The decision is not based on the dictionary definition only, but based on the fact 1/3 of Native Americans have consistently (based on the evidence presented) thought the term to be offensive.

Oddly enough, one of the owners of the redskins was a racist. The washington redskins were the last team to integrate and their foundation was specifically forbidden to donate money towards integration causes. However, I think their team name was picked by the original owner, who named them the Boston Braves like the baseball team (now Atlanta Braves) who wanted the team to be like the New York Giants football/baseball (now S.F. Giants), but Boston fans were confused and they changed the name.