Indian Gaming Law Update 2009

written by I. Nelson Rose

© Copyright 2009, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose,

Indian gaming is a strange mix of often conflicting pronouncements from Congress, federal administrative agencies, courts and tribal councils, and sometimes from state governors, legislatures, courts and regulators.

In three years of studying law at Harvard Law School in the late 1970s, I never once heard a word about Indian law, let alone tribal gaming. Today, there are not only conferences – Harvard held one in April 2009 – but books, courses and institutes. In 2001, I wrote the chapter on Indian Gaming for the first casebook on legal gambling, Gaming Law: Cases and Materials. The next year, Professors Kathryn R.L. Rand and Steven Andrew Light founded the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota; the first university-affiliated institute in the U.S. dedicated to the study of Indian gaming.

Indian casinos may soon overtake commercial casinos. Total gaming revenues for tribes appear to have been about $26 billion in 2007, while the American Gaming Association reported the 12 commercial casino states generated approximately $34 billion. And Indian gaming is about to get a boost from changes in the law, or, more particularly, from those who make the laws.
The Obama Administration – Change Tribes Can Believe In

The most dramatic change is the result of the election of President Barack Obama, and the large majorities Democrats now hold in both houses of Congress. The voters’ rejection of President George W. Bush and conservative Republicans will decide future battles between the supporters of tribal gaming, who are pushing for expansion, and their opponents.

The first battleground over Indian gaming is often the Department of Interior. As Indian gaming lawyer Dennis J. Whittlesey put it, “The just-departed Interior Secretary Dirk Kempthorne will not be missed in any corner of Indian Country, other than by those who are opposed to gaming in any form.”

Kempthorne had been viewed as only somewhat hostile when he had been governor of Idaho. When Bush put him in charge of Interior, which includes the Bureau of Indian Affairs (“BIA”), Kempthorne turned into an unyielding “anti.” He was so anti-gaming that he would change the rules when it looked like he would have to approve an expansion.

The best examples are the new rules he put into place on “after-acquired land” and tribal-state compacts.

Under his predecessor, Gale Norton, the Bush Administration told Congress in July 2004 that there would be no blanket policy on off-reservation gaming. Kempthorne changed that, by issuing a “Guidance Memorandum,” which does not require hearings or the public’s input. Now, land acquired after the Indian Gaming Regulatory Act (“IGRA”) became law can be used for Class III gaming only if it was within commuting distance from a tribe’s current location. Kempthorne’s new commuting rule, not coincidentally, killed the St. Regis Mohawk Tribe’s proposed Catskills casino, after it had won approvals from virtually every other state and federal official.

Kempthorne’s Department changed another policy in 2005, by announcing that it would no longer approve any tribal-state compact unless the after-acquired land had first been put into trust. Again, not coincidentally, the new policy prevented another off-reservation casino, this one proposed by the Confederated Tribes of Warm Springs and supported by Democratic Oregon Governor Ted Kulongoski.

Obama’s new Secretary of the Interior is Colorado Senator Ken Salazar, a self-proclaimed political moderate. But there are bound to be significant changes, starting with Kempthorne’s staunch anti-gaming policies. Salazar could go much further. He told the Senate he will examine the process for recognizing tribes. During the Bush years, 13 of the 15 tribes seeking federal recognition were denied; the process takes years.

Obama acted quickly to appoint the head of the Bureau of Indian Affairs, a position the Bush Administration left vacant for years. Larry EchoHawk, a Bringham Young University law professor, opposed Indian gaming when he was Attorney General of Idaho, but he has mended his fences with Idaho’s gaming tribes.

Obama is going to give Indian gaming an even bigger boost. First Lady Michelle Obama made it clear during a speech to the Interior Department that the President is going to fulfill his promise to appoint a senior White House adviser for tribal issues. She said that American Indians have a “wonderful partner in the White House right now.”

Obama will probably also be tilting the playing field slightly more toward tribes in the long run, through his power to appoint federal judges. In practice, the senior Senator from the President’s party decides who gets picked. Where Bush looked to conservative Republican members of the U.S. Senate for recommendations, Obama will be following the advice of liberal Democrats. The correlation is by no means perfect, but advocates of legal gaming face worse odds when they have to go before right-wing, religious judges, who are personally opposed to gambling.

