Gaming Classes and the Compacts Behind Them
Congress answered a Supreme Court decision about bingo halls with a statute that sorts every game into one of three classes. Which class a game falls into decides who regulates it, what paperwork it needs, and whether the state has any say at all.
The rule in short
The Indian Gaming Regulatory Act divides gaming into three classes. Class I traditional and social games are subject to exclusive tribal jurisdiction. Class II bingo and certain card games are regulated by the tribe with federal oversight, and require a tribal ordinance approved by the Commission chair. Class III gaming requires that ordinance, that the state permit the gaming for any purpose by any person, and a tribal-state compact whose lawful subjects the statute enumerates.
The statute exists because of a bingo hall. In California v. Cabazon Band of Mission Indians the Supreme Court held that California could not enforce its bingo regulations against tribal operations, because the state permitted bingo subject to conditions rather than prohibiting it, and a merely regulatory state law does not reach Indian country. Congress responded with a scheme that gave states a role while keeping the regulatory line the case had drawn.
How a game is sorted
Class I is social gaming for prizes of minimal value and traditional forms of gaming played in connection with tribal ceremonies or celebrations. It is within the exclusive jurisdiction of the tribe and is not regulated by the statute at all.
Class II is bingo, whether or not electronic or other technologic aids are used, games similar to bingo such as pull-tabs, lotto and punch boards when played in the same location, and non-banked card games that state law explicitly authorizes or does not explicitly prohibit. Banking card games are excluded by name, and so are electronic or electromechanical facsimiles of any game of chance — the distinction between an aid and a facsimile is the most litigated question in the whole statute.
Class III is everything else: slot machines, banking card games, roulette, craps, lotteries, pari-mutuel wagering and sports betting. The definition operates by exclusion, so a game that is neither class I nor class II is class III whatever it resembles.
The conditions attached to each class
A tribe may conduct class II gaming on Indian lands if the state in which the lands lie permits such gaming for any purpose by any person, the gaming is not otherwise specifically prohibited on Indian lands by federal law, and the governing body of the tribe adopts an ordinance approved by the chair of the Commission. The ordinance must provide for the tribe's sole proprietary interest, for audits, for background investigations and licensing of key employees, and for the use of net revenues.
Class III adds a third requirement to the same two: the gaming must be conducted in conformance with a tribal-state compact entered into by the tribe and the state and in effect. A tribe requests negotiations, and the state is obliged to negotiate in good faith. The compact takes effect when the Secretary approves it or allows it to take effect without action, and notice appears in the Federal Register.
| Class | Examples | Ordinance required | Compact required | Primary regulator |
|---|---|---|---|---|
| Class I | Social games for minimal prizes, traditional ceremonial games | No | No | The tribe alone |
| Class II | Bingo, pull-tabs, non-banked poker | Yes | No | Tribe, with federal oversight |
| Class III | Slot machines, blackjack, roulette, lotteries | Yes | Yes | Tribe and state under the compact |
| Electronic aid to bingo | Linked player terminals drawing from one bingo game | Yes | No, if it is genuinely an aid | Tribe, with federal oversight |
| Facsimile of a game of chance | A standalone electronic game with a fixed outcome | Yes | Yes, because it is class III | Tribe and state under the compact |
What a compact may lawfully contain
The statute lists the permissible subjects and the list is exhaustive. A compact may address the application of the criminal and civil laws and regulations of the tribe or the state that are directly related to and necessary for the licensing and regulation of the activity; the allocation of criminal and civil jurisdiction between the tribe and the state as necessary for the enforcement of those laws; assessments by the state to defray the costs of regulating the activity; taxation by the tribe of the activity in amounts comparable to those the state assesses for comparable activities; remedies for breach of contract; standards for the operation and maintenance of the gaming facility, including licensing; and any other subjects directly related to the operation of gaming activities.
The statute also states plainly that nothing in it authorizes a state to impose a tax, fee, charge or other assessment on a tribe or on gaming activity, and that the state's refusal to negotiate over such a demand is evidence of bad faith. Revenue sharing survives despite that language only where the state has given something in exchange, which in practice means exclusivity.
The statute permits a tribe to sue a state that fails to negotiate in good faith, but the Supreme Court held in Seminole Tribe of Florida v. Florida that Congress could not abrogate state sovereign immunity under the Indian Commerce Clause. A state that does not consent cannot be sued, and the alternative Secretarial procedures the Department adopted have themselves been contested. The practical remedy in a state that will not negotiate is political rather than judicial.
