Executive Summary

Following many years of litigation and debate, a bipartisan coalition in Congress passed and President Reagan signed into law the Indian Gaming Regulatory Act (IGRA) of 1988, 25 U.S.C. Sec. 2701, et seq. When Congress enacted IGRA, it had before it extensive documentation of the acute and long-standing need for economic development on Indian reservations. It showed decades of failed programs and the potential of tribal government gaming to fund effective tribal governments and bring some measure of prosperity to tribal communities lacking in the natural resources and development capital to relieve the wretched conditions of the poorest of America’s poor.

IGRA was aimed at breathing new life into Indian sovereignty, a concept first proclaimed in a series of three United States Supreme Court opinions in the 1800s written by America’s great jurist, Chief Justice John Marshall. The aim of IGRA was to turn idealism into practical reality through Indian gaming. Congress intended that proceeds from Indian gaming would be used to restore the integrity of tribal governments and tribal government sovereignty. Once Indian governments had the resources to take over the task of making each tribe a self-governing nation, the tribes would be able to provide infrastructure to the reservations and social services to the tribe’s members. After that, Indian gaming would provide the tribes with resources that would allow them to diversify the economy of the reservation, at last making Indian nations self-sustaining after generations of grinding poverty.

Through this legislation, Congress set forth the guidelines for the states and their tribes to reach agreement on the particulars through a tribal-state compact. The Class III compacts that Governor Gray Davis and 62 tribes signed and the Legislature ratified in September 1999, and which took effect upon approval by the Secretary of the Interior on May 16, 2000, are among the most comprehensive and detailed in the entire country. Unlike any other compacts previously approved, the tribal-state compact imposes upon tribal governments the obligation to assess and mitigate significant off-reservation environmental impacts, contribute tens of millions of dollars each year to “Non-Compact Tribes” (tribes with no or very small casinos), and tens of millions more dollars to the State’s General Fund, permitting communities impacted by tribal government gaming to share in a special fund. The tribal-state compact also gives the state an extensive and meaningful role in the regulation and oversight of tribal gaming activities, including determining the suitability of gaming personnel.

No sooner had Indian gaming emerged as a viable economic resource for federally recognized tribes, when so-called experts on Indian gaming, spewing facts and figures aimed at misleading the public and turning back the clock appeared. These self-appointed experts, some in the media and others representing private sector interests, use rhetoric, emotion and selective statistics to mislead the public.

Of course, as Americans we believe in the right to free and open debate, and we respect all points of view, even those that honestly reject gaming of all types. The following takes a look at some of the common misconceptions about tribal nations and Indian gaming. It is intended to correct the record of those who seek to distort the truth and mislead the public.

This report examines a variety of issues including land into trust, federal recognition, public safety, tax issues, environmental issues, sovereignty, gaming regulation, limited gaming, economic diversification, entitlements, and political contributions, replacing fiction with fact.

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Sovereignty

Fiction:
Recognized Tribal Nations have absolute sovereignty and answer only to themselves

Fact:
Tribal governments operate pursuant to a government-to-government relationship with the United States government

Since the early 1800s, the Supreme Court of the United States consistently has recognized that Indian tribes are not private, voluntary organizations; they are governments, possessing inherent sovereign powers over their lands and their members.

In 1831 (Cherokee Nation v. Georgia), the Supreme Court ruled that Indian Nations had the full legal right to manage their own affairs, govern themselves internally and engage in legal and political relationships with federal and state governments. Tribal sovereignty is further rooted in the U.S. Constitution, Art. I, Sec. 8, cl. 3, and repeatedly has been affirmed by acts of Congress.

Because tribes have the status of “domestic dependent nations,” tribal lands held in trust by the federal government are considered federal lands and are subject to all the laws and regulations that Congress has passed on them, including environmental, criminal and tax laws. The Department of Interior’s Bureau of Indian Affairs (BIA) is vested with the authority to govern tribal lands and tribal government dealings.

Today, there are 109 tribal governments in California. Each is a sovereign, self-governing nation.

“... the constitution, treaties, laws, and court decisions have consistently recognized a unique political
relationship between Indian tribes and the United States.”
—President Ronald Reagan

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Federal Recognition

Fiction:
Anyone or any group claiming to be a tribe can earn federal recognition

Fact:
The process by which the United States government recognizes a tribe is thorough, rigorous, costly and can take decades to complete

The process by which the U.S. federal government recognizes a Native American tribe involves strict guidelines and an extensive investigative process that can take decades to complete. At the root of federal recognition and the reason for the process is to certify the ability of tribes to govern themselves, allowing them to enter into government-to-government relations with the United States.

