Part I: Indian Gaming
Introduction
Indian gambling on tribal land is a significant political issue in California. The state currently has more gaming tribes than any other state, with 66 tribal compacts currently signed. As revenues grew in the early 2000's, tribes have entered the political arena by donating large sums of money to both Democratic and Republican candidates. Expensive and contentious propositions have appeared regularly on California ballots concerning Indian gaming and tribal jurisdiction. As Indian casinos grow and their political influence increases the debate over limitations to Indian sovereignty continues to be a major issue in California politics. Questions remain on the amount Indian casinos should pay in state and federal taxes and whether or not they should bear the cost of environmental clean up, crime prevention and quality of life in nearby communities.
Soverignty
A key issue in tribal gaming debate is the sovereignty of Indian tribes. Do recognized tribes have separate rights as sovereign foreign nations, or are they subject to the laws and policies of the United States? Throughout the 1800s the dispute over Native American sovereignty was a significant political issue, fought in courts and legislatures across the country. Many states maintained that Indians as individuals should be subject to state jurisdiction and that native tribal governments 
had no legitimacy as separate institutions. Many Indian tribes claimed to hold all of the rights to self-governance and land ownership that they possessed before the arrival of Europeans. The U.S. government first acknowledged tribal Indian affairs in the Articles of Confederation (1781), which gave the federal government sole and exclusive authority over Indian affairs. The U.S. Constitution, drafted in 1787, gave Congress broad power under the Indian Commerce Clause (Article 1, Sec. 8) to regulate commerce with Indian tribes. The Supreme Court reaffirmed the legal and political standing of Indian nations in a set of three 19th Century court decisions known as the Marshall Trilogy, Johnson v. McIntosh (1823); Cherokee Nation v. Georgia (1831); and Worcester v. Georgia (1832). Supreme Court Justice John Marshall found that "Europeans" had rights to the land by the act of "discovery" which gave European power an ownership title to the land against all others. However, he also ruled Indians to be the rightful occupants of the soil, with
the legal as well as just claim to retain possession of it, and to use it according to their own wishes. As a result of the Marshall Trilogy cases, the Supreme Court both reaffirmed the sovereignty of Indian tribes and acknowledged this as predating European arrival. Paradoxically, while the U.S. government recognizes American Indian Tribes as sovereign nations, the U.S. Congress is recognized by the courts as having the right to limit the sovereign powers of tribes. Because Indian nations lie within the boundaries of the United States, Indian tribes are delineated "domestic dependent nations."
In 1887 Congress passed the General Allotment Act, or Dawes Act, which authorized the Bureau of Indian Affairs to convert tribal lands to individual ownership. The Dawes Act severely limited tribal sovereignty, as did the 1886 Supreme Court case United States v. Kagama, which affirmed that Indian lands were strictly under control of Congress. However, the Indian Reorganization Act, passed in 1934, allowed for the formation of tribal governments under federal authority as vehicles for Indian "self-government." The Act gave Indians more power to manage their internal affairs and established a fund for land purchases and educational assistance. It remains the basic legislation concerning Indian affairs.
Indians and Taxation
The issue of whether or not California Indians are subject to the full array of taxes that non-Indians pay has led to misunderstanding and confusion for both Indians and non-Indians. All residents of the United States, including Indians, must pay federal income tax. However, whether or not Indians are subject to California state income tax is more complicated. California Indians do not pay state income tax if they are an "eligible" Indian, live on a reservation or Indian trust allotment, and work on the reservation or trust allotment. If they live or work off the reservation or trust allotment Indians must pay state income tax (see "Frequently Asked Questions" by the California Franchise Tax Board). Indians pay real property tax on property owned off a reservation or trust 
allotment, but do not pay property tax on land or buildings built on reservation or trust allotment land. However, if the land is owned by a tribe or individual Indian "in fee" the property is subject to taxation (see State Board of Equalization ruling). Indians are not subject to fees and licenses that apply to buildings or activities that occur on reservations or trust allotments. Indians are exempt from paying vehicle license fees by legislation signed by Governor Gray Davis in 1999 if vehicles are used primarily on reservation land (see California Revenue and Taxation Code, sec. 10781.1). Indians pay sales tax on sales off reservation and trust allotment land, but are exempt from paying sales tax on most sales on reservations.
Gaming
Large-scale gaming sponsored by tribal governments started in the early 1980s. As state lotteries grew in popularity, several Indian tribes in Florida and California 
began raising revenues by operating bingo games offering larger prizes than those allowed under state law. When Florida and California attempted to close tribal gaming operations, tribes sued in federal court, Seminole Tribe vs. Butterworth (1979) and California vs. Cabazon Band (1987). In both rulings, the courts said that if state law criminally prohibits a form of gambling, then the tribes within the state may not engage in that form. However, if state law regulates a form of gambling, then the tribes within the state may engage in that gaming free of state control.
Gaming on U.S. Indian Reservations was officially regulated after Congress passed the Indian Gaming Regulatory Act (IGRA) in 1988. This legislation requires gaming tribes to have compacts with their respective state governments specifying the types of gaming permitted on reservation lands (see Find Law analysis of the Act).
The IGRA divided the types of Indian Gaming into three separate classes:
Class I is designated as traditional gaming played in tribal ceremonies and remains under tribal jurisdiction.
Class II includes games like bingo that use pull tabs or punch boards, regardless of their technology mechanisms, and any non-banking card games that are not explicitly banned by state constitutions. These games are further regulated through the National Indian Gaming Commission, a regulatory agency created by the IGRA.
Class III includes all other forms of gaming that do not fall into the first two categories. These games require a tribal-state compact or agreement, approval by tribal ordinance, and need the approval of the chairpersons of the National Indian Gaming Commission.