Taxation of Class III Tribal Gaming: Is it on the Horizon?

Abstract

451 TRIBAL GAMING HAS EXPLODED across the American landscape in the past 15 years. Initially starting out as card rooms and super bingo games, it has expanded to massive Las Vegas style casinos that generate hundreds of millions of dollars of revenue for the recognized tribes that have aggressively developed sophisticated gaming businesses. There is no question but that these gaming operations have brought much needed revenue to tribes and their members that were previously impoverished and largely dependant upon federal assistance programs to meet their everyday needs. However, as tribes have developed financial strength and concomitant political muscle in the form of massive well placed political contributions at the local, state, and federal levels—their assertion of “sovereignty” in the face of ever increasing private enterprise— local and state attempts to regulate business operations affecting non-tribal persons, entities, and governments is causing an increasing portion of the citizenry to question the extent to which tribes should be free from the regulatory and tax framework that is imposed upon the rest of the population. At the heart of the growing controversy over tribal rights is a fundamental misunderstanding of the relationship between tribes and the United States government. Tribes are not, in fact, sovereign nations in the traditional sense (i.e., a separate country that is governed solely by its own laws). Rather, Article 1 Section 8 of the United States Constitution (the so-called Indian Commerce Clause) places the regulation of “Indian Tribes” in the hands of the United States Congress by providing that: “The Congress shall have the Power . . . to regulate Commerce . . . with the Indian Tribes.” When Congress adopted the Indian Gaming Regulatory Act1 (IGRA) in 1988 in accordance with the power granted to it by Article 1 Section 8 of the United States Constitution, it was responding to the United States Supreme Court’s declaration in California et al. v. Cabazon Band of Mission Indians et al.2 that the State of California could not enforce the state’s bingo and card game statutes on tribal lands. The case arose out of the state’s attempt to regulate bingo games and card games being operated by the Cabazon and Morongo Bands of Mission Indians on tribal land. In the face of strong tribal opposition, Congress enacted IGRA based upon findings that included the Congressional declaration that “a principal goal of Federal Indian policy is to promote tribal economic development, tribal self-sufficiency, and strong tribal government.”3 Congress went on to declare that the purpose of IGRA is: