The tribes' right to conduct such activities free from state regulatory control had been upheld in several landmark federal court decisions. In 1988, bowing to political pressure from state governments, Congress passed IGRA after considering and rejecting several other bills which would have curtailed tribal sovereignty to an even greater extent. Although some tribes opposed IGRA because it limited tribal sovereignty, approximately a third of the nation's tribes have successfully negotiated tribal-state compacts and launched casino operations. It is estimated that Indian gaming represents a 3.5 billion dollar industry nationwide. This is slightly less than 8 per cent of all legalized gaming in the U.S., which generated approximately 44 billion dollars in revenues nationwide in 1995.
Revenue equals gross amount wagered less payouts, prizes and winnings to players.
In contrast, wagering through lotteries and at commercial casinos, including riverboats, has increased 13 per cent and 14.5 per cent, respectively. Indian gaming is government gaming, conducted by a sovereign government for public purposes, as state lotteries are. The federal government does not tax state lotteries, so it would be unfair and unconstitutional to tax tribal gaming operations, which fill the same purpose. In addition, federal law requires that Indian gaming revenues be used exclusively for tribal government purposes. Using these revenues to generate funds for the U.S Treasury would be contrary to the intent of Congress when IGRA was adopted.