Petitioning tribes must go through a long, expensive, rigorous process by which the group must demonstrate its historic status as a tribe and its continuous functioning as a political entity. This practice, called the Federal Acknowledgement Process, requires that tribes meet seven requirements to be considered a federally recognized tribe.

1. The petitioner has been identified as an American Indian entity on a substantially continuous basis since 1900.
   
   
2. A predominant portion of the petitioning group comprises a distinct community and has existed as a community from historical times until the present.
   
   
3. The petitioner has maintained political influence or authority over its members as an autonomous entity from historical time to the present.
   
   
4. The group must provide a copy of its present governing documents and membership criteria.
   
   
5. The petitioner’s membership consists of individuals who descend from a historical Indian tribe or tribes that combined and functioned as a single autonomous political entity.
   
   
6. The membership of the petitioning group is composed principally of persons who are not members of any acknowledged North American Indian tribe.
   
   
7. Neither the petitioner nor its members are the subject of congressional legislation that has expressly terminated or forbidden recognition.

   Source: United States General Accounting Office
   

It is imperative that a petitioning tribe meet all seven criteria. The Branch of Acknowledgement and Research (BAR), the technical staff within the BIA, is responsible for reviewing all submitted documents, including historical evidence and complex genealogy charts. After evaluating all of the information, including comments from the public and local and state governments, the BAR makes a recommendation to the Assistant Secretary for Indian Affairs, who has the final say on the recognition process. Many groups have been denied recognition because they failed to satisfy one or two categories. A tribe’s only other recourse for recognition is through an act of Congress.

“Tribes are governments. They are not for-profit corporations.”
—Senator John McCain

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Land into Trust

Fiction:
It is easy for Native American tribes to take land into trust and the reason many of them do so is for gaming purposes

Fact:
Placing land into trust is a lengthy and highly regulated process, making gaming on new trust lands highly improbable

The process of placing land into trust is a strict, lengthy, well-regulated legal process that requires an in-depth application from a petitioning tribe, public comments from the local communities, and consultations with state and local officials and agencies where the land is located, in addition to the consent of federal regulatory agencies as outlined in the land-into-trust process. The federal government also requires exhaustive research, including environmental assessments, to determine if there will be any adverse effects on plans for the land to be put into trust.

The process itself guarantees that local communities will not be harmed by taking land into trust. Once the completed application and relevant documents are submitted to the Department of Interior, experts carefully scrutinize the application, all supporting materials and written comments from interested parties before a decision is reached. Many tribes have waited for over a decade to go through this process due to the backlog of cases and slowness of the Interior Department to act.

The process by which recognized Indian tribes are able to place land into trust was established in 1934 by the Indian Reorganization Act, allowing the Secretary of the Interior to hold property in trust as a means to compensate tribes for the unjust taking of tribal lands throughout the late 1800s and early 1900s, when more than 90 million acres were forcibly taken from Indian control.

Except for a few instances, a majority of the land that makes up reservations or trust land is in barren, rural regions of the country. Because of their remote and isolated locations, trust lands are often of little or no value to the public at large and generally do not contribute much money to the county’s general fund.

Taking land into trust is important to Native Americans. It allows American Indians, having had a sliver of their original reservation lands restored to them after they were seized by the federal government, to expand their property to a point where their reservations can sustain economic activity. One tribe in San Diego County has a reservation of only six acres, while another tribe in San Bernardino County has only six useful acres on which to build. Land into trust provides tribes with a chance to develop economic opportunities, create adequate housing and provide education and healthcare facilities for tribal members. According to IGRA, tribes can only conduct gaming on existing reservation land. Only in very unique cases does this not apply, such as for the Lytton Band of Pomo Indians and the United Auburn Indian Community, both of whom were terminated, restored and granted land in accordance with their ancestral heritage.

