Native American casinos have become a symbol of gambling in the US. Still, their history is much more recent than one would expect. In fact, the proliferation of Native American casinos dates back only a few decades.
Native American casinos are owned and operated by tribal governments that are recognized by the federal government. Native American casinos are a compelling case because they enjoy a high degree of legal and fiscal independence from state and federal laws.
Generally, Native American casinos are not obliged to comply with state law, nor are they expected to pay taxes on their profit to the state. However, they do not exist in a vacuum but have to comply with federal law to gain their special status.
While the casinos do not pay tax, they are not an entirely profiteering business. All Native American casinos are expected to contribute to state-run funds that are used to benefit Native American reserves, even the communities that do not run casinos themselves.
The special legal status of Native American casinos has its background in the American history of the 18th and 19th centuries. During this time, Native American populations were forced to give up their lands and were settled in specially designated reservations. Their reservations continue to this day.
However, the native populations never gave up their political autonomy in their negotiations with the US government. The tribes were recognized as sovereign nations and were, in a way, treated as states or foreign countries on their own.
This gives the native populations legal rights to govern their territories separately from the rest of the country, an inherent right, not an exclusive right that was “given” to them.
In this context, the event that finally jump-started Native American casinos was a Supreme Court case in Florida in 1979. The Seminole tribe opened a casino in their territory, gaining instant popularity and attracting numerous tourists.
The state immediately intervened to close down the operation, but instead of complying, the tribe sued the state. In the end, the state of Florida lost the case; the Supreme Court ruled that the states do not have the right to regulate business activities in Native American reserves, nor could they tax the proceedings.
In the late 1980s, the Indian Gaming Regulatory Act created federal rules for gambling in Native American reservations. The regulation has created a clear playing field for all federally recognized tribes and their gambling operations. It also strengthened the tribes’ negotiation power with the states.
After the events in Florida, other tribes soon followed suit. By the year 2000, almost half of all American states had casinos being run on tribal lands, outside state jurisdictions. The casinos continued to emerge increasingly quickly in the 21st century as well, as casino-gambling continues to grow.
Native American reservation gambling has become a terrific source of income for the reservations. They operate an annual turnover that is counted in dozens of billions of dollars, generating more income nationwide than Atlantic City and Las Vegas combined.
The quick proliferation of the casinos has led to the professionalization of the business. Tribes often hire outside business consultants and expert staff to guarantee smooth operation.