In recent months, one federal statute has been cited repeatedly, perhaps more than any other federal law when discussing the expansion of sports betting across the country. That is the Indian Gaming Regulatory Act, or as it is often referred to, IGRA.
IGRA is the statute that will determine whether Florida is allowed to offer mobile sports betting throughout the state. It will also control how sports betting will look in many states across the country, from Connecticut to Arizona.
Before there was IGRA …
Indeed, IGRA can trace a significant portion of its provenance to the state of California. Back in the mid-1980s, California sought to restrict the ability of tribes in the state to offer bingo and certain card games.
Bingo was not entirely prohibited by California law at the time, but was restricted to “designated charitable organizations,” and could not offer prizes of more than $250, as well as several other restrictions.
California insisted that tribes were required to comply with state law, as did Riverside County. They argued that the Cabazon and Morongo Bands of Mission Indians were in violation of local ordinances, as well as state law.
The lawsuit and the Supreme Court
Tribes filed suit in federal court. The tribes argued that the state and the county lack authority to regulate or enforce state gambling laws on tribal lands.
The Supreme Court held that the tribes were correct that, “State regulation would impermissibly infringe on tribal government.”
Justices John Paul Stevens, Sandra Day O’Connor, and Antonin Scalia penned a dissent. They argued that absent a Congressional exemption for tribal gaming from state law and federal supervision, a state should be able to prohibit:
high-stakes gambling on Indian reservations within its borders.
Impact of the decision
The majority of the Court found this argument unpersuasive, setting off a situation where in recognizing tribal sovereignty, states were left without the ability to regulate tribal gaming on land within state boundaries. This led Congress to act in near-record time, at least for Congress.
In response to the Supreme Court decision, Senator Daniel Inouye of Hawaii, and Senator John McCain and Representative Mo Udall, both of Arizona, introduced legislation that would serve as a compromise between states and tribes across the country.
IGRA became law on October 17, 1988, when the legislation was signed by President Ronald Reagan.
When the law passed in 1988, it recognized that licensing and regulating gaming activities had become an important revenue stream for many tribal governments and sought to protect this revenue stream for tribes. IGRA declared that:
Indian tribes have the exclusive right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity.
Classifications of gaming
IGRA uses three classifications to categorize gaming activities:
- Class I games are those games that are traditional or ceremonial in nature. These games can be offered without restriction and require no other agreement.
- Class II games include bingo and non-banked card games, much like the activities that gave rise to the Cabazon Supreme Court case. This category of gaming does not require the tribe to enter into a compact with the state, instead, the tribe is subject to oversight from the National Indian Gaming Commission.
- Class III includes gaming activities that do not fall within Class I and Class II. These games can only be offered in a state if a Tribe and the state have entered into a compact.
What is a gaming compact?
On a basic level, a compact is a contract between a state and a tribe with land within the state to offer gaming on tribal land.
Compacts set out the terms and conditions surrounding the games that can be offered at tribal properties. There is great variation between states in regards to the specificity of compacts.
For instance, while some states specifically spell out every game and the number of properties that can offer a game, other compacts, like that of New Mexico, simply allow all Class III games that are not prohibited by law in the state. This is how they were the first state to offer sports betting at tribal properties).
Process for compact approval
After a state and a tribe agree on a compact or compact amendment, it is sent to the Department of the Interior for review.
A compact can only be disapproved by the Secretary of the Interior under three circumstances:
- It violates IGRA
- It violates another provision of federal law; or
- Violates “the trust obligations of the United States to Indians.”
Compacts that are approved (or considered to be approved) take effect when they are published in the Federal Register. This must occur within 90 days from when the compact is received by the Office of Indian Gaming.
Tribal sports betting is a big part of the future
Tribal operation of sports betting is going to be a big part of the growth of the industry.
The newly minted compact between Florida and the Seminole Tribe represents just an early point.
Many of the major states remaining to legalize sports betting will do so via compacts with tribes located within their borders. IGRA remains an important tool, though it appears in need of some modernization to clarify issues surrounding mobile gaming.