"Interestingly, there is one form of gambling so under-regulated and so under-taxed that it has become, well... something of a monopoly in the industry.

In the 1976 United States Supreme Court case titled Bryan v. Itasca County, the high court reaffirmed that states had no authority to tax property of Native American reservations or regulate activities of inhabitants within their borders without Congressional approval. The ruling was based upon the Commerce Clause of the United States Constitution that grants the Federal government the exclusive right to deal with "the Indian Tribes." It wasn't long thereafter that high-stakes bingo and casino-style gambling began appearing on some otherwise economically barren reservations.

In 1987, in California v. Cabazon Band of Mission Indians, the high court ruled that while states could impose their criminal jurisdiction on tribal reservations, the states could not utilize this power in a hypocritical or otherwise inappropriate manner. Thus, the court reasoned that in a state like California, which permitted gambling and even promoted its own state lottery, the government could not use criminal statutes to effectuate what was in reality an attempt to impose civil regulation on reservation gaming.

The Cabazon decision literally opened the floodgates to Native American gaming. In its wake, various states lobbied Congress for authority to regulate and tax these operations, most of which were competing with state-sanctioned and state-taxed private and public gaming. In response, Congress passed The Indian Gaming Regulatory Act (IGRA) in 1988.

IGRA sets forth classifications of Native American gaming. Traditional social games with minimal prizes are designated as "Class I" gaming, and are exempt from all regulation. Class II gaming mostly involves bingo and bingo-style games and "non-banked" card games, where players compete against themselves and not the house. "Class II" gaming is permitted on reservations in states that permit gaming to any extent at all. Class II gaming is completely regulated by tribes with the oversight of the National Indian Gaming Commission (NIGC), a federal regulatory body established pursuant to IGRA.

States have limited involvement with Native American gaming only under "Class III" which involves casino-style gaming like blackjack, roulette and slot machines. In order to conduct Class III gaming, the tribe must negotiate and execute a compact with the state and, pursuant to IGRA, the state is obligated to negotiate in good faith."

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Chris E. Wittstruck: Native American Casinos - Govt. monopolies (HarnessLink 12/7)