August 18, 2023 0
Be it in movies, TV shows, or online, you have probably come across tribal casinos in the United States more than a few times. As a matter of fact, people encounter this type of land-based casino so many times that they rightfully ask: Are all casinos on Indian reservations?
Well, not all. We’re all familiar with the glitz and glamour of Las Vegas and Atlantic City, the epitomes of gambling in America. But outside these two cities, there seems to be a slew of brick-and-mortar casinos simply dubbed tribal casinos. What’s up with that?
In the lines below, we will try to dissect the concept of tribal, or Native American, casinos in the US, when they came about and why, and lay out the main differences between casinos on Indian reservations and their commercial equivalents.
In the United States, the concept of Indian gaming encompasses all gambling enterprises owned by federally recognised Native American tribes that operate on Indian reservations.
These enterprises include a range of business operations: from full-blown casino facilities with slot machine parlours, Las Vegas-style high-stakes gambling, and hotels with varying accommodation capacity to smaller facilities offering bingo, lotteries, and video poker.
Since US federal laws allow a certain level of tribal sovereignty and self-government, tribal casinos are exempted from being regulated by individual states.
To answer the question of Why are casinos on Indian reservations?, we have to go back several decades.
The history of casinos on Indian reservations is closely linked to the case of Russel and Hellen Bryan, a married couple from Minnesota living on a reservation. The story began in 1972 when Itasca County notified the couple that their mobile home was subject to US$147.95 in taxes. The Bryans, both enrolled members of the Minnesota Chippewa Tribe, couldn’t afford to pay the tax and turned for help to a legal aid service.
Following a series of lower court rulings against their favour, in 1976, the case was brought before the Supreme Court. In a landmark case dubbed Bryan v. Itasca County, the Court ruled that a state could not tax any property on Indian land or the people living there.
In the light of the Supreme Court’s ruling, the phenomenon of gambling on Indian reservations got off the ground. For instance, the Seminole tribe in Florida was the first to start an illegal high-stakes bingo operation in 1979.
Despite the authorities’ attempts to shut down this tourist-attracting facility, the Supreme Court once again ruled in favour of the tribe and held that the State had no right to regulate activities on Indian reservations.
However, it wasn’t until 1988 when The Indian Gaming Regulatory Act (IGRA) was passed by Congress, clearing all legislative hurdles for Native American tribes-owned casinos.
Apart from serving as a legal framework for tribes and states to develop tribal gaming, the IGRA also laid the legislative ground to protect gaming as a means of generating revenue for Indian tribes.
The passage of the IGRA has offered ample opportunities for Native tribes to run gambling operations. Still, not all US states have tribal casinos inside their borders and not all tribes engage in gambling. There are two reasons why there are casinos on some Indian reservations and not on others.
For a tribe-run gambling operation to exist, a state needs to have a reservation. States like Illinois, Kentucky, Delaware, Georgia, Maryland, or New Hampshire recognise no tribes; therefore, they have no reservations on their territory. In total, there are 15 US states with no Indian reservations.
The other reason is that a state hasn’t reached a compact with a tribe within its borders. Such is the example of Utah, South Carolina, or Alaska, all of which recognise Native American f tribes but haven’t reached a deal that would allow the tribes to run gambling operations.
It should be noted that a tribal-state compact is needed only if a tribe wishes to offer a type of gambling that is not legal in the state; in that case, it needs approval from the authorities.
A tribal-state compact is like obtaining a gambling licence: you cannot start a gambling operation unless granted formal approval. We explored this in-depth in our blog post about gambling licence and what it means, so check it out for a more detailed explanation about how it works.
Across the United States, there are two typical kinds of casinos: Indian reservations and commercial casinos. Of course, the main difference between those two is the location; Indian casinos can be located only on Indian reservations, while commercial casinos, well, you can find them on virtually any other property.
But what are some other distinctions between these two types of casinos?
While commercial land-based casinos must adhere to all state or federal law, their Native American-run counterparts do not. Remember the 1976 Supreme Court decision that ruled states could not regulate activities on Indian reservations or tax their residents?
The said ruling was bolstered further by a 1987 decision that held that a state could not regulate casino activities on Native American land as long as the type of gambling was already legal in the state. As a result, if a tribe wants to start a gambling operation and not pay a single penny in state or federal taxes, it needs to make sure that it sticks to legal types of gambling.