Another federal agency about to change is the National Indian Gaming Commission (“NIGC”). It is unfair to call outgoing Chairman Philip Hogen an opponent of tribal gaming. In early February, 2009, for example, he ruled in favor of the Seneca Nation in its fight to keep open its casino in downtown Buffalo.

But Hogen alienated many tribes and their suppliers by fighting to establish clear distinctions between Class II and Class III gaming devices. Class II machines are technically electronic aids for games like bingo, and Hogen feels they should look and play differently from Class III slot machines. Many current Class II games are nearly indistinguishable from Class III machines. Hogen’s proposals would slow down the Class II devices and force players to press buttons to daub electronic bingo cards and to declare winning patterns. This would be a severe financial blow to tribes stuck in states without compacts, or those who don’t want to be subjected to state regulations and revenue sharing.

Hogen is staying on until his replacement is appointed. But, given Obama’s support for issues impacting Indian’s welfare, it would not be surprising if he soon appointed a new NIGC Chair who is even more friendly toward tribes, and perhaps less willing to listen to the anti-gaming federal Department of Justice (“DOJ”).
IGRA, the Courts and Congress

The IGRA has created other issues that continue to be fought in federal agencies, Congress and the courts. The U.S. Supreme Court abdicated its responsibility by declaring part of IGRA unconstitutional without giving any guidance as to what happens next. In Seminole Tribe of Florida v. Florida,1 the U.S. Supreme Court ruled that the main, and in fact only, remedy given tribes in IGRA when a state refuses to negotiate violates the inherent right of states to be free from suits, unless they consent. But the Court explicitly refused to rule on whether other remedies are available,2 or even whether IGRA is now entirely unconstitutional.

Prior Secretaries of Interior have felt they had the power to make regulations for tribal casinos over the objection of the states. The final Regulations were published and took effect on May 12, 1999.3 Courts are divided on whether IGRA gave the Secretary this power, and whether these particular regulations are valid. In the original Seminole case, the 11th Circuit declared, in dicta, that the Secretary did have this power.4 Yet, even prior to the Supreme Court’s decision in Seminole, the 9th Circuit had already discussed and dismissed the notion that the states can be bypassed by turning “the Secretary of the Interior into a federal czar…”5 The Procedure Regulations were firmly rejected by the 5th Circuit in 2007 in a suit brought by the state of Texas.6

It is doubtful whether new Secretary Salazar will push the position that he can make regulations for tribal casinos over the express opposition of state governors and legislators. Not only does this raise issues of states’ rights, an emotional issue for conservatives and Republicans, especially when tied to the question of gambling, it would bring him into direct conflict with the Democratic majority leader of the U.S. Senate, Harry Reid, from Nevada.

Congress is going to be faced, again, with calls to amend the IGRA. Although no one is completely satisfied with the present federal statute, gaming tribes feel that opening IGRA to amendment risks undoing all that Indian gaming has accomplished over the last 20 years. And why chance it? Once the depression/ recession is over, this will be a very good time indeed for Indian gaming.
Other Court Cases

Land Into Trust

Gaming has brought not only money and millions of visitors onto Indian lands. It has also brought sometimes unwanted attention to unresolved issues of Indian law. Ironically, the most important Indian gaming case decided in recent years by the U.S. Supreme Court technically did not involve Indian gaming. The dispute was over taking land into trust. Unfortunately, as often seems to happen with Supreme Court opinions, the February 24, 2009 decision by Justice Clarence Thomas raised as many new questions as it answered.

In 1934 Congress passed the Indian Reorganization Act (“IRA”), which allows the BIA to take land into trust without the approval of the governor of the state. The IGRA, on the other hand, clearly gives the governor veto power over new land for gaming for a tribe that already has a reservation.

In 1991, the Narragansetts bought a 31-acre parcel in Charlestown, Rhode Island; in 1998, the Secretary of the Interior agreed to take it into trust. Governor Donald L. Carcieri filed suit.

There were major constitutional issues, but the legal challenge ultimately revolved around a single word: “now.” The IRA defines “Indian” as “all persons of Indian descent who are members of any recognized Indian tribe now under Federal jurisdiction.” In a 6-3 decision, the Court ruled that Congress meant what the sentence literally said, that the BIA can take land into trust regardless of state laws only for tribes that were recognized in 1934. So, the IRA does not apply, because the Narragansetts were not federally recognized as a tribe when the BIA was enacted.

