Achieving the Upper Hand
How to establish control in compact negotiations
By Judy Shapiro
The Department of the Interior ( DOI ) is revising its rules for review and approval ( or disapproval ) of tribal-state Class III compacts . The Rulemaking Announcement began with an extended review of tribal comments on a consultation draft . Comments on the public draft were due by March 1 . The proposed rules would add guidelines and guardrails to existing DOI practice by publicly codifying current legal and administrative standards .
Currently , tribes wishing to conduct gaming under the Indian Gaming Regulatory Act ( IGRA ) must negotiate a compact — allocating gaming regulatory responsibility — with the state , then submit that compact for DOI review . The Secretary has 45 days to approve or disapprove the compact . Without any action , the compact is “ deemed approved ,” meaning that it goes into effect upon publication — but only to the extent it is consistent with law .
Nearly 35 years after the 1988 enactment of IGRA , the tribal-state gaming compact process remains problematic . Early fights concerned the scope of gaming that states must negotiate . When the Supreme Court rejected the Seminole Tribe ’ s suit to enforce good-faith compact negotiations against the state of Florida , as barred by state sovereign immunity , states seized leverage . Some compacts incorporated provisions that infringed on other tribal sovereign rights , in violation of IGRA . Absent a congressional “ Seminole fix ” to restore negotiation obligations , the secretary must protect tribes against state overreach .
Illegal Provisions After a long struggle to achieve a compact , tribes have sometimes accepted questionable concessions , such as impermissible state taxes , allocation of state jurisdiction and non-gaming subject matter , and have asked the secretary to take no action on the compact , allowing it to go into effect as “ deemed approved .”
The strategy permitted a tribe to establish a relatively stable basis for Class III gaming , even when some provisions diminished tribal rights protected by IGRA . The proposed regulations contemplate that a guidance letter , issued after the
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45-day period , may list all provisions in a “ deemed approved ” compact found to violate IGRA . Upon publication , the compact is fully effective only to the extent consistent with IGRA . Compacted gaming can begin , but illegal provisions ( even if not listed in the guidance letter ) remain subject to challenge in court .
Violation of IGRA – But Still Approved ? By law , the secretary may disapprove a compact only if it violates IGRA , any other federal law or the trust obligation of the United States , but disapproval is not required . Sometimes , the DOI affirmatively approves a compact containing illegal provisions . The proposed rules recite the secretary ’ s discretion to do so .
This practice has and will continue to engender confusion for tribes attempting to negotiate new compacts . For example , in 2012 , the DOI rejected a compact that would have governed Mashpee Wampanoag gaming in Massachusetts , detailing a number of violations , including attempts to regulate Class II gaming . But in 2021 , the secretary affirmatively approved Arizona compacts that specifically limit tribes ’ authority to conduct Class II games , perpetuating earlier compact provisions that included Class II positions in the number of maximum gaming positions permissible .
The proposed guidelines include regulation of Class II gaming in a list of activities that are considered evidence of a violation of IGRA , but this list will be only as helpful as the secretary ’ s willingness to enforce it .
Revenue Share The regulations discuss “ great scrutiny ” of revenue sharing provisions to determine if any amounts in excess of regulatory fees are impermissible taxes , with specific reference to whether the state has provided substantial economic benefits to justify revenue sharing . Revenue sharing provisions have been perennially controversial since they were first approved nearly 30 years ago .
The Rincon Tribe successfully established , in 2010 , that California offered inadequate consideration for significant revenue share demands in a compact amendment . By regulation , such a demand is “ evidence of a violation of IGRA ” and a basis to demonstrate in court that the state has not negotiated in good faith . Because California had earlier waived its sovereign immunity , Rincon could secure a remedy .
Protecting 21st Century Gaming Expansion Competition for sports betting is fierce and litigious . The proposed regulations acknowledge tribes ’ right to negotiate the conduct of statewide remote wagering or iGaming , provided that either state law or the compact establishes that the wagering take place at a server located on Indian lands , that the tribe regulates the gaming , and the player is not located on another tribe ’ s Indian lands .
Whether approved or “ deemed approved ,” compacts may still be challenged . In Florida , third-party competitors are seeking to invalidate sports betting provisions of the “ deemed approved ” 2021 compact for the Seminole Tribe . More recently , in Washington state , a card room seeks to invalidate sports betting provisions by claiming that tribal exclusivity violates Equal Protection .
Each case challenges the DOI directly and leaves out the compacting parties , while the impacted tribes have intervened as the “ real party in interest ” for the limited purpose of interposing their own sovereign immunity to defeat the challenge , preventing a court from considering the complaint at all . Decades after state sovereign immunity barred tribes from compelling compact negotiation , tribes are deploying their sovereign immunity to protect hard-won compact terms . A variant on the long-sought “ Seminole fix .”
While they stop short of a “ Seminole fix ,” the proposed regulations announce standards to enhance protection of tribal compact rights . It remains to be seen how they will be applied and enforced .
Judy Shapiro is a strategic partner in the Washington , D . C . office of Big Fire Law & Policy . She can be reached via email at jshapiro @ Bigfirelaw . com or at 202-257-6436 .