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History as a Guide?
By Michael J. Anderson
On January 20, 2017, President Donald J. Trump was sworn in as the 45th president of the United States.

American Indians and Alaska Natives have traditionally voted Democratic in presidential elections, with some exceptions in Alaska, Arizona, Utah, Oklahoma and a handful of other states. Post-election maps typically show pockets of blue (Democrat) in red (Republican) states where Indian reservation residents reside.

It is with this history that Native Americans, along with most of the country, were shocked and surprised that Mr. Trump had won the election. Along with this shock was a genuine fear for many of what a President Trump might mean for Indian Country with respect to sovereignty, the federal budget, the trust responsibility and, of course, for the continued success of the modern buffalo—Indian gaming. This article highlights both the potential opportunities and pitfalls a Trump administration will present for Indian Country.

Reading the tea leaves with respect to Indian gaming policy has always been a challenge with a new president, and current Indian Country leaders have experienced many transitions from the presidential administration of one party to another. President Bill Clinton had virtually no experience with Indian gaming before taking office, yet his administration and policies supported almost $10 billion in Indian gaming revenue growth during the 1990s.

While some tribal leaders were apprehensive of President George W. Bush and his professed support for states’ 10th Amendment rights, his administration continued to accept land in trust for Indian gaming projects and approved dozens of tribal-state compacts. President Barack Obama also was virtually a blank slate with respect to Indian gaming, yet his administration would prove to be one of, if not the most steadfast supporter of Indian gaming projects and compacts in history.

One difference between President Trump and his immediate predecessors is that he was never an elected official, which in most cases might provide some information on Indian gaming policy. Oddly enough, however, Trump’s private-sector experience in the casino industry has provided him with more background on the Indian gaming industry than all of the prior presidents combined. In particular, however, one congressional hearing in 1993 has painted a long-lasting negative impression of Trump that has been difficult for him to overcome.

In 1993, the House Natural Resources Committee chaired by Democratic Chairman George Miller held a hearing on the regulation of Indian gaming, which then was at an early stage. Trump was an invited witness, and provided his perspective as the owner of the Taj Mahal in Atlantic City, New Jersey. He alleged the prospect of organized crime activities in Indian gaming and challenged the authenticity of the Mashantucket Pequot Tribe in Connecticut.

Trump made a number of unsubstantiated and offensive statements in the hearing, including a now-legendary comment that some of the tribal members in Connecticut did not “look” like Indians to him. The Criminal Division of the Department of Justice testified at the same hearing and debunked Trump’s allegations that there was an organized crime presence in Indian gaming.

The introduction of Donald Trump’s negative views to tribal leaders and the National Indian Gaming Association was compounded a year later. In 1994, he testified before an Indiana state legislative committee and opposed an Indian tribe’s potential entry into the South Bend gaming market in Indiana.

If those two activities were Trump’s only experience with Indian tribes, there would be very strong reasons for concern even today. However, as the Indian gaming market grew and alliances were formed with Las Vegas entities and Indian tribes, Trump followed his contemporaries and began to partner directly with Indian tribal governments.

For example, Trump’s organization partnered in the early 2000s with the Twenty-Nine Palms Band in Southern California, and entered into a management agreement with the band. The relationship ultimately was terminated by the band, and while not totally amicable, it did not result in litigation. His corporation also entered into an affiliation with the unrecognized Paucatuck Eastern Pequots in Connecticut and funded their federal recognition efforts. Trump later sued the tribe in 2003 when the Paucatucks unified with the Eastern Pequots and terminated their agreement with Trump. Also in the early 2000s, Trump apparently worked behind the scenes in an attempt to block the St. Regis Mohawk’s efforts to establish a casino in the Catskills, New York.

The most positive statement of Trump’s views on Indian gaming came in a 2000 letter from Trump to the Cowlitz tribe in Washington state. In his letter to Cowlitz Chairman John Barnett, Trump expressed his support for tribal sovereignty and tribal gaming so long as it was properly regulated. He also sought to explain away in part his earlier testimony before the House Resources Committee. Ultimately, the Cowlitz tribe did not enter into an agreement with the Trump organization.

Based on this history, no discernible philosophy on Indian gaming emerges from the past interactions between Indian tribes and Trump. Most of the potential partnerships and lawsuits appear to be driven strictly by business reasons. Even so, it may be of some comfort to supporters of Indian gaming that Trump has had direct dealings with Indian tribal government officials and has even partnered with tribes. This history seems to eliminate the prospect that Trump would harbor any objections to Indian gaming based on moral grounds or that tribes are somehow infiltrated by organized crime or compromised by lack of regulation.

With respect to land-in-trust acquisition for Indian casinos, it is also difficult to see where President Trump and his administration stand. Trump has expressed a strong desire for economic development in rural areas, which could favor tribal acquisitions, especially for energy projects. By contrast, his strong support for states’ 10th Amendment rights could favor a potential veto power over acquisitions that do not have the support of local communities and state governments.

The major official in charge of land acquisitions at the federal level under the Indian Reorganization Act is the secretary of the interior. President Trump has nominated Montana Congressman Ryan Zinke for secretary, and he is expected to be confirmed. Zinke had a number of Montana tribes support his nomination. At his confirmation, he expressed strong support for tribal sovereignty and self-determination. Routine land acquisitions will therefore likely continue, although the more controversial “two-part” off-reservation acquisitions probably reached their high-water mark with the Obama administration.

