Legal Gambling, Tribes and the Courts

written by I. Nelson Rose

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

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.
Land into Trust

The most important Indian gaming case pending before the U.S. Supreme Court technically does not involve Indian gaming. In 1934 Congress passed the Indian Reorganization Act (“IRA”), which allows the Bureau of Indian Affairs (“BIA”) to take land into trust without the approval of the governor of the state. The Indian Gaming Regulatory Act (“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.

The U.S. Supreme Court will decide many legal issues. The first is whether the IRA even applies, because the Narragansetts were not federally recognized as a tribe when the BIA was enacted. There are major constitutional issues, but the first legal challenge revolves 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.” Did Congress mean what the sentence literally says, that the BIA can take land into trust regardless of state laws only for tribes that were recognized in 1934?

Other issues are special to this case, such as the question of whether the Rhode Island Indian Claims Settlement Act repealed the BIA’s power under the IRA.

But the big question is whether the BIA should be given great deference in its decisions about taking land into trust, especially its conclusion that it need not look at IGRA. The tribe said that it had no intention of opening a casino. But tribes have been known to change their minds.

A win for the tribe could inspire expansions in a dozen states.
Federal Recognition

Only federally recognized tribes fall 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. The view of many courts can be summed up in this quote from a recent federal judge in Connecticut: As Representative Christopher Shays put it: “Regretfully, Indian recognition is too often not about recognizing true Indian tribes, but it is about Indian gaming and the license to print money.”
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. 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.
Tribes as 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.

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.
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.

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 precedent. States in particular are attempting to apply their laws to tribes. The Court in this case based its ruling in part on a case from California, which held that a state law dealing with political donations applies to tribes.
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.

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. 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.
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. 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.

© 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,

Contact Me

If you’d like to contact me, scan the QR code or click the link below to view my digital business card.

I. Nelson Rose

Related Posts

Legal Jeopardy in Sports Gambling: Insights from SERMAPod

Legal Jeopardy in Sports Gambling: Insights from SERMAPod

I recently had the privilege of being a guest on the SERMAPod, the podcast for the Sports and Entertainment Risk Management Alliance, hosted by Rich Lenov, founder and CEO of SERMA. During the episode, we discussed the complex world of sports gambling, focusing on...

Casinos Dragged into Ohtani Sports Betting Scandal

Casinos Dragged into Ohtani Sports Betting Scandal

By the time you read this, Scott Sibella will probably have been sentenced in federal court.   Sibella had been president and chief operating officer of the MGM Grand casino in Las Vegas.  The sentencing hearing, set for May 8th, is the result of a plea agreement, in...

Pete Rose Wishes He Had a Translator

Pete Rose Wishes He Had a Translator

Just because you have made yourself into a national embarrassment does not mean you cannot sink any lower. No, I’m not talking about that other guy, the wannabe dictator with the superpower of having absolutely no sense of shame....