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“Unity: The Path Forward in Compacts”

Indian Gaming Magazine - Sovereignty By: Jonodev O. Chaudhuri

Twenty-seven years go this last May, a remarkable event occurred that helped pave the way for modern gaming in Arizona. In a profound display of unity, tribes throughout Arizona, and also throughout the U.S. and Canada, converged onto the small Fort McDowell Yavapai Nation reservation in central Arizona to support their Yavapai sisters and brothers in their efforts to protect the economic lifeblood of their community. In response to an FBI raid of their gaming machines – one that was precipitated by a stubborn refusal of then Arizona Governor Fife Symington to negotiate a Class III Gaming Compact with Fort McDowell and the other Arizona tribes –the members of Fort McDowell rallied to blockade the only exit from the casino grounds using their own personal vehicles and any other equipment that could be found on their tiny forty square mile reservation to the exit. The blockade prevented the Mayflower moving trucks rented by the FBI to leave with their machines, and immediately after this spontaneous grass-roots action, Fort McDowell leadership issued a call for support from Indian Country. The tribes that gathered to support their efforts recognized the importance of the willingness of this small, 800 member tribal nation to stand up to the powerful federal and state governmental forces who arrayed against them. 

In the ensuing two weeks during the blockade, Native people answered Fort McDowell’s call for unity and came from as far away as Oka in Canadian Mohawk Territory and converged on Fort McDowell. This solidarity not only helped the tribes present a powerful front to the state, but also provided a platform for the tribal nations of Arizona to make their moral case in the public arena. Over this period, callers into the radio and television stations increasingly expressed support for the Arizona tribes’ position, and they gained momentum until the vast majority of callers to Arizona radio stations were in support of the tribe’s position. This event came to be known as the standoff at Fort McDowell, and it led to the governor wisely reconsidering his position and entering into a compact with Fort McDowell, as well as, eventually, the other gaming tribes of Arizona. Similar displays of unity helped pave the way for gaming compacts in other states as well. 

While it has only been twenty-seven years since Arizona agreed to Fort McDowell’s compact, and even less in states such as Oklahoma where compacts were entered into just fifteen years ago, these stories provide important lessons as tribes in many other states now face imminent compact negotiations and other compact related issues.

What are the lessons? The lessons learned from Fort McDowell are twofold: unity and standing our ground. 

First, unity is the only path forward. When faced with a challenge to the tribe’s inherent sovereign authority to game on its own lands in accordance with IGRA, the community did not splinter. Political factions did not point fingers or attempt to disperse internal blame – instead, they came together and took collective action to stand up against the infringement on their nation’s sovereignty. One individual could not have stopped the dozens of agents who showed up to confiscate the tribe’s gaming infrastructure, but together, they were able to stop the agents from shutting them down. 

Second, Fort McDowell demonstrates that tribes must stand up and hold states accountable when states infringe on the inherent authority of tribal nations to engage in gaming. IGRA affirms the Cabazon Court’s acknowledgement that tribes are the only true regulators of gaming on tribal lands. But the law is only as effective as implemented. If tribes permit states to overstep their bounds and regulate in ways that the law does not contemplate, then extra state regulation will become the norm. Finally, standing our ground helps educate states that they have a powerful interest in working with tribal nations. Since the very first tribal compacts were entered into, the benefits to states from entering into such agreements have become abundantly clear. 

In Arizona, the direct and indirect benefit of tribal gaming to the State of Arizona is $4.7 billion annually, and in Oklahoma, Indian gaming contributes nearly $13 billion every year in state production of goods and services. Indian gaming in Oklahoma also provides 96,117 jobs in Oklahoma, and contributes $4.6 billion in wages and benefits to Oklahoma workers. Despite these clear benefits, the chains of renegotiation have been recently rattled in a number of states, most starkly, Oklahoma. 

The Oklahoma governor’s recent command that the state will be requiring all tribes to re-negotiate compacts –compacts that contain evergreen provisions that the tribes maintain have been clearly triggered –is a call for unity on the part of tribes in Oklahoma. First and foremost, if something is not broken, it should not be fixed. In Oklahoma, the gaming compacts with tribes are working. The governor’s focus on exclusivity fees misses the profound impact that Indian gaming provides in other areas, regardless of whether exclusivity fees are in place, such as: jobs, tourism, infrastructure, roads, emergency services, tribal health facilities that often serve non-tribal members, and the development of other governmental and economic infrastructure. For instance, in Minnesota, a state where tribes pay no exclusivity fees whatsoever, the positive impact of Indian gaming is estimated at $1.8 billion annually. The dollars that tribes bring in stay at home – they do not leave the state to pay private shareholders. Indian gaming brings customers to states, often times to rural parts of the states. 