Like a trained poker player who can read “tells” at the gaming table, observers of Indian Country will soon have some “tells” based on how the Trump administration responds to some late-inning decisions of the Obama administration. In particular, Acting Assistant Secretary Larry Roberts made a number of end-of-administration decisions, some of which are just surfacing in the press.

For example, the Interior Department approved a two-part application for the Shawnee Tribe of Oklahoma for 107 acres that is ready to be submitted to the Oklahoma governor. Since this decision is not terribly controversial, the Trump administration may allow it to stand.

In addition, DOI approved a land swap for the Timbisha Tribe in Ridgecrest, California that appears to reduce the National Environmental Policy Act requirements from a more extensive land-in-trust process under 25 CFR 151 to a more expedient environmental overview. The Ridgecrest City Council has expressed opposition to this decision.

One of the more important late-inning Obama administration decisions involves the Cowlitz Tribe of Washington. Opponents of the tribe filed a petition to the Supreme Court to reverse their favorable decision by the D.C. Circuit on July 29, 2016. The Department of Justice has defended the Interior secretary’s decision, but requested and was granted an extension of time to respond to the petition request.

New Attorney General Jeff Sessions could reverse or change DOJ’s prior support and legal theories on behalf of the Cowlitz Tribe. Such a decision to undercut or change the Obama administration’s landmark legal opinions and court decisions interpreting the United States Supreme Court decision in Carcieri v. Salazar would have profound negative effects on a number of tribes who have struggled to show that they were “under federal jurisdiction” as the IRA requires.

Another late decision worth monitoring is the Bureau of Indian Affair’s issuance of the Record of Decision (ROD) for the Wilton Rancheria in their application for 35.9 acres in the city of Elk Grove, California. A notice of the ROD in the Federal Register was not published before January 20, 2017. The Trump administration has put a blanket hold on all nonpublished notices and regulations, and the Rancheria’s opponents have asked that it be held. This is likely going to be one of Secretary Zinke’s first decisions involving Indian gaming land acquisitions, and could be quite instructive.

Some other indicators of support or negativity for Indian gaming will involve the potential legalization of internet poker and growth of state internet gambling. The confirmation of Attorney General Sessions will likely hinder efforts to pass a national law to legalize internet poker, which in turn would continue to provide brick-and-mortar Indian casinos with a market advantage.

One latent issue potentially affecting tribal gaming is whether federal budget balancers will take another run at taxing Indian gaming revenue directly. The highly contentious attempt by the Republican chairman of the House Ways and Means Committee Bill Archer to tax Indian tribal governments in the mid-1990s failed spectacularly, and would face even more well-funded opposition today.

Like any new presidential administration, the hopes and fears inspired by the president are generally out of proportion to the eventual reality. Indian gaming is such a powerhouse for local economic development, and Indian tribes are such integral players in federal and state politics, it is difficult to see drastic changes in the industry. Gambling on the Trump administration’s Indian gaming policies may present some challenges, but it remains a good bet.
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Michael J. Anderson, Anderson Indian Law, has practiced federal Indian law for over 30 years in Washington, D.C. He served as acting assistant secretary and deputy assistant secretary for Indian affairs during the Clinton Administration (1995-2001) and associate solicitor for Indian affairs. He is a citizen of the Muscogee (Creek) Nation.

Orders in the Courts
By Judy A. Shapiro

A new president’s impact on the judiciary is a slow process. The federal judicial system is constructed to resist change. Even dramatic political shifts in the administration, and in Congress, take time to percolate through the courts. Federal judges have life tenure; many sit for decades. Of nearly 900 federal judgeships, there are now a little more than 100 vacancies—a ratio matched by the one vacancy out of nine seats on the Supreme Court.

The Supreme Court gets most of the nomination attention, but those other seats will slowly fill in, and they matter. The appointment power seldom matches the drama of transformative policy through legislation or executive action, but it confers the opportunity to shape federal law over a long period of time.

The Supreme Court generally accepts one or two Indian law cases in a year, and it has not, in recent years, been kind to tribal interests. By the end of last term, with Justice Scalia’s seat vacant, the court split 4-4 in Dollar General. If the court had mustered five votes to overturn the decision, it might have severely constrained tribal court jurisdiction. With that same vacancy continuing, the court has already heard argument on sovereign immunity, and is being asked to consider the critical question of the Interior Department’s authority to accept trust land under the IRA in a post-Carcieri world. Disenrollment cases are also working through the judicial process, as are questions of good-faith compact negotiation and gaming eligibility of new trust lands.

As of this writing, the Senate is considering the nomination of Neil Gorsuch to the Supreme Court. After 10 years experience on the U.S. Court of Appeals for the 10th Circuit, Gorsuch, unlike many of his predecessors, has some familiarity with the more abstract principles of Indian law. His positive record could signal a change in direction for the Supreme Court.

Because the Supreme Court seldom takes more than one or two Indian law cases each year, conflicts on tribal issues most often reach finality in the lower courts. In principle, a single district judge can alter the progress of a proposed gaming enterprise, although the obligation to follow existing precedent limits dramatically new interpretations of law.

Appellate judges have more freedom to diverge from established practice; they are certainly not bound by lower court decisions. But it will take more new appointments to alter the direction of a circuit court, which usually operates through three-judge panels. A losing party can ask for rehearing “en banc,” by all active judges in the circuit. Then, the outcome turns on generations of judges drawn from generations of presidents. Newly appointed circuit judges tend to have a delayed impact on the direction of appellate review.

The most significant transition of Indian law matters in federal courts will likely flow from the altered environment in the executive branch. As in the past, the courts will be asked to consider challenges to decisions made by the now departed administration. In the normal course, the Interior Department and the Depart-ment of Justice would vigorously defend the determinations to take land in trust, put regulations in place, approve compacts, or determine gaming eligibility of trust land. But now we have an executive branch whose philosophies of governance, land use, private ownership and states’ rights differ from its predecessor’s.

It may, to the extent permitted by law, rescind an earlier decision—as in the chaos of the reversal of the decision to require full environmental review for the Dakota Access Pipeline. More subtly, an agency may decline to defend an existing decision. The United States may choose not to oppose Supreme Court review of a decision that the Obama administration won in the lower courts.

The Department of Justice might opt not to defend a decision that favored a tribe in the early stages of attack. In these cases, the tribes may have to expend more resources to try—alone—to preserve the progress they made with the last administration. They will be disadvantaged to not have the United States on their side, joined in common interest after a lengthy agency process.

Those who have doggedly opposed tribal gaming development in the past may now become bolder. They, too, will notice if the United States stops defending tribal interests. They, too, may look for new appointments to lower courts as a way to redirect a forum that had previously been more protective of tribal interests.

And all eyes will be on the Supreme Court, to gauge its developing positions on tribal trust land, tribal rights to good-faith compact negotiation, and, ultimately, the ability of all tribes to count on the full benefits of the Indian Gaming Regulatory Act.
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Judith A. Shapiro has practiced Indian law for more than 20 years. She has particular expertise in tribal gaming, including management and financing agreements, state compacts, administrative regulation of gaming agreements and, most recently, the development of standards governing Class II technologic aids. Shapiro’s work includes tribal recognition and litigation to preserve tribal sovereignty.

A Rising Tide Lifts All Boats
By John Tahsuda

When asked to predict what President Trump’s impact on tribal gaming will be, I thought “it’s a little like looking into a crystal ball” because Native American issues were not actively discussed during the 2016 presidential campaign. However, when you look past the over-hyped/over-sensationalized media coverage, and look at what Trump has been saying he wants to accomplish for the country, you see a lot of things that are important to Indian tribes and their single largest source of tribal government revenue—tribal casinos.

President Trump’s No. 1 objective is to improve the American economy. That sounds great for our tribal casinos. Our tribal casino businesses cannot be exported overseas to find tax havens or to find cheaper labor. We have to remain here. Our patrons have to come here to enjoy our beautiful casinos and resorts. Our employees have to come here to our casinos and resorts to work. We are an America-only business.

Therefore, I fully anticipate that President Trump’s first impact on tribal gaming will be very positive as we all enjoy a faster-growing, stronger economy that benefits all Americans, including the First Americans.

We have now had the opportunity to see Indian gaming flourishing as an industry under both Republican and Democratic administrations. Unfortunately, neither of those presidents was a fan of gaming in general, or tribal gaming specifically. In fact, former President George W. Bush tried to stop his administration staff from even stepping foot in tribal casinos, while former President Obama not only forbade his administration people from conducting meetings at tribal casinos, he tried to stop tribal officials from conducting meetings at their own tribal casinos if federal budget dollars were paying for any part of the meeting costs.

Therefore, I anticipate that the next positive impact for tribal gaming to be seen will come from President Trump’s familiarity with the casino business in general. Given that he has been in the business, I believe he will not only be comfortable with the concept of tribal casinos, but he will actually understand the economic benefit of tribal casinos. President Trump will encourage the regular use of tribal resort facilities to the great benefit of tribes.

Another area that has seen past administrations let down tribes has been the failure to respect and support tribal sovereignty when it came to the biggest tribal assets, tribal casinos. The Bush and Obama administrations failed to support tribal government authority over labor matters in tribal government gaming.

This disrespect for tribal sovereignty reached its pinnacle under former President Obama, who, when faced with a strong, bipartisan congressional effort to acknowledge and restore tribal government authority (the same authority held by every other American government—federal, state and local), actually issued a veto threat to deny tribes their inherent sovereign governmental authority.

I believe President Trump will support tribal government authority over labor matters in tribal government gaming. He has already shown a savviness in working with the trade unions, but not the “service” unions. That same strategy will work positively for tribes, who have had long and historic relationships with trade unions, but have only had disrespect and litigation from the “service” unions such as Unite HERE.

Now that those unions have lost their champions in former President Obama and former Senate Democratic Leader Harry Reid, I anticipate that Trump will encourage unions to respect tribal sovereignty, or he will support changes to laws and regulations that respect tribal authority.

Another policy area in tribal gaming that I believe is ripe for a change in direction is the “off-reservation” land acquisition process. Under former President Obama, the attempts by prior administrations to put reasonable parameters around the admittedly broad and vague IGRA Section 20 land acquisition restrictions were pulled back.

The result was to make the “off-reservation” casino land process a purely political exercise, subject to the very “swamp” activities Trump has vowed to “drain.” Not only does a purely political process lessen public trust, but it is inherently unfair to those tribes legitimately attempting to develop new casino properties that fit within long-accepted legal standards.

I anticipate that President Trump will direct his administration, particularly the Department of the Interior, to develop new fair and reasonable standards to govern the acquisition of land off-reservation for gaming purposes, consistent with the Indian Gaming Regulatory Act and other longstanding federal Indian laws and policies.

These are only a few of the policy issues important to tribal gaming. I am sure that over the next few years, other issues will arise, some of which the tribal gaming industry will be on the same page as President Trump and others which may see some differences.

