Native American Gambling: Industry Facts and Questions


Posted: April 28, 2021

Updated: April 28, 2021

  • Native American gambling refers to sovereign gambling activities within tribal reservations
  • How do gambling laws affect Indian casinos and gambling operators?
  • Are they really creating revenue?

What is Native American Gambling? Does it help Native American communities economically? How does it connect to American gambling laws? These questions often come up when we encounter gambling in the United States. This type of gambling has an interesting route and importance in the US gambling and casino industry, considering the general strict regulations across the country. Find out the connection between casinos and Native American communities today. 

Gambling in the States, specifically online gambling in the US is amongst the strictest and most complicated issues. As laws vary by state, Native American communities mean an exception in many cases. Native American gambling comprises casinos, such as. Ignition Casino, bingo halls, and other gambling operations on Indian reservations or other tribal lands in the United States. Because these areas have tribal sovereignty, states have limited ability to forbid gambling there, as codified by the Indian Gaming Regulatory Act of 1988. We break down the history, effect on Native communities economically, and the overall impact on online gambling in the US. 

What does the Indian Gaming Regulatory Act say?

In 1988 Congress passed the Indian Gaming Regulatory Act which kept tribal sovereignty to create casino-like halls. However, the states and Natives must be in Tribal-State compacts and the federal government has the power to regulate the gaming. These compacts have been used by state officials to confiscate Native casino revenue which serves as a “special” tax on Native reservations. Essentially, the tribes still have “exclusive right” to all classes of gaming except when states do not accept that class or it clashes with federal law (Source: Wikipedia). To see an example, we covered the recent compact between the Seminole Tribe and the state of Florida.

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According to the American Economic Association, since the IGRA, gaming operations have had a far-reaching transformative effect on American Indian communities and their economics. Specifically, on market improvement. However, critics rightfully claim their concerns. Partly on gambling addiction, the economic impact of a closely regulated market. Moreover, the fact that gambling can not substitute a steady income.

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How do Native American casinos work?

Native American reservations have countless casinos. In fact, these make more money than Las Vegas or Atlantic City. Of course, if you grew up in America, this might not be a new phenomenon. However, for many of us, the operation of Indian casinos is a bit of a blur for many of us. According to the above-mentioned tribal sovereignty, Native American communities should be able to do whatever within their tribes. Although, we might ask the question of how accurate this really is. Reservations today are not exactly safe-havens.

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Poverty rates and substance abuse are high in these communities amongst other socio-economic issues. After the Indian Gaming Regulatory Act, changes did come for such communities. However, it did not solve any of their real problems nor do all Indian reservations have casinos. Notably, Native American gambling did become popular within the tribes as a way of creating revenue. In fact, it exceeded the gambling revenue in Las Vegas.

Can they do anything they want?

The IGRA specified three classes. Class one refers to social games, small prizes and there is no regulation from the commission, federal, or state government. Class two and three involve games of chance like poker or bingo, blackjack, or baccarat. Regarding these types of games, the commission regulates. In class three games, it can only be approved when there is a tribe-state compact. In this case, the state can tax tribes. So, based on the compact, in big money games, tribes do not have sovereignty. Usually, class three compacts specify that tribes need to pay local counties or states a portion of the profit.

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Problems and questions of Native American gambling

In reality, from over 500 hundred reservations across the US, the impact of IGRA and Native American gambling has affected the communities in an uneven way. While in some tribes, substantial economic growth is visible or reinvesting for the communities’ development is a practice, it is definitely not a norm in all cases. There are particular critics of online gambling. The UIGEA (Unlawful Internet Gambling Enforcement Act of 2006), prohibits a tribe, a state, or any other “person engaged in the business of betting or wagering” from knowingly accepting financial payments associated with “unlawful Internet gambling.” Restrictions on the games that a Native American tribe may offer under the IGRA and isolated reservations prevent a majority of tribes from participating in the $32 billion tribal gaming industry.

Online Gambling and Native American Gambling today

As more and more states pass legislation for online gambling despite the UIGEA, the opportunities for Indian casinos get wider. Tribes are already requesting permission to implement online casinos in the US, and in December 2020 the first tribal casinos in Michigan were approved to offer online gaming. Expect this shift to continue as more tribes seek to offer online gaming through their existing casinos such as Ignition Casino, while other competitors simultaneously petition the state (Source: Gammalaw). Traditional sports betting and fantasy sports gambling appear to be the sector best positioned to benefit from increased online gambling due to the growing popularity of fantasy sports betting apps. If tribal gaming organizations are able to capture more of these markets, the recent change in law will prove to be a great benefit to their operations.

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