It was in 1987 that the Supreme Court of the United States made the ruling that no state in the country holds an authority when it comes to gaming institutions located on tribal land. Indian gaming sites are very popular in the United States and this ruling alarmed many state officials. One the flip side, the Indian tribes that were running casinos were ecstatic when they heard the news. This ruling led to huge profits for Indian reservations and a decrease in revenues for individual states.
In reaction to this ruling, Congress quickly passed the Indian Gaming Regulatory Act. This act allowed each state to have a certain amount of authority over these Indian reservations. It required the reservations on the state government to form contracts and agreements in regards to the gaming institutions.
All different types of agreements can be made between individual state governments and Indian reservations. Some states only allow reservations to have a certain number of gaming devices. Other states require different amounts of the profits made by the reservations.
These different categories separated casinos by the gaming options they offer. Each class has different stipulations, in regards to profit, that the reservations have to abide by. If Indian tribes fail to adhere to these regulations then the state has the authority to shut them down.
Class II games are the favorite of Indian casinos because the tribe can keep more of every dollar and they aren’t required to share profits with anyone.
Most gaming at Casinos is considered Class III and subject to sharing profits with the state.
The compact in the news most often lately is the compact between the state of Florida and the Seminole Tribe. A compact was negotiated by the governor but the state legislature is dragging its heels in approving it.
In California, proposition 94 through 97 allows for California Indian tribes to expand casinos to be the largest in the world. According to the compact the tribes would pay billions of dollars into the California General Fund. With the economic emergency in California this seems like a good way for the state to get out of the black. The tribes affected by this compact are the Pechanga, Morongo, Sycuan, and Agua Caliente and they currently operate five casinos in Riverside and San Diego County. Each of the tribes can have 2000 slot machines and the compact will allow them to have 5000 for Sycuan and Agua Caliente and 7500 for the Pechanga and Morongo. This would bring them up on an equal level with the Foxwoods casino in Connecticut, an Indian casino that is the world leader in slot machines. MGM Grand in Las Vegas has 3700 slot machines.
Profits from these expanded machines will be about $4.3 billion with a tax rate of 15% going to the state. The Lottery is taxed at 83% of income not used for prizes and operational costs. It is questionable why the slot machine tax isn’t higher and bringing in more money to the state.
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