But I anticipate that those differences will be addressed with respect from the administration, and discussed and resolved consistent with the longstanding policy of government-to-government dialogue. Tribal gaming has now been through numerous changes in administrations, and continued to grow and thrive while working with each.

I do wholeheartedly anticipate that President Trump will support tribal gaming for its most important purpose: to provide an economic base for the development of strong tribal economies and to support critical functions of tribal governments. His vision of an economically powerful and secure America will be the rising tide that lifts all canoes.
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John Tahsuda is a principal of Navigators Global, LLC, specializing in Native American law and policy. He is a former staff director of the Senate Committee on Indian Affairs. Tahsuda is a member of the Kiowa Tribe of Oklahoma.

In the 20 years following the 1988 passage of the Indian Gaming Regulatory Act, the interplay between the tribal and commercial gaming verticals was largely a one-way street.

Commercial operators and suppliers saw tribal gaming as an expansionary opportunity, and were quick to lend their know-how, products and services to tribes. Tribes, for their part, needed to find people and companies who could help them kickstart their nascent casino businesses.

“Early on in our gaming era, we had to go outside and find some of the experts to help us understand the industry that we were embarking on,” says Ernie Stevens, chairman of the National Indian Gaming Association. “Naturally we looked at the outside industry, outside consultants, management companies—things like that. It was our desire to hit the ground running and make this industry work for us.”

But as tribal gaming has matured into a $30 billion industry and individual tribes have built up their own repertoires of skill and experience, the cross-pollination between the tribal and commercial verticals has become much more dynamic—with tribal operators no longer constrained to four-walled properties on reservation land.

Whether it be through licensing, operations, equity stakes or otherwise, the tribes that have been most successful and mature in tribal gaming are increasingly branching out as commercial gaming operators in a myriad of ways.

“Those in Indian Country are now becoming the experts in the industry. It’s important to understand that we’ve grown up in the industry and we are now our own experts, and we’re very proud of that,” says Stevens. “That’s a clear reflection of our experience, of our resources and of the priorities of our tribal councils and tribal governments.”

Start with the Seminoles

The outgrowth first picked up steam in the mid-2000s, when the Seminoles of Florida acquired the licensing rights to two Hard Rock casinos in the state and leveraged that success to acquire the Hard Rock International brand outright in 2007 for $965 million.

While the tribe had dramatically improved its welfare over the prior 30 years through gaming—and particularly through the development of Class II bingo machines that looked like Class III slot machines—its efforts to expand its offerings in the state were being met with resistance.

“The problem you have if you’re an Indian tribe is you only get gambling on Indian land,” says Bob Jarvis, a law professor at Nova Southeastern University in Florida. “You have to have the right confluence, you have to have an area where there really aren’t any other options and you have to have a state that’s willing to play ball. For the longest time, the Seminoles were not in a state that was willing to play ball with them.”

That all changed when the Seminoles, under their indefatigable Chairman Jim Allen, acquired Hard Rock and thus transformed themselves from Class II gaming operators into a full-fledged entertainment empire.

In the years since, the tribe has successfully utilized the Hard Rock brand to bring casinos, cafes and other entities into that empire—which now tops $5 billion in annual revenue and spans 68 countries. In addition to the six casinos it owns and operates in Florida, the tribe now licenses its Hard Rock name to eight other casinos in the U.S. and another in Macau.

“It’s not necessarily the tribe itself—Seminole Gaming or the Seminole Tribe of Florida—that is out trying to own additional casinos or develop additional casinos,” says Jeff Hook, senior vice president of marketing for the tribe. “They really use the Hard Rock arm to go do that and to leverage the brand that Hard Rock has to help grow the casino business for the tribe.”

This diversified approach has given the tribe an enviable status in Indian Country.

“Jim Allen is at least 10 years ahead of anybody else. The Seminoles are at least 10 years ahead of anybody else. What they’ve realized is that gambling is really not their future because there is a cap to what they can do,” says Jarvis.

As the Seminoles sought to diversify their holdings outside of gaming, other major tribes took a different approach during the mid-2000s by leveraging their tribal gaming cachet to propel them into commercial gaming.

“Since we know gaming the best, it’s only natural that we look for ways to advance in that industry first,” says Felix Rappaport, chief executive officer of Foxwoods Resort Casino in Connecticut.

Expanding Portfolios

The Mohegans and the Mashantucket Pequots—owners of Mohegan Sun Casino and Foxwoods, respectively, in Connecticut—began closely looking at new ways of broadening their gaming portfolios in response to heightened competition from states in the mid-Atlantic and Northeast regions.

“Gaming is something that only a relative handful of organizations do well, and since we believe we have a level of expertise that’s valuable, it’s only natural that we have looked at ways to expand the Foxwoods brand into other commercial ventures,” says Rappaport.

Both tribes eyed Pennsylvania, which had then just passed enabling legislation, as a natural jurisdiction to lend their expertise and broaden their holdings. In 2005, the Mohegans acquired the Pocono Downs racetrack in Wilkes-Barre from Penn National Gaming for $280 million and launched it in 2006 as the state’s first slot parlor. Today, it has expanded several times—including a four-star hotel—and is one of the most successful casinos in the state.

The Pequots in 2006 won a license to build a casino in Philadelphia, but the $275 million project never materialized, as the tribe could not find a committed financial backer during the economic downturn. The license was ultimately revoked by the state’s gaming board in 2010.

The Mohegans and the Pequots also fiercely sought to break into Massachusetts, which had for years served as a key feeder market for their respective Connecticut properties.

