Sovereignty as the starting point
Tribal gaming rests on a fact that outsiders find hard to hold onto: the more than five hundred federally recognised tribes are sovereign nations with a government-to-government relationship with the United States, and states have no authority over what happens on tribal land unless Congress gives it to them. In 1987 the Supreme Court held in California v Cabazon Band that California could not enforce its bingo regulations against a tribe's bingo hall, because the state permitted bingo and therefore regulated rather than prohibited it, and tribal sovereignty barred state regulation on Indian lands. Congress responded the next year with the Indian Gaming Regulatory Act, which is the framework everything since has run through.
Tribal casinos are now the largest segment of American gambling by revenue, with around 250 tribes operating more than 500 facilities and gross revenue of over 40 billion dollars a year. Online gambling policy in every state with significant tribal gaming (California, Florida, Oklahoma, Arizona, Michigan, Connecticut, Washington, Minnesota, Wisconsin, New York and others) is shaped by what the tribes hold, what they want, and what a compact can be made to say.
IGRA's three classes
Class I covers social and traditional ceremonial games, under exclusive tribal jurisdiction.
Class II covers bingo (including electronic bingo aids) and non-banked card games such as poker, which a tribe may offer on its own authority if the state permits such gaming for any purpose, regulated by the tribe with oversight from the National Indian Gaming Commission. Class II machines that look like slots but resolve outcomes through a bingo draw are a large part of the Oklahoma and Florida markets precisely because they need no compact.
Class III covers everything else: house-banked casino games, slot machines, sports betting, pari-mutuel wagering, lotteries. A tribe may offer Class III gaming only under a tribal-state compact, negotiated with the state, approved (or deemed approved) by the Secretary of the Interior, and covering the games, the regulatory arrangements, and any revenue sharing. IGRA requires states to negotiate in good faith, and the remedy when they do not has been litigated for decades.
Compacts
A compact is a treaty in all but name. It sets which Class III games the tribe may offer and where; the tribe's regulatory body and the state's role (usually inspection and audit rights); the treatment of minors, patrons and employees; and, most contentiously, money. IGRA prohibits states from taxing tribal gaming, but it permits revenue sharing where the state gives the tribe something of value in return, and the thing of value is almost always exclusivity: the state promises not to license competing commercial gaming (or a specific form of it) in some or all of its territory, and the tribe pays a share of revenue, from a few per cent to over a quarter, into the state treasury. Connecticut's two tribes have paid 25 per cent of slot revenue since the 1990s in exchange for casino exclusivity; Florida's compact with its largest tribe produces hundreds of millions a year; Oklahoma's thirty-plus tribal compacts fund the state on a sliding scale.
Exclusivity is what makes online gambling complicated. A state that promised a tribe exclusivity over casino games cannot license commercial online casino without breaching the compact or renegotiating it, and the tribe's price for renegotiation is the state's problem. That is why California's tribes and commercial sportsbook operators fought each other to a standstill in 2022, why Florida's online sports betting runs through a single tribe, why Connecticut's online market is a tribal-lottery partnership, and why Maine's 2026 online casino law gives the licences to the tribes.
The hub-and-spoke question
IGRA's premise is that tribal gaming occurs on Indian lands. A bet placed on a phone in a suburb, transmitted to a server on the tribe's reservation, and accepted there: where does it occur? If on Indian lands, it is tribal gaming under the compact and outside state licensing; if where the bettor sits, it is off-reservation gaming the compact cannot authorise. Florida's 2021 compact adopted the first reading, deeming online sports bets made anywhere in the state to occur on tribal land where the servers sit, and giving the tribe statewide online exclusivity in exchange for a large revenue share. Commercial competitors sued in federal court; the district court struck the compact down in 2021; the D.C. Circuit reversed in 2023, holding that IGRA governs only the on-reservation component and that the compact's off-reservation provisions were a matter of state law the state had validly enacted; and in June 2024 the Supreme Court declined to hear the case. The tribe's online sportsbook has operated statewide since late 2023.
The Florida model is now the template tribes in other states point to: a compact that deems online activity to occur on tribal land, statewide exclusivity, revenue sharing, and no commercial licensees. It has obvious attractions for tribes and for states that would rather deal with one partner than thirty, and equally obvious objections from commercial operators, who have no route into such a market except as a tribe's technology partner.
Models in practice
Tribal-exclusive online (Florida): one tribe, statewide, under the compact.
Tribal-plus-commercial (Arizona, Michigan, Connecticut): tribes hold online licences alongside commercial operators or the lottery, each partnering with technology providers; Arizona's 2021 law gave licences to tribes and to professional sports franchises in equal number, which brought both constituencies inside.
Tribal licensing of commercial operators (Maine): the tribes hold the licences and choose the operators, with the state taxing the result.
Tribal opposition (California, Minnesota, Oklahoma): tribes with land-based exclusivity oppose commercial online legalisation and, in California, have the ballot-measure resources to defeat it. The 2028 window in California depends on the tribes proposing a measure that gives them control.
Tribal absence (New Jersey, Pennsylvania, Illinois, Ohio): states with little or no tribal gaming legislate commercially without the constraint.
Regulation of tribal online gaming
A tribal online operation is regulated by the tribe's gaming commission under the compact's standards, with the state's compact rights and the National Indian Gaming Commission's oversight of the tribe's ordinance. In practice the tribe's regulator adopts technical and responsible-gambling standards comparable to the state's commercial rules, uses the same testing laboratories and geolocation providers, and licenses the same vendors, because its commercial partners and its compact counterparty expect it to. Vendors serving a tribal operation need the tribe's licence rather than, or in addition to, the state's. The federal anti-money-laundering regime applies to tribal casinos as to commercial ones.
The tribal position in the prediction-market fight
Tribes have emerged as the most determined opponents of federally regulated sports event contracts, because a federal instrument available to anyone with a phone bypasses the exclusivity they negotiated and paid for. Tribal associations have filed suits and amicus briefs, petitioned the Commodity Futures Trading Commission, and lobbied Congress, arguing that IGRA and their compacts are federal law that event contracts cannot override. Lesson six takes up the dispute; the point here is that tribal sovereignty, which shaped the state map, is now shaping the federal one.
What to take from this lesson
Tribes are sovereign, and IGRA channels their gaming through three classes, with Class III (casino, sports betting) requiring a state compact. Compacts trade revenue sharing for exclusivity, and exclusivity is what constrains online legalisation in tribal states. Florida's hub-and-spoke compact, upheld on appeal in 2023 and left standing by the Supreme Court in 2024, is the template for tribal-exclusive online markets; Arizona, Michigan and Connecticut mix tribal and commercial; Maine licenses through the tribes; California and others are blocked by tribal opposition. Tribal regulators adopt commercial-grade standards and license vendors themselves, and tribes lead the opposition to federal event contracts.