, in a five to four vote, the U.S. Supreme Court ruled that the provision of the act that allowed tribes to sue states in federal courts over the lack of good faith negotiations was unconstitutional because of the 11th Amendment. The amendment implies that states are sovereign units and generally cannot be sued in federal courts.
The Court did not rule the entire act unconstitutional, nor did the Court address how negotiations impasses would be resolved in the future – whether states could simply say no to tribes, or whether tribes could seek relief from the secretary of the interior. In 1999, the secretary of the interior issued guidelines for tribes to take appeals to the secretary’s office when states refused to negotiate compacts.
The act defined three classes of gambling. Class I gambling consists of small prize games between tribal members. It also consists of games traditionally played by tribes in ceremonies or celebrations. These activities are regulated entirely by the tribes. No issues have arisen over Class I games since the passage of the act.
Class II gaming encompasses bingo in its various forms as well as pull-tab cards, punch boards, and tip jars (jars filled with a fixed number of pull tabs, hence guaranteeing a predetermined number of winners).  Certain card games such as poker are also included as long as the games are nonbanking, that is, do not involve bets between the casino and the player instead of bets among players. Tribes can conduct Class II gaming as long as the game involved is permitted in the state to be played “for any purpose, by any person, organization or entity”. The tribe must pass an ordinance in order to offer Class II games. The ordinance is then approved by the National Indian Gaming Commission chairman. The commission conducts background investigations on the gambling facility and its employees.
The Commission then regulates the gambling for a period of three years, after which the tribe can apply for permission to self-regulate the Class II games. Most tribes have successfully won permission for self-regulation. The permission can be revoked if the commission feels that the self-regulation efforts are inadequate. Although the commission regulates the gambling, the commission may assess the tribes a fee for the cost of regulation.
Class III gaming consists of all forms of gambling not covered by Class I and Class II definitions. Basically, the Class III category covers all casino-banked games including blackjack, baccarat, roulette, craps, and all slot machines. Class III also includes lottery games as conducted by state governments and pari-mutuel racing wagers. As with Class II games, the Class III games may be played only if the tribe has an ordinance permitting them and if the games are permitted “for any purpose, by any person, organization or entity” in the state where the tribal facility is located. Additionally, for Class III gambling to be permitted, the tribe must enter into a compact with the state. The compact will provide a detailed provision on games allowed in the facility, the manner of offering the games, and the regulatory structures for oversight of the games.
The Class III negotiated compacts may provide very specific authority for tribal and nontribal (be they county, city, or state) law enforcement agencies to supervise and enforce provisions of the gaming agreements. Without such specific authority being granted to nontribal authorities, all enforcement activities regarding gaming on Indian lands remain in the hands of the tribal government and the federal government. In other words, if there is no compact, and tribes are permitting games the state believes to be Class III games, the state cannot enforce the law. The state must wait for federal district attorneys and marshals to make all enforcement actions. As these officials operate under direction of the U.S. attorney general, the basic enforcement activity is on the shoulders of one federal officer.
State governments may not tax the Native gaming facilities. The state may charge the tribes sums of money to cover the actual costs of state regulation of the facilities, however. In fact, many tribes have acquiesced in state requests for special fees in order to finalize negotiations. The secretary of the interior willingly closes his eyes to the legal violation and accepts that the fees are some how quid pro quos for some mysterious services the state or local governments might give the gambling facilities.
All net revenues from gambling must be allotted as the law provides. They must be used for tribal purposes. If the tribe shows that it is meeting its obligations to provide for the social welfare of its members, however, the tribe may authorize up to 40 percent to go to individual members in a per capita distribution. Some tribes have done so; others have not. In 1999 there were forty-seven tribal governments that gave per capita payments from gambling revenue to their members. Some have given the full 40 percent in per capita distributions; others have given smaller proportions. In the case of one Minnesota tribe with a small membership, the per capita distribution of funds was in excess of $800,000 per individual member for one year. Some other tribes have allocations exceeding $100,000 per member per year; however, most of the per capita payments are not so large.
The National Indian Gaming Commission also regulates non-Native persons who wish to work with the gambling facilities on reservations. Moreover, arrangements for outside management of games are regulated, with the outside managers being limited to agreements for no more than 30 percent of the net revenue of the facility going to them in exchange for their services. Agreements may not last for more than five years. Under special cases managers may receive 40 percent of net revenues for seven years if they also provide financing for the Native casino facilities.
The IGRA anticipated that tribal leaders and other entrepreneurs would see opportunities in creating new tribes in order to place gambling facilities in certain locations with outstanding market possibilities. The law provided that new lands designated as Indian lands by Congress or the Department of the Interior could have gambling only if such was approved by the secretary after some (unspecified) consultations with local residents of the area as well as rival gambling tribes in the vicinity. Moreover, the governor of the state would have to specifically approve the gambling, and of course there would have to be a compact. Plans for new tribes and new tribal lands proliferated, and many applications were made to Congress, the Interior Department, and governors. As of the beginning of 2001, however, only about a dozen tribes had been given new recognition by federal authorities, and only one of these had a casino operating. Only two existing tribes had been given authorization for gambling on new lands not adjacent to their existing reservations.

See Gaming Institutes: Research and Political. <