#149 © Copyright 2008, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose, www.GamblingAndTheLaw.com

It was 20 years ago, almost to the day, that the Indian Gaming Regulatory Act (“IGRA”), was signed into law.

Some gaming was being conducted on Indian land at the time, mostly high-stakes bingo. But it is fair to say that IGRA gave birth to a large new industry.

And more than a few controversies.

These included the question of the scope of gaming. For anything other than social and traditional games, Congress limited tribes to forms of gambling permitted by the state where the tribe was located. For poker and traditional paper bingo, this caused little trouble. But the fights over gaming devices and casino banking games continue to this day.

Congress also created complicated rules for “after-acquired land” (after the date IGRA became law). Tribal reservations were usually remote. Entrepreneurs tried to create Indian casinos near, or in the middle of, large cities. This led to charges of “reservation shopping” and “tribe shopping.”

The rules in IGRA are actually fairly clear: A tribe with an existing reservation could only get new land if it first met a two-part test. This was actually a one-part test, since the first question, whether getting a casino would be good for a tribe, was always answered, “of course.” But the second test, whether it would be good for the community, gave local governments near-veto power.

And then there was the real veto power given to state governors to kill any land transfer they did not like. This led to inevitable court challenges on whether Congress could delegate this power to governors (the answer is yes, it can).

Opponents of Indian gaming used every stalling technique they could to prevent after-acquired land being used for gaming. The ultimate opponent, Dirk Kempthorne, the Secretary of the Interior, even created a new test, not found anywhere in IGRA: tribes could only get after-acquired land for gaming that was in commuting distance of the tribes’ existing reservation. The theory was apparently that tribes should only be interested in opening these fantastically profitable businesses if they could travel to find work there.

The Secretary created another extra-legal solution to a perceived problem not covered by IGRA: revenue sharing. After the spectacular successes of the first few tribal casinos, state politicians discovered that Indian gaming could help them balance their budgets. It became politically impossible for a governor to sign a compact without demanding, and getting, a share of the gaming revenue. The fact that this clearly violated both the letter and spirit of IGRA was irrelevant: the tribes and states both wanted to make these deals. So the Secretary created another test, requiring that states give tribes some sort of unique economic benefit, usually a regional monopoly, in return for revenue sharing.

The idea that tribes could have a monopoly in a state on casino gaming led to legal challenges by competing racetracks and cardrooms. Their claims were based on the history of IGRA: Congress wrote this law to codify the U.S. Supreme Court’s decision in the Cabazon case. There the Court held that the public policy of the state determined whether tribes in that state could have gaming. The test was to see what forms of gaming the state already permitted.

Compacts in California and elsewhere turned this test on its head. Instead of tribes having the right to operate forms of gaming existing in the state, tribes were given the power to be the only ones to offer slot machines and banking card games. The Ninth Circuit had to rewrite the history of IGRA to conclude that tribes could offer permitted games, even if they were the only ones who were so permitted.

But it was the U.S. Supreme Court that did the greatest damage to IGRA. In the Seminole case, it ruled one small, but significant, part of IGRA to be unconstitutional. Congress knew that most states would not even want to talk with their tribes about casinos. So Congress created a new cause of action: A tribe could sue a state in federal court if the state refused to negotiate in good faith.

But the Supreme Court ruled that states could not be sued without their consent.

The Court then left everyone hanging. Even though it has the responsibility to give guidance to lower courts, states and tribes, the Justices refused to discuss what is supposed to happen next. Are tribes left with rights but no remedy? Or is the Secretary of Interior supposed to become a super-czar of gaming and issue regulations when a state refuses to negotiate with its tribes?

What the states and tribes negotiate is a compact. This led to another set of lawsuits. It is impossible for 120 members of a state legislature to negotiate with even a single tribe. Yet IGRA says it is the state, not the governor, which enters into the compact. In Florida and half a dozen other states, legislators have successfully sued governors who thought they could sign compacts without the O.K. of the states’ lawmakers.

IGRA created an explosion in Class II gaming devices. Even in 1988, there were video and electronic aids to bingo and paper pull-tabs. But IGRA gave inventors great incentives to make bingo become as close to a slot machine as is legally possible.

The disputes have become esoteric: How many times does a player have to press a “Daub” button for the game to be bingo? Can the device show winning bingo patterns in the form of reels and slot machine symbols? How fast can the numbered balls, or their electronic equivalents, be drawn?

IGRA’s greatest contribution may be that it unexpectedly changed the laws of other nations. Once player-friendly Class II video bingo and pull-tab machines had been developed for tribal bingo halls, it was natural that charity operators and racetracks would also want the devices.

But bingo is a worldwide phenomenon. I discussed the issue of bingo machines with the Finance Minister of Slovenia and may testify about “What is bingo” on Guam.

“Class II” casinos have been opened in South America. The term has become a shorthand for gaming devices where players play against each other on machines that are often otherwise indistinguishable from slot machines.

Mexico, for example, has a large, thriving Class II industry. It just doesn’t have a Class I or Class III, because, of course, it does not have IGRA.

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© Copyright 2008. Professor I Nelson Rose is recognized as one of the world’s leading authorities on gambling law and is a consultant and expert witness for governments and industry. His latest books, Internet Gaming Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.