Michigan’s casino industry is dominated by tribal casinos today, but just a few decades ago, that wasn’t the case. In the early 1980s, there was no casino gambling in Michigan. In fact, there was no casino gambling outside of Nevada and New Jersey.
But the ’80s brought a seismic shift to casino gaming in Michigan and across the country. Casino gambling became legalized, but tribal relations changed significantly as well. By the end of the 1980s, tribal gaming grew into the vast landscape of casinos Michigan is familiar with today. How did the law change so dramatically that Michigan could become dotted with casinos? The answer lies in the mountain of case law that opened new doors to betting in Michigan and the rest of the United States.
The core legal issues that led to Michigan’s tribal gaming expansion revolved around tribal sovereignty. Tribal sovereignty means Native American tribes are self-governing entities. They can pass their own laws and enforce them the way they choose. Their systems of government are independent of state and federal governments.
However, that raises some serious legal issues. Do the same criminal laws in Detroit apply on Native American reservations? How do the courts handle which cases are handled by state and tribal authorities?
The Major Crimes Act assigns jurisdictional responsibility to tribal, state, and federal authorities depending on:
- The severity of the crime
- The perpetrator
- The victim
For example, normally any murder committed in the US is handled under state law, not federal law. Under the Major Crimes Act, a murder between a Native American and another Native American would be handled by federal and tribal authorities. This ensures the state is not encroaching on the tribal authority’s sovereignty. A murder committed by a non-Indian of a non-Indian would be handled by state authorities, as it normally would.
But where did that leave illegal casinos back in the day? Is operating a casino a criminal act or a civil action? One man decided to test the boundaries of tribal sovereignty and find out.
Fred Dakota’s Federal Lawsuit
In the early 1980s, the Keweenaw Bay tribe began offering bingo as a revenue driver after Michigan’s recent recession. There was some resistance from state authorities, but overall, it went off without a hitch. But in 1983, the former tribe administrator, Fred Dakota, applied for a gaming license from the tribe. At the end of the year, he opened Michigan’s first for-profit tribal casino and ran it out of his garage.
But federal authorities had serious concerns about the new casino. The Keweenaw Bay tribe had the right to create and enforce its own laws. But the State of Michigan had not legalized casino gaming. The Assimilative Crimes Act makes violating state criminal law on a tribal reservation a federal offense. That means that tribal lands are subject to:
- Tribal law
- State criminal law
- Federal law
So, when the federal government sued Fred Dakota and his casino, they believed he violated Michigan criminal law.
Ultimately, Fred Dakota lost his case and his appeal. Both courts decided that his for-profit casino violated Michigan law, and tribal sovereignty didn’t give him or his tribe the authority to license and operate that casino. He had to shut down, but there was specific wording that Michigan’s other tribes took advantage of.
One of the reasons the District Court ruled against Fred Dakota was his casino’s for-profit operation. The bingo games that the Keweenaw Bay tribe operated before the casino benefited the tribe. Some of the money was reinvested into the tribe, which changed the legal standing of the bingo games. However, Fred Dakota’s casino was an unambiguously commercial casino, because the business lacked the “tribal benefit” that would’ve applied a different body of case law to his casino. The Dakotas did not allocate any casino profits to the tribe and the tribe did not tax the profits.
While he had to close, other tribes opened casinos across the state. They ensured their casinos’ profits were reinvested into the tribes. This set the stage for a new round of legal challenges. However, a Supreme Court case regarding a tribe in California settled the debate for Michigan and the United States.
California v. Cabazon Band of Mission Indians
The Cabazon Band of Mission Indians operated a casino in California where non-Indians–yes, that’s the legal nomenclature–would be the primary customers. It was similar to Fred Dakota’s case. But the US Supreme Court ruled in favor of the Cabazon Band.
While the judges in Fred Dakota’s cases decided Michigan law could shut down tribal gaming, the Supreme Court ruled that California law couldn’t keep the Cabazon Band from operating casinos on their reservation. The court held that the state can enforce state laws on tribal lands only where the federal government expressly permits the enforcement. Because Congress never enacted a national law prohibiting gaming, the tribal laws
The Supreme Court also decided that states did not have the authority to keep gaming off tribal reservations. Because the tribes’ self-governance depends on making themselves economically independent–and because the casinos were lucrative sources of jobs and income–the states could not interfere with tribal gaming. There is a federal interest in keeping tribe’s self-sufficient economically.
And because the ruling came from the US Supreme Court, tribal gaming was effectively legal across the United States.
In early 1987, tribal casinos suddenly became legal and expanded tribal sovereignty. That gave Congress a massive task. They had to figure out how to balance state and tribal interests in the light of the Cabazon Band ruling. After a year of hearings, Congress passed the Indian Gaming Regulatory Act.
This law sorted different types of gambling into three tiers.
Traditional Indian games and social games with little monetary value are defined as Class I games. Class I games have minimal value and the tribes regulate the games directly.
Class II games include games of chance like bingo (but not slots) and games where the participants compete against each other, as opposed to the house. These include lotto and poker. Class II gaming was also regulated by tribes, but Class II games had to be legal in their states. Also in order to offer Class II games, the tribe needed to adopt gaming provisions provided by the National Indian Gaming Commission to ensure they were regulated in some way.
Finally, Class III gaming included all other games not defined as Class I or Class II. This included slot machines and table games. For tribes to offer these games, they had to:
- Create a state compact.
- Have that state compact approved by the Secretary of the Interior.
- Create a tribal gaming ordinance approved by the National Indian Gaming Commission.
As a result of these laws, Michigan’s tribal casinos could grow into the thriving industry Michiganders recognize today. Although Fred Dakota didn’t make it to the Supreme Court, his point of view was ultimately vindicated so long as gaming provided a benefit to the tribe. Michigan’s tribes had the right to license and operate casinos, and those rights extended across the United States, far beyond Michigan’s borders.