The growth of tribal casinos can be traced to the late 1970s, when Native American tribes began to operate bingo halls to raise funds for tribal purposes. Tribes in Florida and Wisconsin tried to open high-stakes bingo games on their reservations. Bingo games were legal in those states but subject to restrictions on the size of the jackpot and how often games could be held. The Oneida Tribe of Wisconsin and the Seminole Tribe of Florida took their respective states to court, claiming that the tribes were sovereign nations and not subject to state limitations on gambling.

In 1981 the Fifth Circuit Federal Court of Appeals ruled in Seminole Tribe of Florida v. Butterworth (658 F.2d 310) that the tribe could operate a high-stakes bingo parlor because the state of Florida did not have regulatory power over the tribe. In other words, the tribe is a sovereign governing entity that is exempt from state regulations. A similar ruling was issued in Oneida Tribe of Indians v. Wisconsin (518 F. Supp. 712). Both cases concluded that the states' gambling laws were regulatory (civil) in nature rather than criminal, because the states already allowed bingo games to take place.

Other tribes also sued, and the issue eventually reached the U.S. Supreme Court, which ruled in February 1987. In California v. Cabazon Band of Mission Indians (480 U.S. 202), the court decided that California could not prohibit a tribe from conducting activities (in this case, high-stakes bingo and poker games) that were legal elsewhere in the state.

In 1989 the Bay Mills Indian Community opened the King's Club in Brimley, Michigan; it was the first Native American gambling hall to offer slots and blackjack games instead of just bingo.