Indian Gaming Today:  State Law and Politics in Wisconsin

By Kathryn R.L. Rand and Steven Andrew Light

A basic tenet of federal Indian law is that as sovereign nations, tribes ordinarily are not subject to the strictures of state law.

Under IGRA, however, tribes may conduct gaming only in those states that “permit such gaming for any purpose by any person,” and for casino-style gaming, IGRA requires that the tribe enter into a tribal-state compact. Through the “permits, such gaming”and compact requirements allow state law to establish the terms under which a tribe may conduct Class III gaming.

Because state law determines the permissible scope of tribal gaming and may drive compact negotiations, it acts as a constraint on tribes’ ability to negotiate a favorable compact. This is illustrated by the experience of gaming tribes in Wisconsin. The state’s dramatic growth in tribal gaming, substantive changes in state public policy toward gambling, conflict between the governor and the state legislature over Indian gaming, and both federal and state court interpretations of state law—including two recent landmark Wisconsin Supreme Court decisions—all have affected the scope of Indian gaming in Wisconsin.

The 11 federally recognized tribes in Wisconsin each have entered into Class III compacts with the state and operate 24 gaming enterprises. In 2005, total tribal gaming revenue in Wisconsin topped $1.2 billion, putting Wisconsin in eighth place among states with Indian gaming. Wisconsin’s $100 million direct tribal payments ranked third in 2005 (behind only Connecticut with $421 million and California with $253 million).

Despite—or perhaps because of—the economic success of tribal gaming in Wisconsin, it has been politically charged from the start. Roughly coinciding with the advent of Indian gaming, the state’s public policy toward casino-style gaming shifted from a general gambling prohibition, to permitting a state lottery (along with bingo and pari-mutuel on-track wagering). Subsequent developments revealed the influence of changing state political regimes on tribal gaming law and policy.

The scope of Indian gaming allowed under Wisconsin law was settled by a federal court decision in 1991. Based on the broad definition of “lottery” in state law, the court reasoned that the authorization of a state lottery included any game of chance. Accordingly, the state constitution “permitted such gaming” in theory, even if the state chose not to operate any games beyond a lottery in practice. As a result, the state was required to negotiate all games not prohibited expressly by the Wisconsin Constitution or state law. Former Governor Tommy Thompson then quickly authorized tribal operation of pull-tabs, blackjack, video games, and slot machines.

Soon after, the state passed a constitutional amendment banning casino games, including poker, roulette, craps, and blackjack. In direct response to the federal district court’s interpretation of lottery, the constitutional amendment further concluded that, “except as provided in this section, the legislature may not authorize gambling in any form.”

Five years later, when the compacts’ initial term expired, Thompson wielded the amendment to obtain concessions from the tribes. As a source close to Thompson’s office put it, the change in state law gave the governor “the ability to issue the death penalty” for Indian gaming, which he used to leverage tribal-state revenue sharing—approximately $24 million per year. In exchange, the tribes were allowed to continue operating casino-style gaming with the benefit of a near-monopoly under state law for the next five years, the term of the amended compacts.

When Governor James E. Doyle took office in 2002, he inherited a large budget shortfall and, like Thompson before him, looked to Indian gaming to provide much needed state revenue. He proposed nearly a five-fold increase in the tribes’ annual payments to the state, from $24 million to $100 million, with total payments of $237 million during the first two years. In exchange, the tribes would receive long-term compacts and additional casino-style games, such as craps, roulette, and poker.

Some state legislators, however, criticized the compact amendments as a bad deal for the state, and accused Doyle of giving tribes a “sweetheart deal” as payback for soft-money political contributions during his campaign. The political contestation between Doyle (a Democrat) and Republican lawmakers ended up in the Wisconsin Supreme Court.

In Panzer v. Doyle (2004), state Senate Majority Leader Mary Panzer and others claimed that Doyle’s authorization of additional casino games exceeded his authority under the state constitution. The court agreed, holding that the Wisconsin Constitution prohibited such games as craps, roulette, and poker, making the games “uncompactable.”

The court recognized that its restrictive reading also cast doubt on games offered at tribal casinos under the original compacts, which authorized blackjack and slot machines, but it sidestepped the issue. That question was put before the Wisconsin Supreme Court in Dairyland Greyhound Park, Inc. v. Doyle, decided this past summer. In Dairyland, the court relied on the contract clauses of the Wisconsin and U.S. Constitutions to hold that the original compacts were unaffected by changes to the state constitution. In an opinion peppered with piecemeal withdrawal of “any language to the contrary in Panzer v. Doyle,” the court reasoned that because the state constitutional amendment did not apply to the original compacts, the terms of the existing compacts determined allowable games.  Further, the court indicated that all Class III games were on the table for negotiation, as the federal district court’s 1991 decision, rather than the state constitutional amendment, controlled the scope of gaming under the original compacts and any subsequent amendments.

It would seem necessarily to follow, then, that the Doyle amendments would be valid, contrary to the court’s holding in Panzer. Yet, the Dairyland court claimed not to reach the 2003 amendments, seemingly construing them as separate compacts rather than amendments to the original compacts.

The cases certainly reveal a rift not only among state political actors, but also among the Wisconsin Supreme Court justices as to the validity of the 2003 compact amendments. Both cases viewed the issue as one of state law, appropriately decided by the state court, regardless of the tribes’ participation in the cases and their impact on tribal interests. The public policy issues at hand, including the impacts on all 11 tribes and their members, for whom gaming has created jobs and alleviated reservation poverty, seemed irrelevant to the court’s decisions. Tribal efforts to exert political influence in successfully negotiating compact terms were nearly all for naught in this instance, and plainly are vulnerable to future challenges in state courts in Wisconsin—and elsewhere.

Kathryn R.L. Rand (rand@law.und.edu) is the Floyd B. Sperry Professor and Associate Dean for Academic Affairs at the University of North Dakota School of Law. Steven Andrew Light (steven_light@und.nodak.edu) is an associate professor of political science and public administration at the University of North Dakota. They are the Co-Directors of the Institute for the Study of Tribal Gaming Law and Policy.