The Mohegans eyed a potential casino site in the city of Palmer—east of Springfield—only to be stuffed in 2013 when it lost a local referendum by just 93 votes. The tribe then set its sights on bidding for the Boston license with a proposal to build a $1.3 billion resort at Suffolk Downs, though that effort also came up short as the project was ultimately awarded to Wynn Resorts in 2014.

The tribe’s commercial expansion efforts suffered another blow in late 2014 when New York turned down its bid for a license to build a casino in the Catskills.

The Pequots have also had difficulty expanding in the congested Northeast—particularly in Massachusetts. The tribe’s bid for the Boston license was shot down by voter referendum, and it kicked tires on sites in Fall River and New Bedford in the state’s southeast region only to have the Massachusetts Gaming Commission decline to grant a license for that part of the state in 2016.

But a key trait of any successful gaming company is that it picks itself up off the mat and keeps plowing ahead.

With expansion prospects in the Northeastern U.S. largely dried up, the Mohegans hit a potential jackpot in 2016 when they won the rights to build what will be the largest casino in South Korea at Incheon International Airport—the eighth-busiest airport in the world. The facility—expected to open in 2020—will try to pry high-roller tourists from northern China, and is projected to draw 10 million visitors annually.

In June 2016, the Pequots announced a partnership to build a brand-new Foxwoods Resort Casino in Biloxi, Mississippi, thus giving the tribe its first greenfield commercial gaming enterprise once the project comes to fruition.

The Mohegans and the Pequots are also teaming up in a commercial venture to build a third casino in northern Connecticut to stave off competition from MGM’s new property—currently under construction in Springfield, Massachusetts.

“Since Mohegan and Foxwoods are the only two resort casinos in Connecticut, we’re building together in an effort to protect both Connecticut jobs and the local economy,” Rappaport says.
Creative Financing and Operations

But as the Seminoles have demonstrated, there are creative ways of working around greenfield casino projects that are resource- and capital-intensive but also limited in their supply.

The Mohegans have also actively sought to market their operational expertise to other Indian tribes looking to get into gaming. In 2015, the tribe closed on a $485 million deal to bankroll the construction of a casino for the Cowlitz tribe in southern Washington. The agreement also includes management and operational rights once the property opens in the second quarter of 2017.

Though the project has been in the works since 2004, there are questions over its future, as it is stuck in a legal dispute over whether the Bureau of Indian Affairs acted properly by taking the land into trust.

In 2014, the Poarch Band of Creek Indians of Alabama began exploring a similar back-door route—leveraging their tribal gaming success into a commercial gaming footprint through consulting, partnerships and acquisitions.

“The effort has been twofold,” says Arthur Mothershed, chief financial officer of PCI Gaming, the business enterprise of the Poarch Creek tribe. “First, the goal was to expand (our) footprint in the Southeast region, and secondly to help other tribes with startup gaming facilities. The rationale for focusing on the Southeast was to use our current database to expand into other markets.”

In 2016, Poarch Creek announced the purchase of the Margaritaville Casino in Bossier City, Louisiana, and it assumed management and operational responsibilities of a new casino owned by the Washoe tribe near Reno, Nevada.

“We realize how difficult it is for a tribe to raise money for a greenfield project on tribal lands, and want to help make that process easier,” says Mothershed.

Online gambling is the newest frontier being explored by tribal gaming interests. Numerous tribes have developed free-play social casino platforms with the goal of building up technical know-how and a customer database that can be leveraged to gain licensure in new markets as they open up.

Two tribes have already established a presence as out-of-state operators in New Jersey, and are building their online gaming cachet.

The Pala Band of Mission Indians, seeking a head start on possible online poker legalization in California, built an in-house platform that launched under the Borgata license in 2014. The Mohegans in 2015 won the right to invest in Resorts Atlantic City’s iGaming operations as an extension of a previous management and equity deal.

As online gambling finds its way onto the legislative agenda in several states in 2017, Stevens of NIGA says tribes are closely monitoring the landscape, and that national regulators are prepared to accommodate new opportunities that might arise.

“I think the most important thing for us—if the iGaming world moves forward legally—is that they understand that tribes are governments, and that we would expect to interact with that industry just like any other government would. That’s the level we would expect to participate,” Stevens says.

Ready for Regulations

Regardless of the specific pathway pursued, the transition from tribal into commercial gaming is lined with regulatory, operational and competitive obstacles—particularly as gaming matures and casinos continue to proliferate across the U.S.

As the Mohegans and the Pequots have learned, competition is increasing as the overall supply of casino licenses tapers off and the number of qualified casino operators continues to grow. Thus, it becomes incumbent on the tribes to demonstrate and articulate their value proposition vis-à-vis their new commercial competitors.

“I’ve been in this business for 38 years—33 of which were working for publicly traded companies. I’ve seen a lot of other operations, and I believe our operations are comparable with some of the so-called giants,” says Rappaport.

However, no tribe has yet to succeed in wrestling a license away from the likes of Wynn Resorts or MGM.

Another issue that must be taken into consideration is that the regulatory landscape for state-by-state commercial gaming differs from that of Indian Country—where tribes operate under the National Indian Gaming Commission and compacts negotiated with their home states.

Jarvis, of Nova Southeastern, reckons the level of supervision employed by many state regulators is more exacting than tribes may be accustomed to.

“All of a sudden, you have to go in front of serious regulators like the Nevada Gaming Commission, where you have to open your books and start explaining who is involved in your operation,” he says. “You don’t have to worry about that when you’re a tribe in front of the NIGC because they don’t ask those sorts of questions.”