“We have not fulfilled our obligation to the Indian tribes across this nation; and, for a variety of reasons, we have put them into third-country status, which I believe is a disgrace in the history of this nation.”
—Senator John McCain

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Limited Gaming

Fiction:
The passage of the Indian Gaming Regulatory Act allowed for unchecked growth of Indian gaming

Fact:
Under Proposition 1A and the California Compact, tribal government gaming is limited and well-regulated

By comparison to gaming in Nevada, Indian gaming in California is small business. According to the California Gambling Control Commission, only 45 of California’s 109 federally recognized tribes now operate casinos, although the state has entered into gaming compacts with 62 tribes. Some California tribes that have compacts but no casinos are planning to open such facilities, but many of the tribes that do not already have casinos are unlikely to establish gaming facilities, due to the small size and remote location of their Indian lands. Tribal governments are not exempt from the law of supply and demand. Furthermore, California tribes are limited to 2,000 slot machines and must submit to a machine-license draw. Certain Las Vegas-style games, like roulette, baccarat and dice games, are illegal at Indian casinos. Indian gaming in California has neither the quantity nor diversity of gaming that exists in Las Vegas; indeed, it doesn’t even begin to approach it.

It was in the 1980s that the federal government realized Indian gaming was a unique and resourceful way to bring a new level of sustainability to the Indian nations. Historically, Native Americans have been one of the poorest groups in the United States. Since the passage of IGRA in 1988, Indian gaming is widely regarded as the first step toward self-reliance for Native American tribes. But strict limits have been implemented to check the growth of Indian gaming.

Under the terms of IGRA, every tribe is required to negotiate with the state and reach an agreement called a tribal-state compact. Gaming is strictly limited to existing tribal lands. IGRA also lays out how the tribe will spend any revenues that are earned. Most are designated for tribal government programs and improving infrastructure on the reservation. Some of these include educational opportunities, scholarships, paved roads and lighting, basic services to reservation homes, healthcare, cultural preservation and economic diversification. Indian gaming operations are presently regulated on six levels—one at the tribal level, two at the state and three at the federal.

In September 1999, after a decade of trying to negotiate with the state, the California Tribes and Governor Davis reached an historic agreement leading to Proposition 1A on March 7, 2000. Proposition 1A, after receiving approval from more than 65% of the state’s voters, permitted specialized types of gaming on federally recognized Indian reservations only.

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Taxes/Special Distribution Fund

Fiction:
Indians do not pay any taxes

Fact:
Native Americans pay taxes on a number of different levels

The United States Supreme Court, as well as the Congress, repeatedly has recognized that tribes are governments, not private, voluntary organizations. Under our system, federal, state and local governments and agencies do not pay income taxes, so neither do tribal governments. However, tribal governments pay employer and certain excise taxes, including certain gaming taxes.

Contrary to common misconceptions, Native American heritage does not exempt tribal members from paying federal income tax by reason of being Indians or because their income is earned in Indian country. In California, tribal members that live off the reservation are also responsible for paying state taxes as well.

While many argue that local governments lose property tax revenues on the Indian trust lands, in truth, most local governments are more concerned with their lack of control over Indian reservations and their inability to tell tribes what they can do on their land. The fact is, tribal governments have been good neighbors and have been consistent with IGRA and other regional development plans.

In addition to the tax revenues to state and local governments as described above, the compact provides for two forms of direct state taxation of tribal government gaming revenues. The first of these is the Revenue Sharing Trust Fund, intended to yield $1.1 million per year for each California tribe operating fewer than 350 gaming devices. Any of these funds that are distributed per capita to tribal members would be subject to federal income tax, as well as to state income tax for members living off the reservation.

The second, a Special Distribution Fund created by the compact, is designed to assist local governments with impacts, permitting cities and counties to apply for grant monies. Tribes with devices in operation as of September 1, 1999, pay into the fund based on a set percentage of revenue from their slot machines. The importance of the present-day economic impact of Indian gaming is often diminished in the media. Indian gaming creates thousands of jobs and contributes millions to the local economies through payroll, taxes and spending. Here in California, it is estimated that Indian gaming contributes approximately $150 million in state and local tax revenues and creates more than 50,000 jobs, both directly and indirectly related to Indian gaming.

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Regulations

Fiction:
There is little in the form of regulation for Indian gaming operations

Fact:
Indian gaming is the most regulated in the nation, with strict controls on a number of different levels

Indian gaming is more regulated than any other form of gaming. Before a tribe can enter into gaming, it must first work with the state to negotiate a tribal-state compact. Once a tribe has met the state requirements, their gaming operation is then monitored on six independent levels.

The six levels of gaming regulations include:

1. On the federal level, the National Indian Gaming Commission (NIGC) is responsible for enforcing IGRA. The commission is charged with overseeing gaming on all federally recognized reservations, conducting background checks and investigative reports, as well as reviewing management contracts, enforcing civil penalties and imposing fines.
   
