Tribal Casinos: Overview.

Introduction

Casinos built and operated by American Indian and Alaska Native tribal nations or groups have become commonplace on the American landscape in the twenty-first century. By 2024 the US Bureau of Indian Affairs (BIA) recognized 574 tribal governments; of those governments, over 40 percent ran one or more gaming establishments, totaling over five hundred operations nationally. According to data from the National Indian Gaming Commission, it has been a booming multibillion-dollar industry, with regulated tribal gaming establishments collectively generated $40.9 billion in revenues in fiscal year 2022 alone.

Casinos serve as a life-saving source of revenue for many impoverished tribal nations. Some American Indians have benefited tremendously from casinos or other gaming establishments. For instance, tribal casinos have generated revenue to fund higher education, tribal enterprises, courts and public safety, infrastructure, and health and mental health programs. Social scientists and social workers have found that gaming enterprises have greatly contributed to increased economic solvency and physical health in tribal communities.

Despite the social and financial gains, tribal casinos have significant social and legal limitations and problems. Some groups have found the promise of casinos to be far different from the reality. In many instances, tribes do not have complete financial control over casinos because of the demands of outside investors, many of whom reap the majority of the casinos’ profits. Crime has also become a problem at some tribal casinos, further complicated by jurisdictional issues on tribal lands. Tribal casinos are a source of controversy for state governments, non-Indigenous casino investors, and antigambling groups who, for financial and social reasons, find the casinos objectionable.

Understanding the Discussion

Class I, II, and III games: Types of gambling games, the level of which dictates if the state must intervene in their regulation. Class I games are traditional native gambling games that require no regulation. Class II games, such as bingo and lotto, also are not regulated. Class III games, such as slot machines, blackjack, betting on sporting events and other casino games, are regulated by federal agencies such as the National Indian Gaming Commission and the Tribal Gaming Commission.

Indian gaming: Casino and gambling activities on eligible lands and reservations belonging to federally recognized tribal nations.

Parimutuel betting: A form of betting in which the winning bettors of the first three slots of a race or competition receive the money of the losing bettors, minus a commission for the host of the betting. Horserace betting, where one wins if they bet on the first-, second-, or third-place horses, is an example of parimutuel betting. Parimutuel betting is considered a Class III activity.

Reservations: Land that is reserved for tribal nations to establish their own governments and act as independent countries; may be referred to colloquially as a “res” or “rez.”

Tribal sovereignty: The right of an American Indian or Alaska Native tribal nation to establish its own laws and act independently of the United States government. Tribal nations have limited sovereignty, which means that in some instances the US federal government can dictate the law.

History

The history of gambling in America dates back to before the Revolutionary War. Activities such as state-run lotteries existed into the mid-nineteenth century. By the Prohibition-era 1930s, however, gambling had been outlawed throughout the United States, but in Nevada, casinos began to appear as early as 1931. Atlantic City, New Jersey, began building casinos in the late 1970s, and within about a decade, all but two states and the District of Columbia had legalized various forms of gambling.

Many Indigenous peoples of North America historically played games of chance as part of their cultures, but what came to be termed “Indian gaming” began modestly with the rise of bingo halls during the 1970s. Bingo, a common activity among church groups and local social organizations, was an easy way to raise funds. Tribes in California, Maine, Connecticut, Michigan, and Florida opened bingo halls to make money for their residents. The bingo halls grew very popular with gamblers off the reservation, and soon these bingo halls became high-stakes gambling establishments, though not officially casinos.

The popularity of the bingo halls increased as churches began to question whether gambling of any kind was an acceptable form of fundraising, moving churchgoers into the Indian-run halls. In Florida, local officials became so concerned about Seminole bingo halls that they tried to ban them. The Seminole nation sued, and the case had to be decided in the United States Supreme Court; Seminole Tribe vs. Butterworth (1979), the landmark case on Indian gaming, established that states had no right to prohibit gambling on Seminole lands because the state did not have jurisdiction over tribal nations. This led to a boom of speculation by other tribal nations on the establishment of gambling operations of their own. As leaders in some nations saw the potential of gambling on tribal lands, they sought to expand the bingo halls into true gambling establishments. The bingo halls evolved into true casinos during the 1980s, offering card games, slot machines, and other high-stakes games.