The importance of this theme was evidenced in mid-February when the Pennsylvania Gaming Control Board commenced an investigation into “possible operational control deficiencies” at Mohegan Sun Pocono.

Stevens of NIGA insists that complying with new regulations is hardly an insurmountable challenge, as tribes have been doing so for three decades and now spend $426 million on regulatory costs per year. But the divergence does highlight some of the logistical and communications challenges that come with branching into a completely different operating environment.

“It has been a challenge for us to convey the message that expansion opportunities are commercial operations subject to local and state jurisdiction rather than regulated by the traditional tribal regulators,” says Mothershed of Poarch Creek. “We began the process believing that all expansions would be similar to those in our past.

“Our advice to other tribes is: before you begin negotiating a deal in a state jurisdiction, keep your governing board and tribal council fully informed of the local and state requirements, and emphasize and that those requirements override tribal jurisdiction.”

Thirty years ago, the U.S. Supreme Court issued a landmark ruling, in California v. Cabazon Band of Mission Indians. The ruling led to the passage of the Indian Gaming Regulatory Act of 1988, setting the principle that sovereign tribes could offer the same kind of gaming approved in the state where they were located. It was the true birth of Indian gaming.

The nondescript stucco building with the sign “Cabazon Card Casino” was packed with about 100 poker players the night of February 15, 1983, when Brenda Soulliere, then 21 and working the cashier’s cage, prepared to leave for a shift change.

Soulliere, a member of the Cabazon Band of Mission Indians Tribal Council, was oblivious as several Riverside County Sheriff deputies entered the building. Deputies acting as players rose from their chairs. Still others emerged from a bathroom.

“Suddenly, there were sheriff’s deputies everywhere,” Soulliere recalls of the 16 law enforcement officers who participated in the raid.

“Don’t leave me here!” screamed a woman cage employee.

“I went back and locked the door,” Soulliere says. “It was a big, heavy door with a deadbolt lock. The GM (Philip Nichols) was shouting at me, ‘Don’t open the door!’ A sheriff’s deputy was banging on the door, yelling, ‘Open the door!’

“They had guns,” Soulliere says of the deputies. “So I opened the door.”

Deputies shoved Soulliere against a wall and began rifling through her purse.

“I asked them why,” she says. “They said they were looking for a bazooka.”

Authorities issued misdemeanor citations to Soulliere and 30 other tribal members, employees and patrons and confiscated $3,000 in cash, records, cards and chips.

The Riverside County raid and an earlier, October 18, 1981 card room bust by Indio police launched a six-year legal war over the tribe’s right to operate gambling that culminated in the landmark 1987 U.S. Supreme Court ruling in California v. Cabazon Band of Mission Indians.

The high court’s 6-3 decision for the Cabazon Tribe—combined with congressional passage a year later of the Indian Gaming Regulatory Act (IGRA)—planted the seeds of what is today a $30 billion American Indian casino industry with some 480 operations in 28 states.

Indian gambling is credited with strengthening tribal governments, rebuilding economies and revitalizing indigenous communities decimated by generations of war, broken treaties and failed paternalistic federal Indian policies that included efforts to terminate tribes.

Considering the tortured history of indigenous Americans, it is, perhaps, appropriate that a small, economically deprived band of Desert Cahuilla Indians on a barren and remote reservation would strike a crucial legal blow for tribal sovereignty and self-sufficiency.

Building A Community

“There was nothing out there but sand and sagebrush,” tribal attorney Glenn Feldman says of the roughly 1,700-acre Cabazon Indian Reservation, which in the late ’70s was home to fewer than five families. Tribal headquarters was a room in a nearby low-rent motel.

Desperate for economic development, the band, which at the time consisted of fewer than 25 members, grew jojoba beans for two years before the bottom fell out of the market.

The tribe then launched a mail-order cigarette operation, and later a packaged liquor business. Both enterprises were shut down for violating federal and state tax laws.

“We were frustrated,” Soulliere recalls. “We just wanted some economic development to create jobs for ourselves. It was that simple. We wanted jobs on the reservation.”

It was at that point tribal Chairman Art Welmas and the council decided to get into the gambling business.

A handful of indigenous governments—notably the Seminole Tribe of Florida—had in the late ’70s opened high-stakes bingo operations, most of which were quickly embroiled in legal disputes with state and local officials.

“We had seen what had happened in Florida and we decided we would take the safe route. We’d go after a card room,” former tribal CEO Mark Nichols told Ambrose Lane, author of Return of the Buffalo.

“After all, they are all over California,” Nichols said of the hundreds of municipalities with licensed card rooms. “Who could argue with local option?”

Indio city officials and later Riverside County sued to shut down the card room for violating anti-gambling laws.

The legal battle for three years centered on whether the card room was on city property. Cabazon won that dispute, proving the land was never legally annexed by the municipality.

The court victory prompted the Riverside County raid, after which Feldman was able to obtain a preliminary injunction allowing the card room to remain open during the lengthy litigation. The tribe in 1983 opened a bingo hall across from the poker room.

California intervened in the litigation. A lawsuit by the nearby Morongo Band of Mission Indians, operators of a bingo hall also threatened with closure by the county, was consolidated with the Cabazon litigation.

The legal dispute centered on what, if any, jurisdiction state and local governments have over Indian trust lands. The issue was convoluted by the fact California was one of six states operating under Public Law 280, which gave states criminal and limited civil jurisdiction over indigenous communities.

