Native American casinos are not regulated by state legislature as they operate within the legally protected Indian reservations. These reservations have limited sovereignty and therefore, in 1987, the US Supreme Court ruled that they could operate gambling facilities, such as casinos, as long as their reservation fell in a state that operated some form of legalized gambling. In 1988, the Indian Gaming Regulatory Act was introduced which aimed to promote Native American tribal economic development, to regulate and protect tribal gaming from organized crime and to set up the National Indian Gaming Commission. Today, there are approximately 400 Native American casinos that allow US gambling.

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The Native American casinos were established in order to provide an income for the Native American community living on that reservation. This income was meant to aid with the economic development of the reservation. It has been successful in improving public services, building schools (there are 26 tribal colleges in existence), setting up education trust funds, setting up alcohol and drug treatment programs, financing entrepreneurships and improving general infrastructure. The casinos generate an income of approximately $18.5 billion. Not only do the casinos generate a large income, but they have improved the labor market for both Indians and non-Indians alike. Tribal unemployment and welfare rates have both dropped since these Native American casinos have been established.

The Foxwoods High Stakes Bingo and Casino of Ledyard, Connecticut is run by the Mashantucket Pequot Tribe. It is said to be the most profitable US casino in the West and, in fact, the most profitable in the whole of the Western Hemisphere.

Of course, these laws, allowing Native American casinos to operate have brought with them much controversy. There are arguments against the establishment of these casinos both from Indians and non-Indians. Among the Indians, the elderly are concerned that the younger generations will lose their traditional values and organized crime and corruption will become wide-spread. Among non-Indians, there have been many allegations of Native Americans taking advantage of the laws when they are not entirely entitled to it, for example, those who want to open a Native American casino by claiming an ancestor from many generations back, who was Native American. There are those who claim that Native American casinos have led to issues of compulsive gambling on some of the reservations. It has also become acknowledged that much of the income generated by these Native American casinos are, in fact, not going toward the development and improvement of Native American reservations and quality of life, but rather to the non-Indian backers of these ventures.

The voicing of the above concerns has led to Congress amending the Indian Gaming Regulatory Act. In 2006, they set out legislation in order to limit the opening of new casinos and to restrict where casinos are able to be opened. These changes to the laws have also brought with them much controversy - mostly from the side of the Indian tribes who feel that their sovereignty is being encroached upon.