AustLII Home | Databases | WorldLII | Search | Feedback

Indigenous Law Bulletin

Indigenous Law Bulletin
You are here:  AustLII >> Databases >> Indigenous Law Bulletin >> 2002 >> [2002] IndigLawB 41

Database Search | Name Search | Recent Articles | Noteup | LawCite | Help

Hopkins, James --- "Betting on Self - Determination" [2002] IndigLawB 41; (2002) 5(18) Indigenous Law Bulletin 8

Betting on Self-Determination

by James Hopkins [1]

In the United States (‘US’), the pursuit of economic self-determination by Indigenous groups provides a fascinating glimpse into the complexity of contemporary tribal sovereignty. For newcomers to this field, the commercial strategies applied by federally recognised tribes must be understood in the context of the systemic jurisdictional conflicts between Indigenous groups, states and Congress.

Economic marginalisation has left many Indigenous peoples throughout the world without the prosperity enjoyed by larger non-Indigenous societies. The desire for tribes to re-assert sovereignty and partake in the prosperity within this context has prompted a significant number to establish gaming facilities on their lands with a view to exercising their exemption from state taxation, particularly in state jurisdictions that prohibit gaming by non-Indian businesses.[2]

The perspective one brings to Indian gaming is important because it shapes the larger issues surrounding Indigenous identity. Gaming as a non-Indian industry is similarly controversial and affected by the images invoked by the gaming pinnacle Las Vegas, Nevada. Transposing this industry over the widely held misconceptions towards Indigenous peoples has only added to the controversy and heightened intense political debates with respect to Indian gaming.[3]

Absent from this debate, however, is a deeper discussion with respect to changes in the legal status of Indigenous peoples within the United States. Over a span of approximately one hundred and fifty years, the Supreme Court has effected a successive diminution of tribal sovereignty. These cases begin with the seminal judicial opinions of Justice Marshall in Cherokee Nation v Georgia (‘Cherokee Nation’)[4] and Worcester v Georgia (‘Worcester’).[5]

Under Cherokee Nation, Indian tribes were recognised as independent political communities with the right to exercise their inherent powers of self-government, as long as those powers had not been taken away by Acts of Congress or surrendered within treaties.[6] However, tribes could not exercise powers inconsistent with their status as domestic dependent nations. The rationale for what was, on the face of it, a contradictory form of sovereign recognition, reflects the westward settlement patterns by non-Indians, the treaty making process from the mid-1700s and late 1800s, and the acknowledgment that Indian tribes surrendered some of their rights and authorities in return for the recognition of others. In addition, Indian tribes were considered to have gained certain protections from the US government against foreign entities, resulting in a sort of trustee relationship.[7]

One year later in Worcester, the Supreme Court held that state laws did not apply in Indian land.[8] After the decision in Worcester, the Supreme Court expanded its doctrine to take into account the ever-expanding interests of the states in tribal land. One example of such expansion involved a significant decision regarding state jurisdiction over reservation affairs during the 1950s. In Williams v Lee, Justice Black asserted ‘[a]bsent governing Acts of Congress, the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them.’[9] The Supreme Court then denied state jurisdiction over a matter that had occurred on a reservation and involved a suit between a non-Indian and an Indian.

Recently however, the Supreme Court has demonstrated a reluctance to follow the precedents set by the Marshall Court and has, on occasion, decided against the preservation of tribal sovereignty in favour of state jurisdiction. In Nevada v Hicks, Justice Scalia stated that ‘[s]tate sovereignty does not end at a reservation’s border’ and acknowledged that although ‘...tribes are often referred to as ‘sovereign’ entities, it was ‘long ago’ that the Court departed from Chief Justice Marshall’s view that ‘the laws of [a State] can have no force’ within reservation boundaries.’[10]

The Indian Gaming and Regulatory Act of 1998

With respect to Indian gaming, recent developments demonstrate the escalating tension between state, federal and tribal authorities. Federal legislation on Indian gaming came about rather quickly with the 1988 Congressional enactment of The Indian Gaming and Regulatory Act[11] (‘IGRA’).[12] Congress enacted IGRA with the intention of imposing a multi-faceted regulatory system on tribal and state governments. Among other features, IGRA derogates the duty to bargain in good faith on state governments, provides for a system of dispute resolution with a view to achieving gaming compacts, and requires accountability on the part of tribal gaming operations. A central tenet of IGRA’s regulatory mandate is the National Indian Gaming Commission (‘NIGC’), which is a certifying, adjudicative and administrative body.