As a rule of thumb, if you are interested in what a tribal casino has to offer in terms of game variety, you can simply check the type of gambling that’s legal in a state you’re visiting. In most cases, reservation casinos will offer the same type of games as their commercial competitors.
As a result, Indian casinos typically offer slots and video pokers; in some cases, you will also be able to enjoy video versions of table games.
In other cases, however, tribes will try to hash out a compact with the state, seeking to expand the offering. In this case, you might be lucky to enjoy a game of poker, even if the state limits the gambling activities of its residents to, say, bingo.
To explain the difference between video poker machines found at Indian casinos and commercial casinos, we’re going to need a brief history lesson.
The 1988 IGRA act established three classes of gaming.
A tribal-state compact needs to be forged for a tribal casino to offer Class III gaming. Sometimes, however, the state will refuse to allow a tribe to run Class III gaming operations, and the tribe will have to stick to Class II slot machines, which have more in common with bingo than slots as you know them.
We compiled a list and detailed the most common types of casino games in a separate blog post that can help you delve deeper into various types of gambling.
Even if a commercial casino is located near a tribal venue, the payouts will not necessarily be the same. What’s more, different reservation casinos may feature different payouts. Sometimes, this is due to the rules of the game (different gaming classes come with different rules), or it can be decided at the casino’s discretion.
For instance, one casino may instruct its dealers to hit soft 17 in blackjack, while another may have the dealer stand on it. Paytables in video poker or slot machines may be different, too; finally, some casinos will opt for Class II machines, while others may spread Class III options, but with a lower payout percentage.
As more and more states are opening up to iGaming, tribal casinos are seizing this opportunity and trying to find their place in the online world. Take a look at our handy post that dives deeper into distinctions between land-based vs online casinos and see what sets them apart.
We’ve already explained that only recognised Native American tribes can be owners of casinos on Indian reservations. But they still need someone to operate them, right?
The tribes themselves operate quite a few casinos. However, there are equally as many casinos that are run by professional casino operators. And although the casino operator takes a cut of the profits, a casino operated professionally can generate much more revenue.
For instance, professional operators with a chain of casinos can offer highly developed loyalty schemes to their members. For a tribal casino to set up such a scheme is not an easy task, but for a major operator, adding a couple of thousand new members from a tribal casino for a big operator, on the other hand, is a piece of cake.
There are numerous examples of major operators being invited to run tribal casinos. For example, Caesars Entertainment-owned Harrah’s operates two Native American casinos in North Carolina, both owned by the Eastern Band of Cherokee Indians.
As you can see, thinking that tribal casinos are operated exclusively by Native American tribes constitutes a misconception. Pore over the most common gambling myths and misconceptions in our separate guide and check your common knowledge about casinos.
Yes, casinos have to be on Indian reservations if owned by Native American tribes. Seeking to set up a casino business anywhere else would defeat the purpose of the autonomy held by Native American tribes over reservations.
Even though Indian casinos are limited to reservations, this notion has many upsides. One of them is the fact that they are exempted from taxes and do not fall under federal authority, giving them ample opportunity to thrive.
Gambling on Indian reservations has reaped huge success in the past all around the US but believe it or not, the Indian gaming industry remains an issue that both courts and the public are discussing every day. Many states are still not satisfied with tribal-state compacts, while casinos on Indian reservations continue to be a cause of concern from many tribe members.
Critics of Indian casinos often cite concerns about the impact of these facilities on local infrastructure and social relations. On the other hand, advocates of tribal casinos argue that the positive effects of gambling operations on Indian reservations outweigh any potential negative outcomes.
The Indian gaming industry is changing the public image of Native American people and their self-perception but still isn’t going anywhere.
Right now, the future of casinos on Indian reservations seems more than bright. At the beginning of 2020, there were 525 federally-recognised tribal casinos in 29 states, and that number is only going up.
As you can see, Native American tribes had gone a long way before they were finally granted sovereignty on reservations and offered an opportunity to capitalise on gambling. And despite having been granted immunity from state laws, a number of barriers still exist when it comes to starting a tribal casino, mainly if the type of gambling isn’t regulated in the state.
While they bring economic prosperity for some tribe members, numerous others have seen zero benefits from them, apart from the altered image of Native Americans in the public eye and jeopardised infrastructure and environment on Indian lands.
We hope we managed to clear up your doubts and answer your questions about casinos on Indian reservations in as much detail as possible.
Let us know in the Forum if there’s a topic you’d like us to explore, and we’ll get right down to it in one of our next blog posts.