Gambling on Decentralization: How Sub-National Regulatory Interests Condition the Impact of Federal Policy

• Date: 01 December 2021
• Author: Aimee L. Franklin,Thaddieus W. Conner,Christian Martinez
• Published date: 01 December 2021
• DOI: 10.1177/0160323X211057917
• Subject Matter: Research Articles

Gambling on Decentralization:

How Sub-National Regulatory

Interests Condition the Impact

of Federal Policy

Thaddieus W. Conner

1

, Aimee L. Franklin

2

,

and Christian Martinez

2

Abstract

Intergovernmental relations scholars note a decentralizing trend transferring authority from

national to state and local government in the American federalist system. Theory suggests that a

misalignment of the interests of national and regional actors may lead to variation in sub-national

regulatory environments. We investigate how different sub-national regulatory environments con-

dition the impact of Tribal gaming. Using tribal-state gaming compacts and amendments from 1990–

2010, we examine how restrictions in sub-national regulatory agreements condition intended

impacts of the 1988 Indian Gaming Regulatory Act. We find that revenue sharing and market

restrictions differentially influence the impact of gaming on tribal per capita income but not levels

of unemployment. Through the case of Tribal gaming, we determine how sub-national agreements

condition the relative accomplishment of policy goals important to Native nations.

Keywords

intergovernmental relations, sub-national policymaking, Tribal gaming, regulatory policy

Introduction

As the United States has moved towards grant-

ing greater authority to lower levels of govern-

ment, questions remain over how diverse policy

environments condition the impacts of federal

programs (Wright 1990; McCann 2015;

Conlan and Posner 2016). Shifts toward decen-

tralization have allowed states to assertively

craft regulatory details that best serve their

interests in policy areas having considerable

discretion granted to regional actors. Studies

suggest that such shifts in the political environ-

ment can impact service delivery and decision-

making at lower levels of government in non-

trivial ways (Pressman and Wildavsky 1973;

Nicholson-Crotty 2004). Principal-agent theory

has been used in studies of fiscal federalism to

demonstrate how the interests of federal officials

(principals) and state/local jurisdictions (agents)

may conflict, leading to cases of potential drift

1

Department of Government, New Mexico State

University, Las Cruces, New Mexico

2

Department of Political Science, University of Oklahoma,

Norman, Oklahoma

Corresponding Author:

Thaddieus W. Conner, Department of Government, New

Mexico State University, MSC 3BN, PO Box30001, Las

Cruces, NM 88003.

Email: conner03@nmsu.edu

Original Research General Interest Article

State and Local Government Review

2021, Vol. 53(4) 298-316

© The Author(s) 2021

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0160323X211057917

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and decision-making that can change the

intended impacts ofpolicy for target populations

(Waterman and Meier 1998; Nicholson-Crotty

2004). While studies have focused on interjuris-

dictional bargaining between federal and state

actors, few studies have explored how sub-

national deviation with national policy priorities

influences outcomes for sovereign Native

nations which possess a unique set of legal

and political rights distinct from other groups

in the intergovernmental relations framework

(Wilkins and Stark 2011).

This paper examines how misalignment

leads to variation in regulatory environments

and what this means for intergovernmental rela-

tions scholarship. To accomplish this, we

explore how intended benefits to Native

American populations vary based on shifting

regulatory environments at the sub-national

level. While national policy may be designed

to benefit a specific entity such as federally rec-

ognized tribal governments, changes at the sub-

national level may result in policy that redirects

such benefits. We examine the implications of

such shifts by examining how restrictions in

state gaming compacts condition the intended

impact of the 1988 Indian Gaming Regulatory

Act (IGRA) on Native American communities.

The IGRA provides the legal framework for

gaming in Indian Country intending to

promote tribal self-determination and self-

sufficiency (Light and Rand 2005). Since

Congress passed the IGRA in 1988, more than

200 Native nations spanning 28 states have

adopted some form of gaming (Schaap 2010;

Meister 2016). Under the law, tribes must sign

individual compact agreements with states to

operate Class III “Las Vegas-style”gaming

facilities subject to federal approval. After

IGRA enactment, tribes are allowed to operate

social games and traditional/ceremonial games

(called Class I) and bingo and nonbanked card

games (called Class II) without entering into a

compact with a state.

Included in these compact agreements are

provisions regulating the Indian gaming

market ranging from revenue sharing require-

ments to specific market restrictions (Light

and Rand 2005; Taggart and Wilks 2005). As

a result, the regulatory environment surround-

ing Indian gaming differs from state to state,

with some compacts imposing more restrictions

than others that may test the original intentions

of the IGRA. Using data from the U.S. Census

(2021) and U.S. Department of the Interior

(2021), we explore how different sub-national

regulatory environments related to fee-sharing

with state governments and restrictions on

gaming facilities differentially impact the

expected outcomes of gaming from 1990 to

2010.

1

We find mixed evidence that regulatory pro-

visions in Tribal-state gaming compacts impact

income and employment levels within Native

communities. Tribes with percentage based

revenue sharing requirements with the state

and restrictions on gambling activities demon-

strate smaller gains in per capita income levels

compared to tribes with fewer restrictions and

less severe revenue requirements. However,

socioeconomic factors such as unemployment

within Native nations are not impacted by dif-

ferences in regulatory environments.

The paper is divided into four sections. The

first section provides an overview of the litera-

ture on federalism and background on the polit-

ical and legal environment surrounding the

Indian gaming industry. The second section

presents the research design and data used to

test our primary arguments. We then summarize

the findings and conclude with a discussion of

theoretical and practical implications.

Sub-National Regulatory

Environments and Tribal Gaming

Federalism and Goal Conflict

Indian gaming policy provides an ideal setting

to test how diverse sub-national regulatory

environments condition the intended impact of

national policy initiatives. We argue that

intended outcomes for target populations such

as Native Americans will be influenced by the

degree of interest conflict or alignment

between national and sub-national actors.

2

A

wealth of scholarship on federalism and inter-

governmental relations (IGR) provides valuable

Conner et al. 299