In the 1987 case of California v. Cabazon Band of Mission Indians, based on the 1976 case Bryan v. Itasca County, the Supreme Court ruled that states can only prohibit tribal gaming if the game in question is illegal under state law. The following year, the US Congress passed the Indian Gaming Regulatory Act (IGRA), which stipulates that a tribal nation is allowed to establish casinos only in states where gambling is legal and only on reservations or other eligible “Indian lands” where the tribe holds jurisdiction, such as land held in trust by the US government. It was hoped that tribes would become more self-sufficient, as during this era President Ronald Reagan cut an estimated $1 billion of their federal funding. By that time, all states but two, Hawaii and Utah, had legalized gambling, allowing Indian gaming to be established virtually nationwide. After IGRA, regulations on tribal gaming establishments softened or disappeared altogether. Indian gaming went into full swing, and tribal nations offered financial opportunities for non-Indigenous businesspeople and foreign investors throughout the 1980s and 1990s.

Several very famous casinos arose in the Indian gaming world during this time period. Foxwoods, located in Connecticut, is perhaps the best example. Its revenues equal about $800 million annually and lifted the Mashantucket Pequot Nation from poverty and near extinction to one of the most profitable companies in the northeastern US. Foxwoods, backed by Asian investors, is also an example of foreign investment in tribal casinos. Other casinos—the neighboring Mohegan Sun, operated by the Mohegan Nation in Connecticut; the Paragon, operated by the Seminole in Marksville, Louisiana; and Cherokee and Comanche casinos in Oklahoma—saw phenomenal success almost as soon as they opened.

Yet, along with their success came problems that called into question the safety of the casinos, investments and, according to many tribal leaders, that of tribal sovereignty itself. The casinos and their operations affected not only the people on the reservation, but those who came from outside to gamble, the state authorities who wanted to collect revenue from the establishments, and non-Indigenous investors who felt that tribal nations had an unfair advantage in establishing casinos.

The major problem the casino owners faced was how tribal sovereignty could be affected. Tribal leaders questioned the wisdom of opening casinos when the IGRA paved the way for federal regulation of Indian activities on reservations. By having casinos that offered Class III games and parimutuel betting, tribal nations opened themselves to state regulation and inspection, as all casinos built on or off tribal lands have to negotiate with the states for such games. As crime increased on reservations due to either the casinos or feuds that developed around building them, some tribal leaders asked state and federal authorities to help police the reservations, leading to more involvement of the US government in Indigenous affairs outside of gaming. Many tribal leaders argued that by allowing the government to intervene in any of their affairs, tribal nations might lose their sovereignty, which they argued was a more important issue than generating revenue for the nation. Most of these arguments were ignored in favor of the possibility of generating money.

Not all tribal casinos turned out to be successful, either. Those established in rural areas away from major highways or without proper management failed, leaving some tribal nations more destitute than they were before. Some waited until it was too late to build casinos and lost out to competition that inevitably arose when the gambling establishment realized how successful such casinos were. Other tribal nations were so indebted to foreign investors that they made no money for their people at all. With every wildly successful casino like Foxwoods or Paragon came a failure that resulted in very little return for Indigenous peoples.

In addition, the states in which Indian gaming establishments arose began to see the profitability of these ventures and questioned whether they should receive revenue from them, even though as sovereign nations, the casino owners were not obligated to pay state taxes. This led to a number of agreements in the 1990s where the state, for a fee, agreed not to allow other investors to establish other casinos. Again using Foxwoods as an example, the Mashantucket Pequots have paid the state of Connecticut one-quarter of its slot-machine revenue annually. In exchange, the state has agreed not to give permits to other investors seeking to build casinos in the state. Other investors have cried foul, claiming that the state had established unfair practices with the Pequots that does not encourage economic competition. Some but not all other tribal gaming facilities have had to enter such compacts.

Concern over crime prompted the federal government to initiate the Indian Gaming Working Group (IGWG), which set federal policies for tracking and monitoring financial activities surrounding tribal gaming and gave additional powers to federal agents to combat organized crime involvement in tribal casinos. The federal government amended the IGRA in 2006, adding provisions that limited the potential to open new gambling operations and updated restrictions on existing casinos, including changes in the rules regarding state-tribal negotiations. Tribal representatives had a mixed reaction to the amendment, and many felt that amendments to the IGRA posed a threat to the sovereignty of tribal operations as they gave communities and states more power to oppose casino operation and establishment. Later in 2006, objections to proposed restrictions led to additional amendments to the gaming regulations set to go into effect in early 2008.

Applications from Indigenous groups for recognition as tribal nations by the federal government flooded the BIA following the Seminole decision. According to BIA data, between 1979 and 2020, more than seventy such applications were approved. Non-Indigenous investors like Donald Trump questioned the legitimacy of those groups and protested that they should not be recognized as tribes simply for the sake of creating casinos.