The three prescribed classes of gaming under IGRA can be summarised as follows:

The imposition of a compact on tribal and state governments in Class III gaming stems from the lucrative nature of such gaming. The states’ good faith requirement is emphasised to ensure that tribes are not forced to forfeit rights and to prevent their rights from becoming concomitant to states’ rights.

Supreme Court limitations on IGRA

The Supreme Court dealt a major blow to IGRA in the realm of Class III gaming negotiations when it held in Seminole Tribe v Florida (‘Seminole’),[16] that the constitutional doctrine of state sovereign immunity prohibited Congress from allowing individuals or tribes to sue states in federal court. Because tribes could no longer sue to enforce or contest gaming compacts in federal court, the Seminole decision essentially neutralised IGRA’s Class III good faith provision.

From a strategic perspective, although states won the right to be immune from IGRA’s binding provisions, states simultaneously lost potential leverage as beneficiaries of compact revenue sharing in Class III gaming agreements. Practically speaking, Indian gaming has survived Seminole and tribal sovereignty remains a live issue, particularly as state and federal authorities try to impose taxation on Indian gaming operations.

State governments have not historically been concerned with the wellbeing of tribes. However, the advent of Indian gaming and the revenue it generates has turned state and federal focus to the collection of taxes on the sale of services and products by businesses that facilitate gaming operations on tribal lands.[17] For example, in Yavapai-Prescott Indian Tribe v Scott,[18] the Ninth Circuit Court of Appeals held that the state’s interest to tax a joint tribal venture was paramount to the interests of the tribe and the federal government. The privilege tax was levied on the rental of convention rooms operated by a non-Indian developer whose corporation was situated on Yavapai land, had 30% ownership in favour of the tribe, and abutted the tribe’s casino.

More recently, the federal Internal Revenue Service (‘IRS’) was successful in their appeal to the US Supreme Court on retroactive taxation of Class II gaming, namely pull-tabs. In Chickasaw Nation v United States (‘Chickasaw Nation’),[19] the Supreme Court had to determine whether IGRA provides Indian tribes with the same exemption from wagering taxes afforded to states by Chapter 35 of the Internal Revenue Code (‘IRC’). The Court rejected the tribe’s argument that the self-government guarantee in the 1855 Treaty with the United States precluded the imposition of the tax in question. The ramifications of Chickasaw Nation are significant in that it gives the IRS authority to retroactively collect from all Indian gaming facilities operating Class II gaming pull-tab operations on tribal lands under IGRA.

While the sovereign immunity of tribes from state and federal taxation is weakening, so too is the tribes’ ability to tax non-Indian businesses on tribal lands. This was the conclusion held by the Supreme Court in Atkinson Trading Company Inc v Shirley.[20] Moreover, in order for a non-Indian activity to qualify for tribal taxation, it must demonstrate a dire threat to tribal interests that, absent the tax, would create a negative impact to the interest and imperil the political integrity of the tribe.[21]

The adversity surrounding Indian gaming is not limited to issues of taxation. The decision by Judge Broomfield in American Greyhound Racing Inc v Hull (‘American Greyhound’)[22] has brought into question the very legality of state participation in compacts. The impetus for the challenge comes from Arizona’s non-Indian gaming businesses including the horse, dog and track industry. Under Arizona law, the Governor has authority to negotiate the terms of compacts on behalf of the State.[23] In the event negotiations fail, the Governor must enter into a standard form compact with any tribe wanting to sign on to its terms.[24] Seventeen of the 21 recognised tribes in Arizona have entered into compacts, all on substantially similar terms, all currently under extension review.[25] These legislative features were scrutinised by Judge Broomfield in American Greyhound, when he found that ‘[i]f the legislature purports to enact a law like a blank check, leaving some other branch to create a rationale and then carry it out, such an arrangement violates the non-delegation doctrine.’[26]

Tangible economic benefits of gaming in Arizona

Despite the uncertain future of Indian gaming the process of bargaining for state compacts has produced some unexpected alliances as circumstances in the State of Arizona demonstrate. The Attorney General for the State of Arizona has already filed an appeal against the American Greyhound decision and the extension of the existing compact that binds seventeen gaming tribes is before the State’s House of Representatives.[27]

The Cornell Report,[28] released in June of 2001 found that Indian gaming made an important contribution to the state’s economy and highlighted the following:

In addition, the attraction of gaming to tribes largely involves the ability to fund tribal governance and afford greater opportunities to enrolled members.

In conclusion, absent the broad constitutional entrenchment of Indigenous rights in other jurisdictions,[32] Indigenous self-determination in the United States becomes a commercial enterprise demanding great perseverance and skill. With respect to Arizona, the tribes have gained considerable political experience at the federal and state levels and have engaged in sophisticated strategies to further their cause.

