Bingo Palace is a story about love, tradition and spirituality. The novel follows the lives of a group of people tied through various branches of lineage. The main characters struggle with life and coming of age on a Native American reservation in North Dakota.

Lulu Lamartine's trip to the post office opens this story. Lulu is the grandmother of the main character, Lipsha Morrissey. An unknown narrator is watching lulu as she carries on what the narrator calls her routine. Once at the post office, Lulu removes the wanted poster of her son, Gerry Nanapush, from the wall and makes a copy to send to her grandson, Lipsha. She keeps the original and frames it in her apartment.

At the time that Lipsha Morrissey receives the package from his grandmother, he is living in Fargo, North Dakota, working for a sugar beet factory. According to the members of the reservation, Lipsha never lives up to his potential, and they are all disappointed in his life choices. When Lipsha was younger, he scored incredibly high on his ACT exams, and everyone thought he would do great things with his life. Instead, Lipsha chooses a life of odd jobs and hasty decisions. Lipsha believes the package from his grandmother is a sign that it's time for him to do more with his life, so he packs his belongings and goes back to the reservation where he was raised. His return home starts off awkwardly at one of the reservation's dances. When he sees an old acquaintance, Shawnee Ray Toose, he forgets that he no longer fits in with the flow of reservation life. Lipsha is captivated by Shawnee Ray's presence and makes up his mind to pursue her. However, there are many obstacles in the way of his goal.

Shawnee has a son with Lipsha's uncle Lyman Lamartine, and Shawnee was also taken in by Lipsha's aunt Zelda Kashpaw. Lipsha describes Zelda as a calculating woman who cares so much about appearances that she takes Shawnee in to give the community the impression that Lyman eventually plans to marry Shawnee and take care of their child. In reality, either Lyman or Shawnee had long before squelched their marriage plans, so Zelda decides to use Lipsha to aid in getting Shawnee and Lyman together. She concludes that having Lipsha back on the reservation will either make Lyman jealous enough to marry Shawnee or make Shawnee see Lyman's worth after dating someone as unreliable as Lipsha. Her plan partially works, as Lipsha begins to fall in love with Shawnee and also goes to work for Lyman at the Bingo Palace.

The Bingo Palace is the reservation's local gambling spot. The building, which Lipsha compares to a circus tent, services regular bingo players with daily games but also offers a bar and slot machines. Lipsha is hired to keep the establishment clean and work behind the bar on occasion in exchange for a room and weekly wages. The job leads him closer to spiritual awakening when his mother's ghost shows up at the bingo palace one night after hours. His mother, June Morrissey, gives him a financial boost by giving him winning bingo slips, and her presence reminds Lipsha of his spiritual ties. However, his love for Shawnee Ray blinds him and limits the extent he manages to use these gifts. He lets Lyman tie his winnings into a venture that would desecrate their ancestors' spiritual land and becomes lost between this spiritual world and the modern world he knows. He loses his spiritual ability, his financial freedoms and Shawnee Ray, and he must learn to use his spiritual gifts to survive.