The Court therefore avoided having to decide other questions, such as whether the BIA should be given great deference in its decisions about taking land into trust. Since the statute’s language was supposedly clear on its face, there was no reason to look to the BIA for guidance, as the lower Court had done. The issue is important for Indian gaming, because the BIA had said it could rule on whether the land should be taken into trust without examining the requirements of the IGRA. The tribe had said that it had no intention of opening a casino. But tribes have been known to change their minds.

A win for the tribe would have inspired expansions in a dozen states. Instead, promoters of some Indian gaming projects are facing additional new obstacles. Tribes that were recognized in 1934 or have special acts of Congress are not affected. But any tribe whose federal status had not been clearly established by 1934, including those newly recognized by the BIA’s administrative process, now faces challenges by opponents for any land taken into trust. These include the Cowlitz Tribe in Washington and the Ione Band of Miwok Indians in California.

The Jamul Indian Village, for example, was not recognized by the Department of Interior until 1981, and its land was taken into trust for a reservation through administrative actions in 1978 and 1982. It is expected that the Supreme Court’s decision will be raised by state and local officials who oppose the Jamul’s plans to open a casino 20 miles east of downtown San Diego.7

The BIA has announced that it is developing new policies to deal with the Supreme Court opinion. But it will be up to the Department of Interior’s Office of the Solicitor to make the final decisions. Hilary Tompkins, a member of the Navajo Nation, was nominated to the position in March, but as of this writing had not yet even be confirmed by the Senate. There is also pressure building for Congress to amend the IRA to include all tribes, no matter when recognized.

Federal Recognition

Of course, federally recognition itself is a contentious issue. Only federally recognized tribes have the right to operate gaming under the IGRA, so determinations by the BIA become matters of economic life and death. The process takes years and then almost always ends up with the BIA rejecting the application, followed almost always by lawsuits, and almost always by courts upholding the BIA’s decision. Politicians and judges sometimes have a jaundiced view of tribal applications. The view of many can be summed up in this quote from Representative Christopher Shays of Connecticut: “Regretfully, Indian recognition is too often not about recognizing true Indian tribes, but it is about Indian gaming and the license to print money.”8

Sovereign Immunity

Disputes surrounding tribal sovereignty, particularly sovereign immunity, continue to swirl. Tribes are often losing in federal and state courts, with decisions finding tribes have accidentally waived their immunity to suits by such acts as agreeing to arbitration.

Even when tribes win, courts often indicate they think the tribes should lose. The U.S. Supreme Court has clearly indicated that it thinks tribal sovereign immunity is a mistake, and that Congress should eliminate it.

Possibly the most dangerous recent case for tribes operating casinos was a decision this year from the Supreme Court of Oklahoma.9 Loyman Cossey, a non-Indian, sued Cherokee Nation Enterprises, L.L.C., in state court for personal injuries he received while he was a customer at the Roland Cherokee Casino. Although the tribe had set up this separate company to run the casino, the Court first ruled the tribe itself was a proper party to the suit. It then went on to hold that the case could proceed in state court, because the casino patron “had not entered into a consensual relationship with the tribe and customer’s presence at the casino did not have a direct impact on the tribe’s political integrity.”

The tribe had agreed to a partial waiver of sovereign immunity in its tribal-state compact, when it signed onto the provision that tort claims may be heard in a “court of competent jurisdiction.” The Court rejected an affidavit from Gov. Brad Henry that he meant tribal courts, not state courts. Instead, the Court held that state courts were the only place the case could be heard, because tribal courts do not have the power to hear any case involving a non-Indian casino customer, unless the compact expressly says so.

The case will probably go up to the U.S. Supreme Court before it goes down for a trial on the merits.

Indispensable Parties

The question of tribal sovereign immunity arises not only when a tribe has been sued, but when it has not. Because tribes normally cannot be sued without their consent, they are usually not named as defendants. Non-Indian defendants then move to dismiss, especially in cases involving compacts, on the grounds that the plaintiffs failed to join indispensable parties, the tribes.