Some commentators have compared exclusivity fees between state A and state B, and some commentators have compared exclusivity fees to commercial tax rates. Both comparisons are wrong. First, the fees tribes in one state may pay for exclusivity do not have any bearing whatsoever on the fees that a tribe may pay for exclusivity in another state – with the driving concept being that fees to states are only appropriate when equivalent value is given by a state to a tribe. Exclusivity fees are inherently set on a case by case basis. Further, as IGRA clearly states, states cannot tax Indian gaming, and therefore, comparisons between fees and state taxes on commercial gaming are apples to oranges comparisons.

When viewed in this light, developing prohibitive fee structures brings the very real possibility of reducing overall state revenue through shrinkage of local tax bases and reduction in revenues from other taxes. The idea is simple, if the economic pie is bigger, the state benefits just as the tribes do.

And to be clear, as the Supreme Court noted in Cabazon, tribes are the owners and primary regulators of their operations. But for the allowances provided for in the Indian Gaming Regulatory Act (IGRA), states would have no role in the operation and regulation of Indian gaming. Although IGRA creates an avenue for states to enter into compacts with tribes if and when they engage in what the Act defines as Class III gaming, that avenue does not provide states with a carte blanche authority to act in bad faith. IGRA created a balance between sovereign interests, and within that balance, tribes’ inherent authority to game and regulate their own operations must be upheld. 

On this, tribes must remain unified. States often attempt to cajole one or two tribes to acquiesce to higher exclusivity fees. However, when tribes remain unified, states are not able to leverage one tribe’s acquiescence to achieve a negotiation that states could not obtain under the law. So far, the response from tribes in Oklahoma has been unified. In multiple inter-tribal meetings, there has been a consistent and clear expression of unity among Oklahoma tribal nations. This unity will serve as a powerful blockade to any attempts to leverage fees beyond what is fair and directly tied to the tangible benefits received by tribes. 

Meanwhile, in California, in addition to ongoing dialogue between the tribes and the state regarding the negotiation of forward looking compact terms, the implementation and enforcement of existing compact terms is the subject of significant contention. Tribes have filed suits in California, alleging that the state has failed to regulate illegal card rooms that, according to the tribes, are subject to the exclusivity clauses in their compacts. In response, California has maintained that its compacts with tribes do not contain exclusivity provisions. While the tribes and the state debate the existence, nature, and extent of the exclusivity clauses in the compacts at issue, larger issues are at play. 

One thing is clear, as mentioned above, IGRA ’s prohibition against state taxation on Indian gaming requires any fees paid to states to be in exchange for something of comparable value, leading to the question: if there are no exclusivity provisions in these compacts, why is California getting paid? The fees that tribes pay to the state certainly cannot be in exchange for the state’s prohibiting house-banked card games, as that prohibition emanates from California’s Constitution, and not the gaming compacts themselves. 

Finally, in Arizona, many state-tribal compacts are set to soon expire. It is encouraging to note that the tribes in Arizona have engaged in a number of inter-tribal leadership meetings for this very purpose.

Things to keep in mind as folks exercise unity and steadfastness, states are not entitled to anything without an exchange. And anything that is given to them needs to be commensurate with the value being offered. So whether it be sports betting, expanded game offerings, or the ability to engage in online activities within state boundaries, any adjustment to fees should be directly tethered to value that the state is willing to provide. 

There is seemingly great uncertainty across the landscape of tribal-state compact negotiations at this time. But, as the standoff at Fort McDowell demonstrates, this uncertainty is not new. If anything, it is in fact certain. The only question is how tribal nations, tribal citizens, and the Indian gaming industry on the whole, will react. 

The Indian gaming community will continue to move forward standing strong on the foundational pillars of inherent sovereignty that IGRA affirmed, and that tribal nations will do so as a unified front. That is, truly, the only sure path forward.