Federal appeals courts in Seminole v. Butterworth (1981) and Barona Band of Mission Indians v. Duffy (1982) upheld the right of tribes to operate gambling on Indian lands without state interference. Judges in both cases made a distinction between PL 280 criminal/prohibitory and civil/regulatory matters. If gambling was otherwise legal in a state, they ruled, it had no jurisdiction over tribal governments also engaged in gambling.

The 9^th Circuit Court of Appeals in February 1986 reached a similar ruling, issuing a summary judgment for the Cabazon and Morongo bands and ordering a permanent injunction preventing California and Riverside County from applying their gambling laws on the reservations.

The Supreme Court declined to hear the Barona and Seminole cases on appeal. But it agreed to review the Cabazon/Morongo case, leaving the bands with the responsibility of fighting a crucial legal battle over the right of indigenous communities to engage in gambling on tribal lands.

On the 30^th anniversary of the high court ruling, Cabazon and Morongo are operating upscale gambling resorts in the Coachella Valley.

“We had to fight, legally, every step of the way, for everything we did,” Soulliere recalls.

Supreme Court Interest was a Bad Omen

Attorney Feldman was moving his family from Washington, D.C., to Phoenix, Arizona, in the summer of 1986 when he stopped for gas in Amarillo, Texas. Cell phones were not popular, and he sought out a pay phone to check with his office.

“My secretary told me, ‘Guess what? We just got the order from the Supreme Court,’” Feldman recalls. Justices had issued a certiorari, or writ, to review the 9^th Circuit Court of Appeals ruling upholding the right of Cabazon and Morongo to operate gambling on their reservations.

“I was surprised and disappointed,” says Feldman, who represented the tribes in the federal case. “The conventional wisdom was they took the case to reverse the 9^th Circuit.

“My thought was we had better get to Phoenix and do some research, because we’ve got a brief to write.”

The concern among tribal leaders that the high court would reverse the 9^th Circuit was, indeed, widespread. About 1,600 miles east in Washington, D.C., Frank Ducheneaux hurriedly re-drafted proposed legislation to regulate gambling on Indian lands, a precursor to IGRA.

More than 100 tribes impacted by President Ronald Reagan budget cuts had by 1986 turned to some form of gambling—largely high-stakes bingo—to generate needed revenue to fund government services to their citizens. The Bureau of Indian Affairs said 106 tribes were operating some form of gambling in 1985, 93 of them high-stakes bingo.

“With the draconian reduction in funding of federal programs under the Reagan administration, gaming seemed an ideal source of revenue, and there was a mini-explosion of tribal high-stakes bingo and pull-tab operations,” says Ducheneaux, then counsel to the House Interior Committee on Insular Affairs.

The growth of Indian gambling prompted Congress to debate legislation to provide states some regulatory control over the industry. Because tribes had been successful in federal courts, draft versions of the legislation gave tribes regulatory primacy over their operations.

As is the case with the current version of IGRA, early drafts of what was then the Indian Gaming Control Act, or HR 1920, distinguished between Class I traditional Indian games, Class II bingo and poker and Class III casino-style gambling. Tribes were given regulatory primary over traditional and Class II gambling with states having limited oversight of Class III casinos.

But Indian law experts feared the Supreme Court’s decision to review California v. Cabazon meant justices would reverse the 9^th Circuit and give states total jurisdiction over tribal gambling.

Ducheneaux quickly redrafted HR 1920 giving states enhanced jurisdiction.

“I was trying to get a bill well on its way through the committee and Congress to save what we could before the Supreme Court made its decision,” Ducheneaux recalls.

“I don’t remember the concessions I made to the other side,” Ducheneaux says of opponents to Indian gaming, “but it was not a very good bill. We conceded in the bill state jurisdiction.”

What Ducheneaux terms the “sell-out bill” was offered as a compromise to Indian gambling opponents on Capitol Hill, notably Democratic Rep. Tony Coelho of California. They rejected it.

“We took it to Coelho and his people,” Ducheneaux says of the legislation sponsored by then-Indian advocate and House Democrat Mark “Mo” Udall of Arizona. “In effect I was saying, ‘We know the court’s going to screw us so we’re going to go ahead and screw ourselves a little bit.’

“They rejected it out of hand. They wouldn’t take the damn thing, thank God. They were convinced they were going to get a slam dunk from the Supreme Court.

“I don’t know what I would have done if Coelho and his people had taken the sell-out bill,” Ducheneaux says. “I don’t know whether I could have had Mo take it off the table.”

Cabazon Argued on the Big Stage

Despite the dire predictions circulating throughout Indian Country, Feldman was confident he could convince justices to rule for the tribes. The court set December 9, 1986 for oral arguments. Each side was given half an hour to make their case.

“The law was the law, the cases were the cases; the precedents were all there,” Feldman says. “We had addressed all the issues in the 9^th Circuit. It wasn’t Perry Mason. There were not going to be any surprises pulled out of somebody’s briefcase to change the dynamics of the case.”

Nonetheless, he says, “We knew we had a Supreme Court that at least had some questions or concerns about what the 9^th Circuit had decided.”

Cabazon/Morongo had a federal appeals court record that gave justices some comfort to rule for the tribes; not only the Seminole and Barona cases and a similar 1981 federal court ruling involving the Oneida Tribe of Wisconsin, but a 1976 Supreme Court decision in Bryan v. Itasca, which upheld tribal jurisdiction in a Minnesota tax case.

There were affidavits from Interior officials that tribal gambling as a tool for self-governance was consistent with U.S. Department of Interior policy and directives from the Reagan administration.

There was a stipulation by both sides that there was no evidence of organized crime activity on the Cabazon and Morongo reservations.

