Recently, Arizona and Connecticut came to agreements with the states’ Indian tribes. The agreements allow the tribes to expand their offerings and add sports betting. They also permit the states to authorize other entities to conduct sports betting. The tribes appear to believe they received a fair trade-off in the agreements.
Until these new compacts were signed, the tribes had an exclusive on gaming in Arizona and Connecticut. They paid for exclusivity. In Connecticut, the Mashantucket Pequot and Mohegan Tribes have paid 25 percent of slot revenue for the privilege of being the exclusive operators of slot machines in the state. Since 1993, that has amounted to more than $8 billion. In Arizona, the tribes have paid the state about $1.5 billion in the last two decades.
In Florida and New York, the tribes have also paid for the same privilege. But the states have not always honored the agreement and have authorized other forms of gaming. Tribes in both states have suspended payments to state and local governments, claiming that legalizing those other forms violated the compacts. Both states are interested in offering sports betting, so governors Ron DeSantis and Andrew Cuomo are attempting to renegotiate the compacts. The tribes are at least partially blocking the path. The issues are complicated; Native tribes are not subject to state laws in the same way as other residents of state.
The Americas were not uninhabited when European explorers and settlers arrived. The estimates of the number of indigenous people living here at the time of contact vary greatly. But it’s clear that millions of people were living in North and South America when Europeans began their colonizing. Over the course of several centuries, the Europeans overwhelmed the natives, took possession of the land and relocated the original inhabitants to less desirable locations. Since the establishment of the federal government, it has exercised legal authority over tribal lands. The federal government’s legal authority is based on the original treaties and subsequent federal legislation. The individual states have no authority over the tribes except as granted by federal law.
The federal Indian Gaming Regulatory Act of 1988 governs Indian gaming. IGRA requires a tribe to negotiate a gaming compact with the state before it can conduct gaming activities on its reservation. It also requires the state to negotiate in “good faith.” A flat no from a state is not an option. Compacts list the approved games, and that list depends on the types of gambling that exists in the state. The act evolved from a Supreme Court decision in California v. Cabazon Band of Mission Indians. The court ruled that the Cabazon could conduct any gambling it chose, as California permitted a lottery and thus did not forbid gambling. According to the court, California did not have the right to limit or regulate gaming on the Cabazon reservation. The Cabazon decision led to IGRA, which sought to limit the scope of the gambling allowed to a tribe. It stated a tribe could operate any gaming that was legal and regulated in the state. There are 574 recognized tribes in the United States, 240 of them operate casinos.
Except for Wisconsin, states have resisted Indian gaming and attempted to limit it as much as possible. Maine is still resisting more than 30 years after the act passed Congress. Traditionally, only fishing and hunting on tribal land have been outside a state’s authority. IGRA opened an entirely new category of activities and states were not pleased. The first compact in Connecticut permitted only table games. Connecticut argued those were the only games that met the criteria of the act. Later, the Mashantucket Pequot went back to the state and asked for slot machines. This time, the tribe offered to hand over 25 percent of the slot revenue. Connecticut was eager to get some of the tribe’s gaming revenues and was willing to grant the tribe an exclusive for the money it could not obtain through taxation.
States cannot tax Indian tribes; in the 1970s the United States Supreme Court ruled that states do not have the authority to tax Natives on their reservations. Compacts can and do include some form of revenue sharing, but it is never called a tax. As Indian gaming has expanded and its potential for large revenue streams has become apparent, states have been eager to renegotiate compacts and attempt to gain a larger share of the proceeds, as Arnold Schwarzenegger did in California. Sports betting has provided a double incentive for states to reenter discussions with tribes. It offers a chance to increase the state’s share of Indian gaming and it presents an opportunity to allow gambling outside of tribal gaming.
In some instances, tribes are willing to agree to an expansion outside of their control; in others, they are not. Arizona and Connecticut reached compromises, but they took a long time. Washington, Oklahoma, and New York have not been able to find an acceptable middle ground. In those states, the tribes believe the compacts give them an exclusive right to all forms of gaming, except horse racing and lottery. Florida is still in play; the president of the Florida Senate believes his state is close to an agreement with the Seminole Tribe. It would allow for sports betting and some other forms of non-Indian gaming in the state.
For states with Indian casinos, expanding into sports gambling has proven to be a challenge. The tribes believe they have earned the right to sit at the table in all gambling discussions. And with long histories of broken treaties, they are insisting that everyone comply with the tribal-state compacts.