Because of the requirement that federally recognized tribes build and operate gaming facilities on land over which they have jurisdiction, what constitutes “Indian lands” has come under dispute as well. In March 2020 the Department of the Interior, under then president Donald Trump, drafted new guidance on how tribal nations could place land in trust that treated tribal nations not recognized until after 1934 differently than those with status in 1934; a federal judge asserted the change would complicate the process for tribes like the Mashpee Wampanoags, who received recognition in 2007. Soon afterward, the Trump administration used the 2009 Supreme Court decision Carcieri v. Salazar to remove the Mashpee Wampanoag reservation in southern Massachusetts from trust, marking the first such disestablishment in decades. At the time the Mashpee Wampanoags were seeking to build a casino not far from Rhode Island, where two casinos with Trump ties were already in operation.

The coronavirus disease 2019 (COVID-19) pandemic that raged throughout the world in 2020 brought the United States' five hundred tribal casinos to a standstill for many months. Tribal gaming establishments were among the first to close and the last to reopen. During that time, many attempted to continue paying furloughed workers. The federal government at first did not include tribal nations with gaming operations within its economic relief package but later allowed those with fewer than five hundred employees to apply for the first-come-first-served Payroll Protection Program (PPP) funds. Hundreds of thousands of jobs were lost, and the industry saw a 20 percent drop in revenues in 2020, the first major interruption in nearly two decades of steady growth. The casinos' losses reduced funding for basic services, such as health care and public safety operations, on many reservations and raised questions about the long-term viability of the industry and economic sustainability for tribal governments.

In response to those challenges, many tribal governments diversified their economies, turning to non-gambling business opportunities in areas such as consulting, real estate and retail development, franchising, cannabis dispensaries, and more.

Nonetheless, others invested heavily in gaming expansion, from new offerings to new construction projects. The industry credited its adoption of stringent health protocols as part of the resurgence it saw as pandemic restrictions waned, and by fiscal year 2022, tribal gaming revenues had reached a record high of $40.9 billion. Subsequently, cybersecurity and data protection, inflation, and labor shortages emerged as significant challenges to the industry.

The issue of sovereignty resurfaced in court as well. In the 2022 case Ysleta del Sur Pueblo v. Texas, the Supreme Court ruled that gaming activities banned under state law (such as bingo in Texas) also apply to tribal gaming operations within that state, but also that the tribal government can regulate any state-allowed gaming activities within its jurisdiction. This clarified how IGRA should be applied and upheld tribal sovereignty.

Tribal Casinos Today

Tribal casinos continue to contribute to place-based economic development. Tribal casinos have been found to improve the social and economic welfare for both Indigenous and non-Indigenous populations but also to exacerbate tensions and inequities within and among tribal communities, particularly by incentivizing disenrollments. Some critics of tribal gaming fear that over-reliance on gaming actually undermines tribal economies. Due to the financial gains associated with casinos, many states have created or considered legislation to create their own gaming establishments in order to generate direct revenue that the state might otherwise lose to tribal gaming operations.

Sovereignty proponents consider the preservation of culture a major concern surrounding Indian gaming. Opponents claim that the destruction of the land, as well as the encroachment of non-Indigenous cultures, has permanently altered the character of American Indian nations. Nations such as the Mashantucket Pequots have made efforts to record their history using tribal casino profits, so that one side effect of the casinos is that the successful ones are able to preserve their history, if not their culture.

Following the pandemic, online and sports betting enjoyed a boom across the country, taking the intertwined debates over gambling and tribal casinos in new directions as well. For instance, between 2018 and November 2023, more than half of the US states had legalized online sports betting. Many tribal gaming operators, such as the Seminoles, sought to expand into those areas as well. These efforts met with opposition over the potential for off-reservation online gaming and for certain kinds of gaming being offered by tribes that states otherwise prohibit. In 2024 the BIA updated rules that allow tribal nations to negotiate for statewide online gaming agreements as part of state compacts.

These essays and any opinions, information or representations contained therein are the creation of the particular author and do not necessarily reflect the opinion of EBSCO Information Services.

Bibliography

Ackerman, William V., and Rick L. Bunch. “A Comparative Analysis of Indian Gaming in the United States.” American Indian Quarterly, vol. 36, no. 1, 2012, pp. 50–74. Academic Search Complete. Accessed 21 Feb. 2014.

“BIA Publishes Final Rule for Section 293 Class III Tribal-State Gaming Compacts.” Indian Gaming Association, 25 Feb. 2024, indiangaming.org/nigc-publishes-final-rule-to-amend-fee-calculation-regulations-2/. Accessed 8 May 2024.

