All of these early casinos existed in the shadow of state law. In
1987 the United States Supreme Court, in two separate rulings, made
clear that Indian Nations had broad rights to engage in gaming
activities on reservation land. In the first ruling, regarding a dispute
between the Seminole tribe and the state of Florida, the court held
that the Seminole could engage in "high stakes" bingo games with
jackpots of up to $10,000 despite Florida state law making any bingo
game paying more than $100 to the winner illegal. In a second, more
sweeping ruling, the court held that the tiny Cabazon Tribe in
California was entitled to operate on reservation land any and all
gaming activities that the state of California authorized in any form.
This ruling was significant in that California and most other states
allowed charitable organizations to hold "Las Vegas" nights in which
casino style gambling was allowed. Although state laws controlled this
charitable gambling with a variety of regulations, because of the mere
existence of such activities within the law the court held that tribal
governments could sponsor similar events in casinos on reservation land,
but without state control.
These two Supreme Court rulings caused considerable legal
turmoil and in 1988 Congress acted to create a structure to rationalize
the relationship between state gaming regulations and Indian gaming
activities. The Indian Gaming Regulatory Act (IGRA) rationalized the
relationship between state authorities and Indian casinos by defining
classes of gambling and requiring in certain situations that mutually
agreed upon "compacts" be signed between state and tribal governments.
IGRA defined three classes of gambling. Regulation of "social"
games conducted for prizes of minimum value as well as bingo and card
games where players play against each other rather than against "the
house" were largely left to Indian tribes. In some cases these games
were also regulated by a federal agency. In contrast, "class III"
gaming, which was largely made up of casino gambling, was to be
regulated through a "compact" agreed to between the relevant Indian
tribal government and the state government in which the gaming occurred.
States could regulate Indian casino gaming only insofar as tribes
voluntarily agreed to through a compact, but tribes could legally
operate casinos on reservation land only after a compact had been