"Gambling in Texas, Part 3" by James Bernsen

8/6/2019 "Gambling in Texas, Part 3" by James Bernsen

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Gambling in Texas

A Four Part Series

This is a five-part series in the Texas Republic News on various issues related to gambling legislation. The

Series:Tuesday, March 10: Part One The Legislative AgendaWednesday, March 11: Horse Racing and Slot MachinesThursday, March 12: Indian Casinos and their ImplicationsFriday, March 13: Is Gambling a Good Bet for Texas?

Part Three Indian Casinos and their Implications

By James Aalan BernsenTexasRepublicNews.com

When one speaks of casino gambling, one is increasingly speaking of Indian casinogambling. Thats because Indian tribes have led the way in the dramatic explosion ofcasino development across the country.

Although Indian tribes are no more nefarious than non-Indian casino developers, thespecial laws and rights that they enjoy place them in a powerful position which has in thepast been exploited to expand gamblings footprint exponentially and undermine many ofthe tax benefits states expected to receive when they approved casinos in the first place.

Any legislation that would expand gambling to Texas will expand Indian gambling.

There are five ironclad rules of Indian casino gambling in America today:

1. If anyone can gamble, Indians can gamble and states cant prevent it.2. If you build it, they will come3. Indian tribes are above state law4. Indian tribes cannot be taxed, except voluntarily5. Indian tribes have potentially vast leverage over the state and individual citizens

which will be exploited to expand gambling further and to evade taxes whenpossible.

If anyone can gamble, Indians can gambleIn the early 1980s, The State of California sought to shut down a tribal casino which hadopened up for business despite a clear statewide ban on gambling. The state had justpassed its new state lottery, but found itself losing revenue to a small casino operated bya tribe ofjust 25 members which was conducting high-stakes bingo operations on triballand.


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The state sued, and soon learned a lesson in diminished sovereignty that states acrossAmerica have been learning all too well in the following 20 years. In the case, Californiav. Cabazon Band of Mission Indians, California received a stunning and humiliatingdefeat. As Richard Wilson of the Public Law Research Institute explains:

The Court rejected (the states) argument. Since California allowed bingo, card clubs,and the state lottery, it had clearly indicated that there was noper se public policy againstgambling and the state simply regulated gambling. The court implied that once a statepermitted any games in a class of gambling, the conduct was regulated and Indian tribescould offer those games free of state interference.

The decision was a bombshell. Suddenly, a federal court was telling states that they couldpass all the laws they wanted on gambling, but they just didnt apply to Indians. In theimmediate aftermath ofCabazon, the number of tribal casinos in California beganexploding, and the phenomenon soon spread to other states.

The logic of the courts ruling is simple: the U.S. Constitution grants Congress theexclusive right to regulate and deal with Native American tribes. Thus no stateinterference is legal at all. Because of this constitutional provision and in the face ofstrong opposition from Indian groups congress was unable to overturn Cabazon.Instead, Washington decided to bring order to the emerging chaos of Indian gambling. In1988, they passed the Indian Gaming Regulatory Act (IGRA).

IGRA provided a legal framework, by stating that tribes cannot gamble in states wheregambling is permitted outright. However, if any type of gambling (defined in threedistinct classes) is allowed to any group within the state, that type of gambling is allowedto Indian tribes. Future court rulings have exempted state lotteries from this, but onlyinsofar as they arestate-run operations, not private.

If you build it, they will come

There are currently a staggering 562 federally recognized Indian tribes in the entireUnited States of America.

Texas, however, only has three.

What is the reason for the vast discrepancy? Texas is the second largest state by size andby population, so it should logically have more. Nor is this because Texas did nothistorically have Indian tribes.

Its because Texas doesnt have gambling.

The number of tribes in America has ballooned since the 1980s. Laws grantingsovereignty to tribes have been one reason, but clearly, gambling is an important factor.In California, afterCabazon and IGRA, many small or defunct tribes began applying forfederal recognition, either reviving old claims, or in some cases, making new ones.


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The possibility of tribes that border jump is a very real, and likely possibility. Theprocess has happened in other states, with tribes pressing long-dormant land claims. Inmany cases, tribes have sued for vast areas of land impacting thousands of landowners,but agreed to settle such extravagant claims for a few small acres...and a casino. This is areal possibility for Texas, and one such land claim is already in the courts. Furthermore,

of the existing Texas tribes living in Oklahoma and New Mexico, several already havecasinos.

(For more on the potential for tribal expansion, see Gambling Could Re-Open Book onTribal ClaimsOriginally published in TheLone Star Report, April 30, 2004)

Indian tribes are above state law

As sovereign dependant nations Indians are not bound by state law. If any crime, frommurder to racketeering occurs on federally-recognized tribal land, the state is limited inits power to investigate or arrest without Indian approval. Nor can any state law apply onIndian land except that which is enforced through a relationship with thefederalgovernment, such as IGRA.
http://www.lonestarreport.org/newsletters/4302004_Gamblingco.htmhttp://www.lonestarreport.org/newsletters/4302004_Gamblingco.htmhttp://www.lonestarreport.org/newsletters/4302004_Gamblingco.htmhttp://www.lonestarreport.org/newsletters/4302004_Gamblingco.htmhttp://www.lonestarreport.org/newsletters/4302004_Gamblingco.htm


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Thus, states are hamstrung in their efforts to deal with Indian tribes. The biggest stateconcerns relative to tribal gaming are corruption and taxes.

