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"Also note. Campaign finance restrictions do not apply to Indian tribes. They can give as much as they want to give.
What rationale went into making that regulation/law?"

Not sure it was exactly 'rantionale':

MEASURE ON ELECTION FUNDS TO BENEFIT TRIBES
By Sean P. Murphy, Globe Staff
(Copyright 2001 Globe Newspaper Company - The Boston Globe)
November 25, 2001, Sunday, THIRD EDITION - If the campaign finance bill championed by Senator John McCain becomes law, American Indian tribes stand to increase their influence in Washington.
And McCain may benefit as well.
Long before he took up campaign finance overhaul, the Arizona Republican had staked his ground as one of the Senate's most reliable friends to tribes. He stood up for Indians on a range of issues, from the sanctity of tribal sovereignty to the need for better social programs on reservations. Last year, McCain was the top recipient of political donations from Indians. His $42,900 in contributions from Indian tribes with casinos was almost double the amount received by the second-highest recipient of such funds.
Now, McCain's two signature issues have converged.
Last week, the senator acknowledged through an aide that Indian tribes may gain what McCain had described as an unintended advantage under the campaign finance bill he is cosponsoring. Even so, Mark Buse, the senator's top assistant on the bill, said McCain would not seek to rework the legislation.
To do so would be to endanger the greater goals of campaign finance changes by opening the bill up to what could become a fatal number of proposed amendments. Better to press for the bill as it is and make adjustments later, if necessary, he said.
"There may be flaws that need to be rectified, but they can be handled at a later time," Buse said.
A May 2000 advisory ruling by the Federal Election Commission held that a tribe may make aggregate campaign contributions of more than $500,000 a year, much larger than the $25,000 annual limit for almost everyone else.
That cap applies to "hard money," or donations directly to candidates. Those donations are different from 'soft money," which is given to the political parties, ostensibly for "party building" but which is in practice a way for donors to circumvent limits on hard-money donations.
If McCain's bill passes and all soft money is banned, Indian tribes, with their ability to give larger amounts of hard money, would presumably gain in influence over donors who face stricter limits on giving.
McCain's campaign finance bill narrowly passed in the Senate in April, but has been stalled in the House. By some counts, the fragile coalition of supporters in the House needs to gain just seven more representatives to its side for passage. But with legislative priorities shifting after Sept. 11, movement on the measure seems unlikely this session.
Asked last week about the legal wrinkle that benefits tribes, Senator Russell Feingold, the Wisconsin Democrat who is cosponsor of the bill, said in a written statement to the Globe: "As we stand on the verge of finally enacting a soft-money ban after six years of struggle, it will probably not be possible to deal at the last minute with the aggregate hard-money limits applicable to Indian tribes."
Feingold called the FEC's interpretation of the law defensible, but added, "I can also understand the concern that some have about it, given the tribes' significant gaming income. Further study of this issue is needed, and it can be addressed, if necessary, in future campaign finance legislation."
Barb Lindsay is executive director of United Property Owners, a California-based citizens lobby that tracks federal Indian policy. Among other concerns, the group generally opposes tribes' efforts to have private property taken into tribal control as reservation land.
Lindsay said she had met with a McCain staff assistant in Washington in May 2000 to express concern about the FEC ruling. She said a McCain assistant had not followed up with her.
Scott Seaborne, of the Minnesota-based Citizens Equal Rights Alliance, said he spoke to Feingold's staff on June 1 and was assured that the tribal-donation loophole was something the staff intended to correct with additional legislation following passage of the campaign finance measure.
Lindsay, Seaborne, and Edward Zuckerman, publisher of the Political Finance newsletter of Washington, said in interviews that, if the McCain-Feingold bill passes, tribes would be able to use their gambling profits to further raise their profile in Washington.
"This gives tribes too much power," Lindsay said. "Politicians could become beholden to them, just because they are a rich source for campaign dollars."
Mark Emery, spokesman for the Oneida Nation of New York, said the tribe wants to keep its options open to make multiple donations. Emery said the fact that the Oneida are from a large state led them to seek the FEC ruling.
"There are over 30 congressmen from New York, and the tribe may at some future date desire to donate to each one," he said. "The tribe just wanted to clarify the rules."
Tribes with casinos are among the top donors to politicians. They spent almost $40 million the past five years on contributions to Washington politicians and lobbyists.
Under the FEC ruling, each tribe is limited to a $1,000 contribution per candidate, but donors (tribes) can spread that $1,000 contribution to more than 500 candidates running for federal office - giving a tribe an aggregate limit of more than $500,000.
Other donors are limited to total annual contributions of $25,000 per year, with no more than $1,000 to any single candidate.
Lindsay said the country's 550 tribes could gain more collective clout by donating in concert to affect the outcome of a certain election or to influence a certain policy over which the tribes share a common position.
Political action committees, or PACs, are treated differently by the FEC in a way that gives tribes a distinct funding advantage.
PACs may be funded only with personal funds donated by individual members of a particular company or union associated with the PAC. Individual donations to PACs are limited to $5,000 a year, and must be publicly disclosed.
But an Indian tribe may tap the tribal treasury to fund political contributions. And the treasury is funded by business profits, most often from casinos that are not taxed by the federal government.
Sean P. Murphy can be reached at smurphy@globe.com.

http://www.fcpotawatomi.com/dec_15_01/state.html