And there was acknowledgment that tribes were not among the hundreds of California organizations eligible to operate charitable bingo games.

Justices peppered Feldman about gambling regulations, equating wagering with local government options to legalized cockfighting, drugs and prostitution. The attorney was unflappable.

“Every time somebody threw him a strange question he would respond to it, even if it were far afield from the subject at hand, and just regain his equilibrium,” attorney Patricia Zell recalls in the book Sovereign. “I’ve never seen anything like it.

“He was comfortable, he made everybody else comfortable, and the confidence he exuded really carried the day in terms of the justices’ receptivity to the merits of what he was saying.

“It was just masterful.”

Meanwhile, California Deputy Attorney General Roderick Walston stumbled on factual issues and was dismissive of Cabazon’s claim of sovereignty.

“It is difficult for us to imagine that an Indian tribe with only 25 members can be equated with, say, the sovereign state of California or, for that matter, any other sovereign state,” Walston said.

Six of the nine justices disagreed, ruling on February 25, 1987 that tribes have a right to operate gambling on Indians lands without interference from state and local governments.

Chief Justice William Rehnquist and Justices William Brennan, Byron White, Thurgood Marshall, Harry Blackmum and Lewis Powell made up the majority. Sandra Day O’Connor, John Stevens and Antonin Scalia voted with the minority.

The surprise support came from Rehnquist, who had reviewed legal assaults on the doctrine of tribal sovereignty.

“We got in at the very end of a period when tribal sovereignty, tribal self-governance and those concepts still carried a fair amount of weight at the federal court level and the Supreme Court in particular,” Feldman says.

“From the ’70s to the mid ’80s tribes did pretty well in the Supreme Court. Since the ’80s—since Cabazon—the numbers have dropped precipitously. Tribes have been losing far more cases than they have been winning at the Supreme Court. That’s true today.”

“It really was a big surprise when Cabazon was decided the way it was,” says attorney Phil Hogen, former U.S. attorney and former chairman of the National Indian Gaming Commission.

Ducheneaux went back to work, re-drafting legislation to remove pre-Cabazon concessions. “I took the sell-out bill off the table and drafted a bill which Mo later introduced,” Ducheneaux says. “It was basically what IGRA is today.”

Legal Battles Continue

IGRA requires states to enter into good-faith negotiations with tribes seeking to operate Class III, casino-style gambling. But a 1996 federal appeals court decision upheld state immunity against Seminole litigation attempts to compel Florida to negotiate a tribal-state compact.

Lacking leverage, Cabazon, Morongo and some 60 other California tribes fought for nearly a decade to get state officials to negotiate Class III compacts. Federal courts that earlier sided with the tribes failed to support them in their legal war with Governor Pete Wilson.

While tribes applauded the Cabazon ruling, the decision did not extended to Johnson Act prohibitions against the manufacture, use or transportation of Las Vegas-style slot machines on Indian lands.

“That’s what was overlooked by so many who say, ‘Why do we need IGRA? We have Cabazon.’” Hogen says. “Cabazon didn’t solve the Johnson Act problem.

“Tribes were elated with Cabazon and the decision that said tribes could play bingo,” Hogen says. “There wasn’t an immediate realization Indian gaming wasn’t going to work unless tribes got slot machines.”

California tribes stretched the legal envelope, installing “gray area” machines they argued constituted Class II bingo devices permissible under IGRA. By the time Wilson successor Governor Gray Davis took office in 1999, 29 tribes had facilities equipped with the “gray area” machines.

The devices, however, were clumsy and slow, and it quickly became evident Nevada-style slots were necessary to the success of the tribal casino industry. Machines today generate more than 80 percent of the revenue in Indian casinos.

“It didn’t take long to realize where the real money was,” Morongo attorney George Forman says. “The bingo games took too long. There weren’t enough bells and whistles.”

The issue was resolved with passage in 2000 of Proposition 1A, a ballot initiative that amended the state constitution to authorize Class III gambling on Indian lands subject to legislative ratification. Sixty-three California tribes today generate about $8 billion a year.

Cabazon Emerges From Hard Times

The pioneering Desert Cahuilla Indians came upon hard times after the landmark Supreme Court ruling. A prominent tribal member was slain, a non-Indian executive was convicted of murder for hire and another management employee pleaded guilty to embezzlement. Meanwhile, the band defaulted on bond financing for its Fantasy Springs hotel-casino.

The tribe, which now numbers close to 50 members, has reportedly emerged from its financial deficit and is working to create a more diversified economy, which includes a biomass energy plant.

“We’ve had some financial problems,” Soulliere says. “But we’re good.”

“They’ve got a first-class, very stable management team,” Feldman says. “They’ve also got a very good gaming commission with all non-tribal members. Things are going well for them.”

The legal war strained relations with county and local officials.

“We got a lot of bad press,” Soulliere says, and many tribes in California and elsewhere were not supportive of the band’s legal war, which at its core was a battle for sovereignty and self-governance.

“There wasn’t much support at all. I remember tribes saying, ‘We don’t want to go into gambling.’ At the time ‘gambling’ was a bad word.”

The late tribal Chairman Art Welmas subscribed to the “use it or lose it” theory of tribal sovereignty, says Feldman. He recalls Welmas as a “tough old guy” who fought for the band’s right to pursue economic gain, whether it was jojoba beans, cigarettes, liquor or gambling.

“Welmas and the citizens of Cabazon were confident and aggressive,” Feldman says. “They were determined to take things as far as they could, because they believed they were right.”