   
2. Gaming tribes work with the BIA, a division of the Department of the Interior, on approving tribal state compacts. The bureau also works with the Federal Bureau of Investigations (FBI) and the Department of Justice on investigating any gaming violations.
   
   
3. The U.S. Department of Justice facilitates the land-into-trust process, plans the allocation of tribal gaming revenues, conducts investigative studies, cooperates with the FBI on background checks, and coordinates with local and state agencies on investigations.
   
   
4. On the tribal level is the Tribal Gaming Commission. Also required in the California Tribal-State Compact, each tribe operating a casino must establish a group that is responsible for regulating the day-to-day activities of the gaming facility. Its responsibilities include conducting background checks in association with other regulatory groups, issuing licenses to qualified employees, operating security and surveillance systems, and complying with the Minimum Internal Control Standards as set by the NIGC.
   
   
5. On the state level, the State Division of Gambling Control for the California Department of Justice reports to the California Attorney General. The agency monitors, investigates, and enforces violations concerning gambling activities.
   
   
6. The tribal-state compacts mandated the creation of the California Gambling Control Commission (CGCC). It is charged with setting policy, plays a role in issuing licenses with the tribal nations, and administering and regulating all matters related to gambling in the state. The department reports to the California Attorney General’s Office.

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Economic Diversification

Fiction:
Native American tribes do not consider any other forms of economic means other than gambling

Fact:
Gaming has given tribes the opportunity to explore many new areas of business

Statistics have shown over the years that Native Americans are one of the poorest groups in the United States. On some reservations, unemployment rates can exceed ten times the national average. Since many of the reservations are in unfavorable geographic locations with unpaved roads and little in infrastructure, it can be difficult for tribal members to overcome the poverty they have faced for many generations.

Indian gaming has been described by many as a steppingstone for building an economic foundation for the tribe’s future. In June 1999, the National Gambling Impact Study Commission released its study of the social and economic implications of gambling in the United States. It concluded that communities tend to prosper around casinos and reap more jobs. On many reservations around the country, you can see how Indian gaming revenues have permitted the tribes to branch out into other successful business ventures.

Through revenues generated from gaming, tribes across the state have gone into a diverse number of businesses, from restaurants, retail outlets, banks, recycling rubber tires and water bottling to shopping malls, gas stations and mineral health spas.

It is truly remarkable that in the first two years since the passage of Proposition 1A, a large number of California tribes have sought to diversify their businesses and become less reliant on their gaming operations for funding their tribal governments.

“Over the years, the act (IGRA) has been responsible for lifting many indian tribes out of complete poverty and despair and has breathed new hope and optimism on many reservations across America.”
—Montie Deer, Chairman of the National Indian Gaming Commission

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Entitlements

Fiction:
Despite large profits made from casinos, tribes still take government dollars

Fact:
Tribal governments receive federal funds, as all state and local governments do, in order to provide services to their land and people, who also pay federal income tax

Many federal programs of financial assistance to governments are not means-tested. Grants to tribal governments are no different. The fact that a tribal government may operate a casino has no bearing on that tribe's eligibility to participate in non-means tested government grant programs, just as a wealthy city may participate in the same government grant programs available to the poorest of California's cities.

For some tribes, even with gaming, federal funds continue to make life livable on the reservation. Like any city or county government, recognized tribal nations receive monthly entitlement funds that allow the tribal governments to function effectively.

Local municipalities are not responsible for funding the upkeep and maintenance of reservation land. The monies that tribes receive from the federal government are essential to pay for reservation housing, healthcare, education programs and infrastructure; fundamental needs for everyday life.

The fact is, few casinos make enough in revenue to effectively provide for programs needed by members of the reservation. Those that do are returning or diverting these funds to tribal nations that are in need. We are seeing a growing trend in tribal nations that are no longer reliant on these entitlements.

“Indians are not exempt from federal income tax by reason of being Indians or because their income is earned in Indian country”
—Willam C. Canby, Jr.
Senior Judge, United States Court of Appeals For the Ninth Circuit 1998

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Public Safety

Fiction:
Native Americans place an unfair drain on the emergency services of that particular area

Fact:
The needs of each sovereign Indian Nation vary. Some tribes provide and/or pay for their own emergency services

California is a federal Public Law 280 state. Created in 1953, the statute effectively handed power over from the federal government and mandated that states must provide services on reservation land. When the law was drafted, despite having a strong impact on reservation life, no Native Americans were consulted on the issue. It was a ruling intended to give states more power in their relationships with Indian tribes, who before this had dealt exclusively with the federal government. According to many legal scholars, this was a sweeping blow to the sovereign status of Native Americans and their unique government-to-government relationships with the federal government.