The trend seems to be for courts to let the lawsuits continue, even when it might have some impact on tribal gaming. For example, trial courts had dismissed suits filed by a few tribes challenging California’s calculation of the state cap on slot machines under the 1999 compacts. The federal Ninth Circuit Court of Appeals reversed, even though the other tribes who signed those compacts will not be parties to the suits.10

On the other hand, the state Court of Appeals of Washington ruled that a private casino that also wanted to put in electronic scratch ticket games could not even indirectly attack the state’s tribal compacts, because the tribes could not be joined as defendants.11

Sovereignty, Labor Law and Other Laws?

Sometimes federal and state courts are even changing standards that have existed for years. There used to be general agreement that laws did not apply to tribes, unless the law contained a clear statement that Congress intended the law to apply. But, the Court of Appeals for the District of Columbia Circuit ruled the National Labor Relations Act applies to tribal casinos, because Congress did not specifically exclude tribes.12

The case involved a dispute between two unions anxious to capture the workers at the San Manuel’s Indian Bingo and Casino. The federal government ruled that it was unfair for the tribe to help only one union. But the Court went further, declaring that, at least for federal labor laws, a tribal casino was merely a casino, and the tribe was entitled to no special treatment.

Other courts are looking at this and other precedents. States in particular are attempting to apply their laws to tribes. For example, the Supreme Court of California ruled that the state Fair Political Practices Commission could sue a tribe to force it to comply with the state’s reporting requirements for campaign contributions. The Court held that the U.S. Constitution’s Tenth Amendment and republican government guarantee clause13 gave the State Legislature the power to protect its own sovereignty. It expressly analyzed and questioned the scope of tribal sovereign immunity, and held that alternatives to suing the tribe were inadequate to protect the state’s rights.14

Revenue Sharing and Taxes

Tribes and states continue to fight about regulations, revenue sharing and taxes. The Bay Mills Resort & Casino won an interesting marker collection case, sure to be a precedent in these tough economic times, when the Michigan Court of Appeals ruled that the state’s administrative rules on check-cashing do not apply.15

States and local governments are constantly trying to impose sales and other taxes on suppliers and non-Indian businesses working with tribal casinos. For example, the Mashantucket Pequots have filed suit against the Town of Ledyard to prevent it from imposing its personal property tax on gaming machines leased by Foxwoods from AC Coin.16 And the Ninth Circuit ruled that California could impose a sales tax on construction materials purchased by a non-Indian electrical subcontractor and delivered to the Barona Band’s land for a $75 million casino expansion.17

Class II versus III

The issue of Class II versus Class III gaming devices continues to be fought in courts, with the tribes being nearly universally successful. But it is doubtful the issue will finally be decided by any judge, because making law through lawsuits can never keep up with changes in technology.

The states may try again to get Congress to step into the fight. But tribes have become not only politically powerful, but more politically sophisticated. Tribes now make the argument that if proposed administrative regulations or legislation that affects states can require that there first be consultations with the fifty sovereign states, then why should there not be similar consultations with the separately sovereign tribes, even if there are hundreds of them?

Scope of Gaming

Although disputes over the scope of gaming usually revolve around gaming devices, even card games can become the center of controversy. The Florida Supreme Court ruled that Governor Charlie Crist did not have the power to enter into a compact allowing blackjack and baccarat, but the Seminoles continue to spread the games in their casinos.18 The tribe takes the position that the compact had already been approved by the Secretary of Interior and so was binding.

Interior Secretary versus the States

The mess in Florida and other states is the direct result of the U.S. Supreme Court’s failure to give guidance to states, tribes and the federal government, after it declared part of the IGRA unconstitutional in 1996. Courts are struggling with the question of whether the Secretary of Interior can make Class III gaming regulations when a state refuses to negotiate in good faith.

Someday, soon, either Congress or the U.S. Supreme Court is going to have to determine what happens when a tribe has the right to have Class III gaming, but the state refuses to enter into a compact.

Supporters of tribal gaming are optimistic that the decisions that will be made in these areas in the coming years will be by different lawmakers, administrators and judges than those who had the power to decide the fate of Indian gaming as recently as last year.

© Copyright 2009. Professor I Nelson Rose is recognized as one of the world’s leading experts on gambling law. He is a consultant and expert witness for federal, state and tribal governments and industry. His latest books, Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website,

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I. Nelson Rose

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