Corruption has historically followed gambling, regardless of whether the operators wereIndian tribes or not. In Indian gaming, specifically, corruption and gambling-related

abuses were sufficiently common for the FBI and the NIGC to create a specialorganization the Indian Gaming Working Group to investigate violations in IndianGaming.

Indian tribes cannot be taxed, except voluntarily

Because Indians are not subject to state taxes, their casinos are not subject to them either,unless Indians agree to pay the tax.

This is not as absurd as it first sounds, because generally Indians start off in a relationwith the state with no gambling present. A state under this scenario is considering

allowing gambling, or upgrading the class of gambling it has in the state. The state thennegotiates a compactwith the tribe under IGRA rules, in which the tribe agrees to pay thetax or the state does not approve gambling. Tribes agree, because they cant gamble untilthey do.

Thats how its supposed to work, but that is not generally the experiences of statesdealing with tribal gambling, because IGRA puts another card into the hands of theIndians, which they can hold over the state. If the state refuses to negotiate, or negotiatesin a manner that a court decides is in bad faith, then the federal government canforce astate to accept a compact even if it doesnt want to.

And because the state has almost no control overwho becomes an Indian tribe whetherits through border jumping, tribal schism or new tribes the very real possibility existsthat tribes can enter the game after the fact. With gambling on the books, the state has noleverage against such tribes. They can hold out for favorably low taxes or simply open upwithout paying taxes, and the state will have to give them a compact or face federalsanctions for not doing so. The Indians can sue for the state acting in bad faith, but theState has no power to return the favor.

This has the potential to undermine not just the tax structure for the state, but also theexisting business models of all the existing casinos, Indian and non-Indian alike.

Indian tribes have potentially vast leverage over the state and individual citizens

As noted above, Indian tribes have potentially vast legal claims on Texas soil. Virtuallyany piece of land is subject to Indian claims. In some states, tribes have even sued forland that the state capitol sits on. In others, tribes have tied up millions of acres in landand mineral rights in lawsuits that cloud the titles of the current owners and prevent themfrom selling. Often, the only way to clear the lawsuits which often have legitimatehistorical foundations is to settle. And that means more casinos.


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In 2004, the Cheyenne-Arapahoe Tribes of Oklahoma, in a case of border-jumping, filed a 27 million acre land claim which included all of the City ofDenver, Colorado, as well as Colorado Springs. The tribe offered to drop the suitin exchange for approval of a casino near the Denver Airport.

In 2005, the Mowhawk Tribes of New York agreed to drop all their existing landclaims. The price? $100 million and 14,000 acres on which the tribe could build acasino.

In 2005, the Menominees Tribe of Wisconsin filed a tribal land claim in order toget access to the casino markets of Chicago and Milwaukee.

Whether or not these lawsuits have merit or are judged frivolous, the chaos they createbecomes a form of leverage. And tribes have been fairly successful in using whateverleverage they can find. Indeed, of the 408 Indian casinos currently operating in the UnitedStates, 36 are currently operating on land that was not Indian land prior to the passage ofIGRA in 1988.

Such suits arent simply a fairy-tale possibility in Texas. Theyve happened, and theIndians have won them.

In 2002, the Alabama-Coushatta tribe won a claim in the U.S. Court of Federal Claims, inwhich they successfully argued that the tribe still holds the aboriginal title to 5.5 millionacres in the following East Texas counties:

Montgomery

Walker

Trinity

San Jacinto Liberty

Polk

Hardin

Tyler

Jasper

Newton

Orange

In this case, the land likely wont be taken, but the court has recommended that congress

award the tribe $270.6 million in revenue that the State of Texas has gained from oil andgas production, timber harvesting and other sources.

The Alabama-Coushatta tribe already has a reservation in Texas, but due to its particularstatus as mentioned above, has limitations on its gambling abilities which most tribes tonot have. This claim and other potential claims are a key issue in the gambling puzzle andwill likely proliferate if casino gambling comes to Texas. Tribes cant legally settle for acasino while gambling remains illegal in Texas, but legalizing it would legalize the


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settlements, encourage new lawsuits and expand gambling possibly untaxed to areasthe legislature has never even considered for casino development.

Tomorrow:Part IV - Is Gambling a Good Bet for Texas?

Resources:

James Aalan Bernsen, the editor of the Texas Republic News, has been investigatinggambling issues related to Texas, specifically the Indian gambling angle, for five years.He has written on this issue twice previously:

Gambling Could Re-Open Book on Tribal ClaimsOriginally published in TheLone Star Report, April 30, 2004

The History of Gambling in California Lessons for TexasOriginally published in TheQuorum Report, 2007
http://www.lonestarreport.org/newsletters/4302004_Gamblingco.htmhttp://209.85.173.132/search?q=cache:xrU4oMz5m1UJ:texansagainstgambling.org/userfiles/file/TAG/type/Casinos/Indian%2520Gambling/History%2520of%2520Gambling%2520in%2520Calif%2520Lessons%2520for%2520Texas.doc+History+of+Indian+Gambling+in+California+bernsen&http://www.lonestarreport.org/newsletters/4302004_Gamblingco.htmhttp://209.85.173.132/search?q=cache:xrU4oMz5m1UJ:texansagainstgambling.org/userfiles/file/TAG/type/Casinos/Indian%2520Gambling/History%2520of%2520Gambling%2520in%2520Calif%2520Lessons%2520for%2520Texas.doc+History+of+Indian+Gambling+in+California+bernsen&

"Gambling in Texas, Part 3" by James Bernsen

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