Even so, many tribes provide or pay for their own emergency services. Since tribal lands are frequently in remote areas of the state, tribes cannot always rely on services that may be dozens, or even hundreds, of miles away. There is no one set of standards that tribes follow. Emergency services are handled on a tribe-by-tribe basis through that local government.

Though not required, there are many instances throughout the state where tribes have donated monies to emergency service departments or have established contracts with county agencies to provide emergency protection services. Other tribes have signed memorandums of understanding (MOU) with cities and counties, which establish a payment method for these services.

Indian gaming is allowing tribes to develop their own infrastructure or pay for services needed on the reservations. Certainly without Indian gaming, there would be a drain on the local areas.

In addition to this, the Special Distribution Fund, as created in the tribal-state compacts, was established to address exactly these issues: “…for the support of state and local government agencies impacted by tribal government gaming.” Currently, tribal nations are working with the state legislature in designing a procedure whereby local governments can apply for grants and funds to pay for services rendered.

“We should embark upon a major effort to provide self-help assistance to the forgotten in our midst—the American Indians...”
—President Lyndon Baines Johnson

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Environment

Fiction:
On reservation or trust land, Native Americans do not have to adhere to any environmental protection regulations

Fact:
Native Americans observe rigid guidelines in dealing with environmental concerns

With or without gaming, tribal governments are subject to all federal environmental laws on their reservations. The Bureau of Indian Affairs must comply with the National Environmental Policy Act (NEPA) in approving long-term leases of trust land, and under IGRA, the NIGC must comply with NEPA when reviewing and approving management contracts and related agreements.

The tribal-state compact requires that before a project starts, the tribe will adopt a plan of action to look at the off-reservation environmental impacts and make every effort to follow the policies and requirements of the NEPA and the California Environmental Quality Act (CEQA). (See California Tribal-State Compact Sec. 10.0. Public and Workplace Health, Safety, and Liability.)

These requirements include detailed analysis and conclusions from environmental experts. In some cases, tribal nations have environmental offices with trained professionals participating in environmental issues on and off of the reservation. Tribal nations work with local experts to conduct the studies necessary to look at the impacts from Indian gaming.

While some believe that the best solution to minimizing community environmental concerns is increasing state oversight, existing regulations at the state and federal level are currently in place to protect both the environment and the public. IGRA sets the ground rules for tribal-state compacts that in many cases meet the minimum state requirements. Consider these terms set forth in the tribal-state compacts presently in place in California:

• Any construction activity after the compact is signed must conform to county building and safety codes or the Uniform Building Codes as adopted by that tribe.
  
  
• Tribes will adopt the standards of either the building and safety codes of the county where the facility is located or the Uniform Building Codes. This includes all uniform fire, plumbing, electrical, mechanical, and related codes.
  
  
• No tribe will have a gaming operation that is dangerous to the public health, safety or welfare (excluding tobacco use).
  
  
• Each tribe is required to adopt and follow the state public health standards for food and beverages. State or county health inspectors can come to any gaming facility during normal business hours and make sure the facility is following these standards. While state and county health inspectors do not have jurisdiction over the tribe, any problems are considered violations of the tribal-state compact.
  
  
• Gaming tribes will carry at least $5 million in public liability insurance and be ready to settle claims promptly and fairly. They must be ready to pay legitimate claims, but not for punitive damages or attorney fees.
  
  
• Workers’ compensation provides protection to employees who are injured on the job. The tribe can follow the state’s system or adopt its own program with the same provisions.

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Political Contributions

Fiction:
Tribes should not have the right to make political contributions if they claim sovereignty

Fact:
Tribal participation in the state’s political process should be a source of pride for all Californians, and proof that the American system of democracy really works

To argue that Native Americans should not make political contributions is to say that they should not have the right to vote. Furthermore, the right to make political contributions is, according to the United States Supreme Court, an exercise of our First Amendment right to free speech. Tribes are afforded the same rights and privileges granted to all Americans and American organizations that desire to participate in the democratic process. In the state of California, tribal governments are able to make contributions to political candidates, just as do labor unions and corporations. Native Americans give to candidates, organizations and causes that share common aspirations with the tribe. Indian nations make contributions to candidates who support the protection of individual rights and property ownership, and respect and preserve the government powers of tribal nations.

By contributing to various campaigns and causes, Native Americans are able to participate in a process that they were excluded from for years.

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