Revenue, land and the limits on both
Net revenues from tribal gaming may be used only to fund tribal government operations or programs, to provide for the general welfare of the tribe and its members, to promote tribal economic development, to donate to charitable organizations, or to help fund operations of local government agencies. Distribution of net revenues to members as per capita payments requires a revenue allocation plan approved by the Secretary, which must address the adequacy of funding for the listed governmental purposes and the treatment of payments to minors.
Gaming must occur on Indian lands, which the statute defines to include reservation land and land held in trust or subject to restriction over which the tribe exercises governmental power. Land acquired after the statute's enactment is barred from gaming unless an exception applies, so the question of whether the Secretary will take a parcel into trust and the question of whether gaming may occur there are separate inquiries with separate records.
Two doctrines outside the statute constrain what follows. A dispute with a tribal gaming enterprise runs into the question of whether immunity has been waived, which is why compacts and management contracts contain express waivers and arbitration clauses. And the jurisdictional allocation the compact recites operates alongside, not instead of, the ordinary rules on prosecuting authority in Indian country, which no compact can rewrite.
Points to carry away
- Class I covers social and traditional ceremonial games and falls outside federal and state regulation entirely.
- Class II covers bingo, games similar to bingo, pull-tabs and non-banked card games permitted by state law.
- Class III is defined by exclusion and covers slot machines, banking card games, lotteries and pari-mutuel wagering.
- Class III gaming is lawful only where the state permits that gaming for any purpose by any person and a compact is in effect.
- The statute lists the subjects a compact may address and forbids a state from imposing a tax on the tribe as a condition.
- Net revenues may be used only for the purposes the statute lists, and per capita payments require an approved allocation plan.
Questions readers ask
What does it mean for a state to permit a game for any purpose by any person?
It asks whether the state's public policy prohibits the game outright or merely regulates who may offer it. A state that licenses commercial card rooms, runs a lottery, or allows charitable casino nights permits those games in the relevant sense, even though it restricts who may conduct them and under what conditions. A state that bans a game entirely does not. The inquiry is the same criminal-prohibitory against civil-regulatory line drawn in the case law that preceded the statute, applied game by game rather than to gambling in general.
Can a state require a share of gaming revenue?
Not as a tax, which the statute forbids. Revenue sharing appears in many compacts nonetheless, and the Secretary reviews whether the state has offered something of value that the tribe would not otherwise have — most commonly substantial exclusivity, meaning a promise that no competing commercial operation will be licensed in a defined area. Where a state demands payment without a meaningful concession, the arrangement has been treated as an impermissible tax and the compact provision disapproved or set aside.
Who regulates the games day to day?
The tribal gaming regulatory authority does, under a tribal ordinance approved by the federal Commission. The Commission conducts its own oversight, approves ordinances and management contracts, sets minimum internal control standards for class II operations, reviews background investigations and licensing decisions, and may issue notices of violation and civil fines. For class III gaming, the compact allocates further regulatory responsibility between the tribe and the state, and state gaming agents inspect operations in many states under that authority.
Sources
- Cornell Legal Information Institute — 25 U.S.C. 2703, DefinitionsThe statutory definitions of class I, class II and class III gaming.
- Cornell Legal Information Institute — 25 U.S.C. 2710, Tribal Gaming OrdinancesOrdinance approval, revenue use, the compact requirement and the lawful subjects of a compact.
- Cornell Legal Information Institute — 25 U.S.C. 2719, Gaming on Lands Acquired After EnactmentThe bar on gaming on newly acquired land and the exceptions and two-part determination.
- eCFR — 25 CFR Part 502, Definitions of This ChapterThe Commission's regulatory definitions applying the class boundaries to particular games.
- eCFR — 25 CFR Part 522, Submission of Gaming Ordinance or ResolutionWhat a tribal gaming ordinance must contain and how it is submitted for approval.
- eCFR — 25 CFR Part 293, Class III Tribal State Gaming Compact ProcessHow a compact or amendment is submitted to the Secretary and how it takes effect.
- National Indian Gaming Commission — Indian Gaming Regulatory ActThe regulator's own presentation of the statute it administers.
Justice Partners Journal is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
