Indian Gaming Revenues Spark New Sovereignty Fight


Native American tribes are skirmishing with the states once again, but this time it's a bloodless battle involving fancy political maneuvering and endless reams of legal briefs instead of the cavalry charges and Indian war whoops so familiar from Western movies.

The current rift is not about land rights: the tribes and states are at odds over gaming revenues from reservation casinos.

When the U.S. House of Representatives defeated a measure in July that would have strengthened the system that forces tribes to negotiate compacts with state governments before opening gambling casinos, both tribal leaders and state officials girded for a fight.

With implementation of new Interior Department rules mired in litigation, tribes in some states are continuing or expanding gambling operations against state wishes.

The Santee Sioux tribe in Nebraska, for example, voted overwhelmingly this month to keep their casino open, despite being fined $6,000 a day by a federal judge for not having a gambling compact.

With tribal leaders not backing down and Nebraska Governor Mike Johanns refusing to compromise, the matter will be settled in federal court on August 27.

"Even if we want to, which we don't, we can't override that vote. The community approved of our actions and we are going to keep the casino open," said Santee Council leader Arthur "Butch" Denny.

The Santee situation is being replicated across the country, as states increasingly refuse to negotiate compacts that allow forms of gambling outlawed in the rest of the state. Many tribes have moved ahead without state or federal consent, proclaiming their right to do so as sovereign entities.

Tribes and government regulators are fighting over back casino payments in New Mexico, Kansas Gov. Bill Graves is going to court to keep two Oklahoma tribes from opening casinos in his state and California tribes are petitioning for a statewide referendum strengthening Proposition 5, which allowed Indian gambling.

These are just a few of the flashpoints in an increasingly bitter impasse.

Since 1988, when Congress made Indian gaming legal, the number of casinos or bingo halls on Indian reservations nationwide has jumped from 70 to 260, according to the National Gambling Impact Study Commission.

Because new casinos are springing up so quickly, there are no firm numbers on just how much money tribal casinos have made this year, according to the National Indian Gaming Commission. Various estimates place the take at anywhere from five to 15 percent of all national gambling revenues, which have grown to $50 billion last year.

The dispute between states and tribes centers around efforts to amend or repeal the Indian Gaming Regulatory Act of 1988, which established a process for states and tribes to negotiate compacts, but also led to endless litigation from both sides.

Tribal leaders argue that IGRA and subsequent court decisions unfairly allow states to invoke their 11th Amendment right to invoke immunity against lawsuits from tribes.

[The 11th Amendment reads: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."]

Under the Indian gaming act, tribes have no ability to seek judicial relief if the state will not sign a gambling compact. Increasingly, states are doing just that.

"The states are reneging on the deal they pushed through Congress and tribes accepted, even though the IGRA already diminishes tribal sovereignty by allowing state participation in the regulation of a tribal government activity," said National Indian Gaming Association spokesperson Gay Kingman.

States argue that if their laws do not permit certain forms of gambling proposed in tribal compacts, then there is no compulsion for the state to approve the compacts.

"States have a fundamental interest and responsibility to distinguish among different gambling activities and devices. The governors firmly believe that it is an inappropriate breach of state sovereignty for the federal government to compel states to negotiate tribal operations of gambling activities that are prohibited by state law," said National Governors' Association director Ray Scheppach.

California tribes are circulating statewide petitions for a March ballot initiative to remedy legal flaws in Proposition 5, the Indian gaming initiative passed last fall.

The California Supreme Court on Monday struck down the original measure, ruling 6-1 that it violated the state's constitutional ban on Nevada-style casino gambling.

Proposition 5 endorsed Indian casinos already operating in California without state or federal approval and won support from nearly two-thirds of voters. The bitter campaign waged by both sides eventually cost $100 million, the most expensive ballot initiative campaign in U.S. history.

The new initiative now takes on even greater importance, as the federal government might go ahead with plans to shut down the casinos. Officials had been waiting for the court ruling before taking any action.

"Most Californians believe Proposition 5's landslide victory has assured gaming on tribal lands is protected. Sadly, the dream of Indian self-reliance is still being blocked," said Mark Macarro, who headed the pro-Proposition 5 campaign.

California Governor Gray Davis has taken no official stance on the casinos' continued operation, and has been negotiating with the tribes about expanded gambling.

The court's ruling now virtually assures that the tribes will pursue their March ballot initiative.

New Mexico's Indian tribes have continued a recent trend of not meeting payment requirements set by their compact with the state. According to the Department of Revenue, the state has collected only $5.7 million.

Pueblo leaders in the state have ceased sending any casino payments to the state; they were required under their 1997 compact to pay a percentage of slot machine proceeds.

The tribe is withholding the percentage, which reached $900,000 in previous years, until the compact is renegotiated.

"Our previous payments brought us no consideration, honor or respect. We would be foolish to continue turning over millions of dollars while our own people have unaddressed needs," said Pueblo Governor Milton Herrera. "We would be foolish to continue dealing in an honorable way with a government that simply does not value honor."

Only three of 11 New Mexico tribes have consistently paid in full. State officials estimate the tribes are $30 to $40 million in arrears, and because the state Supreme Court refused to hear the case, the state and tribes must go to arbitration.

The standoff is a perfect example of how the compact rules are flawed.

The tribes argued that the payment requirements were invalid and unenforceable, so they simply stopped paying them. Under the arbitration system, the U.S. Secretary of Interior never approved the dispute compacts and instead let them take effect without his signature.


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