Native American casinos must be a tribal endeavor, not an individual endeavor. In other words, a random group of Native Americans cannot legally start a casino. Only a tribe's status as a sovereign entity allows it to conduct gaming. A Native American tribe must be granted official federal recognition in order to be a sovereign entity.

The list of federally recognized tribes is maintained by the Bureau of Indian Affairs (BIA), an agency of the U.S. Department of the Interior. The most current list includes the names of 562 tribes. It was published on December 5, 2003, under the title "Indian Entities Recognized and Eligible to Receive Services from the United States Bureau of Indian Affairs," in the Federal Register.

Throughout history, tribes have received federal recognition through treaties with the U.S. government, via congressional actions, or through BIA decisions. Most tribes were officially recognized during the eighteenth and nineteenth centuries. Today, recognition can be achieved either through an act of Congress or through a series of actions known as the "Federal Acknowledgement Process." This can be very long and laborious, sometimes taking decades. Under federal regulation 25 CFR Part 83 a–g, there are seven criteria that a group of Native Americans must meet to be federally recognized as a tribe:

• They must have been identified as an American Indian entity on a substantially continuous basis since 1900.
• A predominant portion of the group must comprise a distinct community and have existed as a community from historical times to the present.
• They must have maintained political influence or authority over their members as an autonomous entity from historical times until the present.
• They must submit a copy of the group's present governing documents, including membership criteria.
• The group's membership must consist of individuals who descended from a historical Indian tribe or from historical Indian tribes that combined and functioned as a single autonomous political entity.
• The membership of the group must be composed primarily of people who are not members of an existing acknowledged North American Indian tribe.
• The tribe must not be the subject of congressional legislation that has terminated or forbidden a federal relationship.

Federal recognition is extremely important to Native American tribes because tribes must be federally recognized to be sovereign entities and to be eligible for billions of dollars in federal assistance. The federal government has about fifty-four million acres of land held in trust for federally recognized Indian tribes and their members. In general, exemptions from state and local jurisdiction apply to land held in trust by federally recognized tribes. Even if a tribe does not have a land base, the federal government can take land in trust for the tribe once it receives recognition. This land is no longer subject to local jurisdiction, including items such as property taxes and zoning ordinances.

Within a tribe, there are rules for membership. Most tribes require that a person have a particular degree of Native American heritage (usually 25%) to be an enrolled member. Some tribes require proof of lineage for membership. According to the GAO, federally recognized tribes had a membership of approximately 1.7 million as of May 2001.

One of the most contentious issues related to tribal casinos is the authenticity of the tribes themselves. Critics charge that some Native American groups want federal recognition only as a means to enter the lucrative gambling business. In 2001 the GAO examined this issue in a report titled Improvements Needed in Tribal Recognition Process (November 2001). According to the GAO there were 193 tribes with gambling facilities at that time. The report noted that 170 of the tribes (88%) could trace their federal recognition at least back to the time of the Indian Reorganization Act (IRA) of 1934 or similar legislation from the 1930s. In addition, 59% of IRA-era tribes were engaged in gambling operations in 2001, while 45% of tribes recognized since 1960 were engaged in gambling operations.

The GAO report complained that the regulatory process established by the BIA in 1978 to ensure a uniform and objective recognition process has become too lengthy and inconsistent, leading to more and more lawsuits in federal courts.

The number of petitions for recognition received annually by the BIA began to climb during the 1990s. Although the increase was not dramatic, a backlog began to grow. As of August 2001, the BIA had received 250 petitions for recognition under the program. However, only fifty-five of those petitions had completed the documentation required for consideration. Of those, the BIA recognized fourteen tribes, denied recognition to fifteen tribes, and was considering or was scheduled to consider the other twenty-six.

As noted by the GAO, a significant amount of time is required by the BIA for a final decision on official tribal status due to limited budget and personnel, an ineffective structure for making decisions, and involvement in numerous lawsuits. A petition must be supported by substantial documentation. Once all documentation has been received and the petition is determined to be complete, it is called in "ready status." At this point, the petition is ready to be considered. The date of entering "ready status" determines the order in which a petition comes up for consideration. The GAO reported that six of the ten petitions in "ready status" in 2001 had been waiting for consideration for at least five years. During consideration, a petition is in "active status."

According to the GAO, there was a spike in petitions entering "ready status" during the mid-1990s. The BIA had placed fifty-five petitions in "ready status" since the program's inception in 1978. Twenty-three of those petitions (or 42%) were placed in "ready status" between 1993 and 1997. Although active consideration of a completed petition is supposed to take approximately two years, the BIA reported to the GAO that it could take fifteen years for the agency to resolve all of the petitions awaiting active consideration as of 2001.