Circling the Wagons


As legislators across the United States introduce increasingly draconian statutes aimed at eliminating PDLs from their states, the allure of licensing check cashers and payday lenders either on tribal land or through one of the tribes is becoming increasingly attractive.

It all began in the 1970s, just as Atlantic City was re-imagining itself as Las Vegas East. With state-run lotteries, off-track betting and the revival of riverboat gambling spreading throughout an economically weary United States, legal gambling was clearly leaking into the nation’s bloodstream.

Coincidentally, earlier that decade, a Chippewa couple living in a mobile home located on tribal land in Minnesota decided to challenge a tax bill they’d received from nearby Itasca County. Despite the extensive help of Leech Lake Legal Services, the couple lost their case in state court. They then lost the case in district court, and even got to taste defeat in Minnesota’s Supreme Court.

Then things changed.

The United States Supreme Court agreed to review the case. In a unanimous and shocking reversal of fortune, it held in United States v. Mazurie in 1975 that the states were not only unable to tax Native Americans living on reservations, they couldn’t even regulate them. Tribal sovereignty meant that only the federal government could regulate the tribes, not the states in which they were located.

From that legal position, it was but a short walk to the realization that every square foot of tribal land could become a little piece of Las Vegas. The behemoth that is now the Indian casino business was born.

More to the point, this real estate was no longer legally even a part of the state in which it was located. Tribal casinos were the first demonstration of the wealth and power being in the United States but existing as a semi-independent entity can bring with it.

PDLs Turn?

Today, with so many precedents reinforcing the notion of tribal sovereignty, PDLs have to take a serious look at basing Internet businesses in these nations-within-a-nation.

Check cashers and PDLs have already begun to do business in brick and mortar businesses on tribal lands, setting off a firestorm of controversy.

Gary Nitzkin of Nitzkin & Associates, who is no friend to the PDL industry but has been tracking the issue, believes that the first major indicator as to which way this controversy will end is about to appear. The Colorado Supreme Court is about to hear a case involving two payday lending companies that maintain that they have immunity from prosecution as well as from Colorado state regulations since they have been incorporated under the Indian nations.

Another key component in this legal tangle are Supreme Court rulings maintaining that the regulation of state gambling laws is civil (because of their regulatory nature) rather than criminal as the states in question already permitted bingo games to operate.

On the other hand, there are states that have outlawed gambling altogether, such as Maine, where tribal casinos have not been permitted because in those states the regulation comes under criminal law.

Even though the upcoming Colorado case is being held in a fairly low level state supreme court, many, like Nitzkin, are convinced that this decision will be the bellwether. “If Colorado rules against [PDLs operating on Tribal Land] I think you’ll see the subsequent cases going in that same direction,” he says.

Posted in Winter 2010.