In a major victory for a Wyoming tribe, a federal appeals court on Tuesday ruled that the state must negotiate a compact for all forms of Class III gaming, including slot machines.

The unanimous decision from the 10th Circuit Court of Appeals found that the state negotiated in bad faith for limiting its discussions with the Northern Arapaho Tribe. State officials categorically excluded slot machines, card games and other Class III games from a proposed compact.

The court said that approach was wrong because state law doesn't outright prohibit such games. Therefore, the state must negotiate under the Indian Gaming Regulatory Act, a panel of three judges concluded.

"When a state refuses to negotiate beyond state law limitations concerning a game that it permits, the state cannot be said to have negotiated in good faith under the IGRA given the plain language of the statute," Judge Stephanie K. Seymour wrote for the majority. "Moreover, 'when a state wholly fails to negotiate,' as Wyoming did here concerning casino-style gambling, 'it obviously cannot meet its burden of proof to show that it negotiated in good faith.'"

The ruling comes as the tribe moves forward with construction on a $10.3 million, 30,000-square-foot casino on the Wind River Reservation. The tribe already offers Class II gaming at an existing facility, bringing in an estimated $2 million in net revenues.

The tribe's future could look even brighter with the addition of lucrative Class III games at the new casino. Tribal leaders have been anticipating a license from the Interior Department to operate Class III games but yesterday's decision gives them greater assurances.

The decision also has the potential to affect tribes in Oklahoma, a state in the 10th Circuit where gaming was recently expanded by voters, because the court could adopt a standard beneficial to tribes seeking Class III compacts.

This standard is called the "Wisconsin" analysis after a case in the 8th Circuit involving a Wisconsin tribe. Under this approach, a state must negotiate a compact for all forms of Class III gaming if any type of Class III game is allowed.

A contrasting approach is the "Florida" analysis used in the 9th Circuit and the 11th Circuit. Under this scenario, a state is required to negotiate a Class III gaming compact only for the specific games permitted under state law.

In the Northern Arapaho Tribe's case, the 10th Circuit said it didn't have to decide on a standard because the tribe is entitled to a compact under either analysis. State law permits "a nearly unlimited variety of gaming," the court observed, "albeit only for social or non-profit purposes."

"We need not decide whether to follow the Wisconsin or Florida analysis regarding the scope of gaming under the IGRA because we conclude that Wyoming must negotiate with the Tribe under either approach regarding the full gamut of 'any game, wager or transaction,' the judges wrote.

This leaves open the possibility for other tribes to persuade the court to adopt the Wisconsin approach. This would help tribes in Oklahoma, where voters legalized a lottery and certain electronic casino machines that could be considered Class III games. A Florida approach, on the other hand, would not help the tribes because slot machines are still banned.

The Northern Arapaho Tribe broke ground on the new casino in July, with an opening expected in September 2005. Officials expect the operation to create 120 new jobs with a payroll of $5 million.

When the tribe in 2002 won a lower court ruling requiring state negotiation on some forms of Class III gaming, Sen. Mike Enzi (R-Wyoming) drafted a rider to bar the Interior Department from approving gaming when a state objects. The effort was scuttled after the tribe met with Enzi.

The tribe is one of two in the state of Wyoming. The Eastern Shoshone Tribe also resides on the Wind River Reservation.

Get the Decision:
Northern Arapaho Tribe v. Wyoming (November 23, 2004)

Relevant Links:
Northern Arapaho Tribe - http://www.northernarapaho.com