Conner, Thaddieus W., and William A. Taggart. “Assessing the Impact of Indian Gaming on American Indian Nations: Is the House Winning?” Social Science Quarterly, vol. 94, no. 5, 2013, pp. 1016–44. Academic Search Complete. Accessed 25 Nov. 2015.

Darian-Smith, Eve. New Capitalists: Law, Politics, and Identity surrounding Casino Gaming on Native American Land. Wadsworth, 2003.

Doshi, Sahir, et al. “The COVID-19 Response in Indian Country: A Federal Failure.” Center for American Progress, 18 June 2020, www.americanprogress.org/issues/green/reports/2020/06/18/486480/covid-19-response-indian-country. Accessed 26 Oct. 2020. ‌

Erickson, Camille. “What’s behind Lobbyist Attempts to Block Casinos on Indigenous Land?” OpenSecrets News, 22 May 2019, www.opensecrets.org/news/2019/05/whats-behind-lobbyist-attempts-to-block-casinos-on-native-land. Accessed 29 Oct. 2020.‌

Gonzales, Angela A., et al. “What Does a Casino Mean to a Tribe? Assessing the Impact of Casino Development on Indian Reservations in Arizona and New Mexico.” Social Science Journal, vol. 44, no. 3, 2007, pp. 405–19.

Haigh, Susan. “Casinos and Consulting? Pandemic Spurs Tribes to Diversify.” Boston.com, 27 Feb. 2023, www.boston.com/news/business/2023/02/27/casinos-and-consulting-pandemic-spurs-tribes-to-diversify/. Accessed 8 May 2024.

Harmon, Alexandra. “Gambling Money.” Rich Indians: Native People and the Problem of Wealth in American History. U of North Carolina P, 2010, pp. 249–80.

Haslett, Cheyenne, and Laura Romero. “For Tribes, Casinos Fund What the Government Doesn’t. Now, They’re Closed.” ABC News, 29 Apr. 2020, abcnews.go.com/Politics/tribes-casinos-fund-government-doesnt-now-closed/story?id=70371212. Accessed 29 Oct. 2020. ‌

Hick, Carter W. “The Indian Gaming Regulatory Act: Why Tribes Can Build Casinos off the Reservation.” Gaming Law Review, vol. 10, no. 2, Apr. 2006, pp. 110–22. Academic Search Complete. Accessed 10 Aug. 2008.

Maher, Savannah. “Tribal Casinos Rebound after Pandemic Closures.” Marketplace, 11 Aug. 2022, www.marketplace.org/2022/08/11/the-tribal-gaming-industry-is-bouncing-back-after-pandemic-closures/. Accessed 8 May 2024.

Rand, Kathryn R. L., and Steven Andrew Light. Indian Gaming Law and Policy. 2nd ed., UP of Kansas, 2014.

Romero, Simon, and Jack Healy. “Tribal Nations Face Most Severe Crisis in Decades as the Coronavirus Closes Casinos.” The New York Times, 11 May 2020, www.nytimes.com/2020/05/11/us/coronavirus-native-americans-indian-country.html. Accessed 29 Oct. 2020. ‌

Rose, I. Nelson. “Gambling and the Law—Pivotal Dates.” Frontline, WGBH Educational Foundation, www.pbs.org/wgbh/pages/frontline/shows/gamble/etc/cron.html. Accessed 27 Oct. 2020. ‌

Sayre, Katherine. “Tribal Gambling Could Expand under New Federal Rules.” The Wall Street Journal, 5 Mar. 2023, www.wsj.com/articles/tribal-gambling-could-expand-under-new-federal-rules-7ecf1c41. Accessed 8 May 2024.

Schaap, James I. “The Growth of the Native American Gaming Industry: What Has the Past Provided, and What Does the Future Hold?” American Indian Quarterly, vol. 34, no. 3, 2010, pp. 365–89. Academic Search Complete. Accessed 19 Dec. 2012.

Simermeyer, E. Sequoyah, and Jeannie Hovland. Annual Report FY 2023: Effective and Efficient. National Indian Gaming Commission, www.nigc.gov/images/uploads/FY23‗Annual‗Report‗Final‗022024.pdf. Accessed 8 May 2024.

Spilde, Katherine, and Jonathan B. Taylor. “Economic Evidence on the Effects of the Indian Gaming Regulatory Act on Indians and Non-Indians.” UNLV Gaming Research & Review Journal, vol. 17, no. 1, 2013, pp. 13–30. Academic Search Complete. Accessed 21 Feb. 2014.