Sovereignty as the starting point
Tribal gaming rests on a fact that outsiders find hard to hold onto: the 575 federally recognised tribes listed by the Bureau of Indian Affairs in January 2026 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 two tribes' bingo halls, 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 gaming is one of the two pillars of American gambling: for fiscal 2025 the National Indian Gaming Commission reported gross gaming revenue of 46.2 billion dollars from 545 establishments operated by 246 tribes in 29 states, second only to the commercial sector, whose revenue the American Gaming Association put at 78.72 billion dollars in calendar 2025. 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 games for prizes of minimal value and traditional forms of Indian gaming tied to ceremonies or celebrations, 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, with card games played within state limits on hours and stakes, 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 widely used in tribal casinos precisely because they need no compact; IGRA excludes true slot machines and banked card games from Class II.
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 by the Secretary of the Interior (or deemed approved if the Secretary does not act within 45 days), 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 denies states any authority to impose a tax, fee or charge on tribal gaming, but the courts have accepted revenue sharing where the state offers meaningful concessions 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 into the state treasury, in the examples below ranging from 4 per cent at the bottom of Oklahoma's sliding scale for electronic games to a quarter of slot revenue in Connecticut. Connecticut's two tribes have paid 25 per cent of slot revenue since the 1990s on condition that no one else in the state may lawfully operate slots or other commercial casino games; Florida's compact with the Seminole Tribe produced revenue-share receipts of about 1.04 billion dollars in the state's 2025-26 fiscal year; Oklahoma's 35 compacted tribes 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, when voters rejected both the tribal-backed Proposition 26 and the operator-backed Proposition 27, why Florida's online sports betting runs through a single tribe, why Connecticut's online market is shared between the two tribes and the state lottery, 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. The compact took effect when the Secretary of the Interior let the 45-day review period pass without acting. Commercial competitors sued in federal court; the district court struck the compact down in 2021; the D.C. Circuit reversed in 2023, holding that the compact itself authorises only the betting that occurs on the tribe's lands, and that whether a patron may lawfully bet from elsewhere in Florida is a question of state law for Florida's courts, on which it expressly declined to rule; and in June 2024 the Supreme Court declined to hear the case. The tribe's online sportsbook reopened to existing customers in November 2023, and in August 2026 Florida's revenue estimators reported that sports betting continues to grow at a significant rate in Florida.
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; Michigan's internet gaming law allows both the state's commercial casino licensees and tribes that lawfully conduct Class III gaming to hold operator licences; Arizona's 2021 law allows up to ten event wagering licences for tribes and up to ten for other applicants such as professional sports franchises, which brought both constituencies inside.
Tribal licensing of commercial operators (Maine): the tribes hold the licences and choose the operators, with the state taking 18 per cent of adjusted gross internet gaming receipts.
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. After 2022, any renewed attempt in California is generally seen as needing the tribes' backing.
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 gaming operations with more than 1 million dollars in annual gaming revenue, as to commercial casinos.
The tribal position in the prediction-market fight
Tribes have emerged as among 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. Tribes have filed suits, and tribal associations have urged the Commodity Futures Trading Commission to prohibit sports event contracts and lobbied Congress, arguing that IGRA and their compacts are federal law that event contracts cannot override. In September 2026 the Ninth Circuit held in Blue Lake Rancheria v Kalshi that two California tribes were likely to succeed in their claim that sports event contracts offered on their lands are Class III gaming in breach of IGRA, and that the Commodity Exchange Act's exclusive jurisdiction does not extend to those contracts. 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, which survived federal challenge in 2023 when the D.C. Circuit upheld the Secretary's decision to let it take effect while leaving off-reservation betting to state law, and which the Supreme Court declined to review 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.