Why can Native Americans conduct gambling activities?

Tribal land is not under State law unless a Federal law places it under State law. The Supreme Court held that even if a tribe is under State law the State gaming regulations do not apply on Indian trust land. In 1988, Congress passed the Indian Gaming Regulatory Act permitting federally recognized Indian tribes the ability to conduct gaming activities under certain circumstances. This law allows traditional Tribal gaming, bingo, pull-tabs, lotto, punchboards, tip jars, and certain card games on tribal land. However, it requires a Tribal/State compact for all other forms of gaming.

Congress specifies that "Indian tribes have the exclusive right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity. Congress then went on to define, in Section 2703, certain games as Class I, II, or III.