Sovereignty is the inherent right of a tribal nation to govern itself. Tribes existed as nations and governed themselves long before the formation of the United States of America. They have retained the right to govern themselves, and their sovereignty has been affirmed by the U.S. Constitution and subsequent Supreme Court rulings.
Tribes are sovereign governments recognized by the U.S. Constitution. They have the same status as states and foreign nations under federal law.
Each tribe has its own unique government structure and policies. Most tribes have constitutions or governing articles approved by the Secretary of the Interior. Typically, members elect a governing body and a chairperson or president who serves as the leader.
Tribal casinos are tax-exempt because they are government operations. Just as state lottery revenues are reserved for use by the state, tribal gaming revenues are reserved for use by the tribes. Congress did not intend tribal gaming to be a revenue source for states. Each year, MIGA member tribes pay approximately $126 million in payroll taxes for employees that work at casinos and other tribal enterprises.
Tribal members pay federal income taxes on all income, including payments from gaming revenues. The vast majority of Native Americans pay state income and local property taxes, too. The only exceptions are those tribal members who both live and work on the reservation, a relatively small percentage of all Native Americans in Minnesota.
No. Federal aid goes to tribal governments, not individuals. In rare cases, individual tribal members may receive direct payments as part of negotiated or court-ordered settlement of land, treaty, mineral rights, or other claims.
Tribes do not pay income taxes because they are governments rather than private, for-profit businesses. Tribes generally do not pay property taxes, because most of their facilities are located on federal trust land that are maintained by the tribes. However, in cases where tribal facilities are located on fee land (land not held in trust by the federal government), tribes and Native Americans do pay property taxes. The Mille Lacs Band of Ojibwe, for example, is one of the largest taxpayers in its region.
A reservation is a geographic area with defined boundaries recognized by the U.S. for a tribe to live and govern its people. Some tribal members choose to live on the reservation; others do not.
Most reservations include both trust and fee lands. Fee land is land owned by the tribe. Trust land is land that the U.S. government has taken ownership over specifically for a tribe. The purpose of trust land is to restore lands historically taken from or lost by tribes. Trust status brings the land into the governmental control of the tribe, meaning that the tribe is responsible for all appropriate government services and infrastructure. Because of this, trust lands cannot be taxed or sold.
Land has great spiritual and cultural significance to tribes. Even in modern times, activities like hunting, fishing, gathering, and logging provide a vital connection to Native culture and traditions.
Tribes can have new lands taken into trust with the approval of the Secretary of the Interior or by action of Congress. State and local officials are given the opportunity to comment on such requests, as well as appeal determinations.
From 1887-1934, the federal government illegally seized and sold 90 million acres of tribal land to settlers without compensating tribes. The trust process allows tribes to recover some of those lands to meet the needs of growing tribal communities.
Taking land into trust for gaming purposes is a long and complicated process. The Secretary of the Interior is required to evaluate the economic, environmental and social impacts of any proposed transfers of land into trust. Only a handful of such transfers for gaming purposes have been approved in the past 30 years.
Tribes acquire trust land for public purposes such as housing, schools, infrastructure development and business creation. When land is taken into trust status, local property taxes no longer apply to those lands, because at that point the tribe pays for the development and infrastructure costs associated with its lands – costs usually paid for by property taxes.
Indian Gaming 101
In the case of California v. the Cabazon Band of Mission Indians, the U.S. Supreme Court ruled in 1988 that sovereign Indian tribes could conduct gambling on tribal lands without interference from the state as long as gambling was legal in the state where the tribe was located.
Of the 11 tribes in Minnesota, four are Dakota and seven are Ojibwe/Chippewa. They operate a total of 19 casinos.
IGRA indicates that tribes must be the “sole owner and primary beneficiary” of Indian gaming activities. It prohibits states from taxing tribal gaming revenues, but it allows tribes to negotiate payments to state and local governments for services provided. Under the compacts, Minnesota tribes pay the state a fixed fee to cover enforcement costs. Tribes also pay for background checks for key employees. In addition, many tribes contract with local jurisdictions for police, fire and emergency services.
Through the compact negotiation process, tribal governments granted the State of Minnesota substantial powers to regulate gaming at tribal casinos. The compacts allow the Minnesota Department of Public Safety to:
- Inspect without notice any premises or records related to slot operations;
- Test and approve all slot machines, and remove from play any machines that are non-compliant with compact standards;
- Prohibit the purchase of slot machines from unlicensed vendors;
- Require retention of a certified public accountant to audit books and records of slot operations;
- Gain access to accountant work papers;
- Review all sources of slot revenue, expenses and operational costs to confirm that gambling proceeds are going to the tribe as required by federal law;
- Require background checks before licensure of key gaming management employees;
- Deny licensure to management companies considered a threat to public interest;
- Regulate rules of play for blackjack and payouts for video slot machines;
- Specify staffing and surveillance requirements for blackjack; and
- Impose and collect specified fees to reimburse the state for enforcement costs.
Indian Gaming Impacts
On average, tribes retain about 10% of the gross wager after prize payouts, operating expenses, and debt retirement. Many casinos rely on associated hotel, restaurant and other entertainment/recreation revenues to earn a profit.
Tribes, like states, use their gaming revenues for government purposes such as housing, education, health care, courts and law enforcement, emergency services, roads, water and sewer systems, social services, business development, and cultural preservation.
There is no evidence to suggest that the presence of Indian casinos increases crime. In fact, many rural casino counties have experienced the opposite effect; increased jobs and business growth have helped reduce crime. Many tribes contract with local jurisdictions for law enforcement services and make payments to offset casino-related law enforcement costs.
No. There is no law or agreement between tribes and the state that would prohibit the state from operating casinos if it chooses to do so. The state already operates the lottery. In addition, nonprofit organizations sell charitable pull tabs, and pari-mutuel racing and card games are offered at Canterbury Park and Running Aces Harness Track.
MIGA is concerned about the precedent that off-reservation expansion would set. Once the door is open to state-sponsored or commercial gaming in Minnesota, it will be very difficult to close it. With decreased gaming revenue due to more gaming outlets, tribes would be unable to sustain the progress being made for their people and communities.