The situation in Arizona, while still uncertain, is expected to be resolved by end of August 2002. At present, the Senate is preparing to vote on a bill extending the Indian gaming compacts. It will be interesting to watch for the Ninth Circuit Court of Appeal’s decision in the American Greyhound case in light of the Governor’s decision to proceed with extending the compacts. An important amendment to the extension is the revenue sharing estimated at $83 million per annum.[33]

With so much money on the table, it is likely that some adversarial parties will come to mutually beneficial agreements. When it comes to battles over state, federal, or tribal authority, you can bet your money that Indian gaming will be a winner.

James Hopkins is Director of the Indigenous Peoples Law and Policy Program and Associate Clinical Professor of Law at the University of Arizona, James E Rogers College of Law.

[1] Special thanks to Megan McClurg, James E Rogers College of Law LLM Candidate, 2003, for her research and assistance.

[2] For example, in the State of Arizona seventeen of the twenty-one tribes have entered into gaming compacts. The management structures of these gaming facilities vary from tribally incorporated gaming operations, to licensing agreements that out-source to non-Indian businesses.

[3] During the recent state-tribal gaming compact negotiations in Arizona, the numerous and diverging comments in the media included: (a) ‘We expect there to be a big battle over the expansion of gambling in Arizona. We’re going to do our part to tell people that Las Vegas is close’, Len Munsil, president of the Center for Arizona Policy; and (b) ‘[t]his is absolutely the most critical thing the tribes have faced in a long time. We have the support of the people of Arizona and we think the will of the people will prevail in the end’, David LaSarte, executive director of the Arizona Indian Gaming Association. See ‘Quotes on Indian Gaming’, Associated Press Newswires, 30 July 2001.

[4] [1831] USSC 6; 30 US 1 (1831).

[5] [1832] USSC 39; 31 US 515 (1832).

[6] Cherokee Nation v Georgia, 16-17.

[7] Ibid 16-18.

[8] In Worcester v Georgia, the Supreme Court reversed the conviction of a white missionary under a Georgia law requiring all white persons to obtain a license from the state to live on tribal lands.

[9] Williams v Lee [1959] USSC 13; 358 US 217, 271 (1959).

[10] Nevada v Hicks [2001] USSC 58; 533 US 353 (2001), citing Worcester v Georgia, 561.

[11] Pub L No 100-497, 102 Stat 2467 (1988) (codified at 25 USC §§ 2701-2721 (1994)).

[12] Prior to IGRA, the Supreme Court in California v Cabazon Band of Mission Indians [1987] USSC 25; 480 US 202 (1987), held that tribes acting on tribal land are not subject to civil regulations unless Congress expressly provides. Tribes were thus free to operate games not expressly regulated or prohibited by the state.

[13] Above, n 11. See generally §§ 2703 – 2710 of IGRA. These provisions prescribed the legal classifications of Class I, II and III gaming and delineate the respective jurisdiction between tribes, the NIGC, and state governments.

[14] Ibid.

[15] Ibid.

[16] [1996] USSC 28; 517 US 44 (1996). In this case, the Seminole tribe brought suit against the state of Florida, claiming that the state had failed to negotiate a gaming compact pursuant to IGRA.

[17] David J Bodney, Taxing Times in Indian Country, Ariz Att’y, Jan 1998.

[18] [1997] USCA9 2064; 117 F 3d 1107, 1112 (9th Cir 1997). Arizona business transaction privilege taxes are enforceable on hotel restaurant and room rental receipts for on-reservation facilities because tribes do not have an ‘active role’ in contributing to the business.

[19] 210 F3d 871 (10th Cir 2000).

[20] [2001] USSC 35; 532 US 645 (2001).

[21] Ibid.

[22] 146 FSupp2d 1012 (D Ariz 2001).

[23] See ARS § 5-601.

[24] See ARS § 5-601.01.

[25] See Motion to Dismiss (doc # 28), Hart Aff, para 4.

[26] American Greyhound v Hull 1029.

[27] ‘Indian Gaming Faces Crucial Senate Vote’, Arizona Capitol Times 7, May 3 2002.

[28] Stephen Cornell and Jonathan B Taylor, Udall Center for Studies in Public Policy, An Analysis of the Economic Impacts of Indian Gaming in the State of Arizona (June 2001).

[29] Ibid, Part 1 ‘Summary of Results’.

[30] Ibid.

[31] Ibid.

[32] For example, see Part II of the Canadian Constitution Act 1982 being Schedule B to the Canada Act 1982 (UK) c 11, § 35(1) provides: ‘The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.’

[33] Above, n 27.


AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.austlii.edu.au/au/journals/IndigLawB/2002/41.html