Tribes defend their gambling wealth By CRAIG RIMLINGER and IAN SALISBURY, Special to this newspaper
Wednesday, September 3, 2003 3:13 PM PDT
WASHINGTON (MNS) The numbers evoke the heyday of the Internet boom in the '90s: skyrocketing profits, exponential growth and thousands of new jobs.
But unlike the bravado that accompanied the Silicon Valley explosion, insiders in the burgeoning Indian gaming industry aren't bragging about earnings.
Much of their operations are kept quiet, provoking an outpouring of criticism that has left tribes defending their casinos and, in some cases, their phenomenal wealth.
The dispute pits state and local governments against Indian reservations in a growing political debate that boils down to Indian sovereignty versus state and local control. Whether they like it or not, city governments with nearby reservations have witnessed their residents and others flocking to tribal casinos, such as Foxwoods, the largest casino in the world with an 800-room hotel tower in eastern Connecticut, or Minnesota's Mystic Lake casino with 88 blackjack tables and more than 3,000 slots.
The success of Indian gambling has been remarkable since it was legalized only 15 years ago. Gross revenues from tribal casinos jumped from $212 million in 1988 to about $6.7 billion in 1997. Today the industry generates about $14.5 billion in annual revenues. Between 10 and 30 percent of that is net income, according to Joseph Eve, a Montana accountant who works with several tribes.
Commercial casinos, which also have enjoyed remarkable growth, generated $27 billion in revenue in 2002. In 1988, there were about 70 Indian gaming facilities nationwide. Today, the majority of federally recognized tribes 330 of 558, own casinos. By contrast, about 430 commercial casinos exist nationwide though commercial casinos have been operating for decades.
Nevada legalized casinos in the early 1930s; Atlantic City got its first casino in 1978. Much of the rapid casino growth on reservations has occurred over the past four years since the federally commissioned National Gambling Impact Study was released.
While the study recommended a general moratorium on the expansion of gambling until its effects on society could be measured, Robert Loescher, the sole Native American to sit on the federal gambling commission, wrote: "In my view, the benefits from Indian gaming are just a tiny down payment on the deficit of stupendous social and economic needs facing the vast majority of Native American citizens."
>> SEPARATE NATIONS
To proponents such as Loescher, Indian gambling is a bingo-hall in a trailer park that generates a few thousand dollars a year for the reservation's schools, medical facilities and other essential needs. But to its detractors, Indian casinos represent a gambling monopoly that states had no choice but to grant a sin industry playing entirely by its own rules.
While the tribes have come under increasing scrutiny for fiscal mismanagement, they have failed to a large extent to defend themselves by not disclosing their earnings, citing their unique status as sovereign nations under the U.S. Constitution.
Tribal sovereignty is the legal basis for Indian gambling. It means states cannot prevent casinos from being built. And it means tribes do not need to disclose their casino profits, or how they spend the money.
"Sovereignty is the most important issue of the tribes," says William Eadington, an economics professor and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada in Reno.
States do not have the right to prevent a tribe from building a casino because of the 1987 Supreme Court decision California v. Cabazon Band of Mission Indians and the Indian Gaming Regulatory Act of 1988.
"Indian tribes were there first," said National Indian Gaming Association executive director Mark Van Norman. "Our tribes have the understanding with the United States that our lands were to serve as homelands, and the idea behind the homeland is that people will have a viable way of life on our own land," he said.
>> THE BUSINESS OF TRIBES IS BUSINESS
But tribes are less than forthcoming about the profits from their casinos. Part of the reason might be that some casinos are lucrative.
"Often it's very hard information to get. It's often very controversial," Eadington said.
States aren't allowed to tax Indian casinos. But Connecticut's two Indian casinos, Foxwoods and Mohegan Sun, pay the state 25 percent of their slot-machine revenue to guarantee the exclusive right to operate casinos in the state.
The Connecticut compact is often cited as a model, but most other states get far less. The Oneida tribe in Verona, N.Y., reportedly pays nothing to the state.
The tribes do face some federal oversight. They must submit an annual audit to the National Indian Gaming Commission, but the commission is publicly bound to report only whether the tribe has submitted the necessary paperwork, not what the casino records showed.
According to that commission, the top 20 revenue-generating casinos make up 55.5 percent of the total revenue. A published report from 2000 said the small Shakopee Mdewakanton Sioux Community in Minnesota (estimated enrollment is fewer than 300), provides each member with about $75,000 monthly while donating $23.5 million in charity over the past five years The Pequot, who own the Foxwoods casino, have only around 700 members.
While Indian gambling proponents acknowledge some tribes have become wealthy, they counter most tribes need the money for basic infrastructure. Of the 300 tribes that operate gaming operations, they argue, only a handful have struck it rich.
"Most tribes lack the tribal enterprises and revenue from outside governments' support and they are trying to diversity in order to provide services to the tribes; basic services such as health, housing program, youth facilities," Loescher said.
Still the tribes' refusal to publish figures means that much of the evidence is anecdotal.
"My grandma coordinates the tour busses that come in, the little old ladies that come in to play bingo from Chicago," said Carla Nicholas, a spokeswoman for the Indian gaming association in Washington.
She says her tribe, the Oneida in Wisconsin, opened a casino when she was in high school and it has remained a family run business.
"Now when I go back my cousin is controller of the casino," she said. "People have a job to look forward to when they graduate from school. (Before the casino) most Indian kids, if they did end up going to college, did not have a job to come back to."
Census data shows Indian tribes continue to languish behind the remainder of the country in terms of personal income.
Average per capita income for Indians was $12,893 according to the 2000 census, well below the national average of $21,587.
On the other hand the successful Shakopee Mdewakanton Sioux in Minnesota reported per capita income of $84,500, making the reservation easily richer than Scarsdale, N.Y., or Beverly Hills.
>> LOUDER VOICE
The new gambling fortunes of a select few tribes are helping to finance the Native Americans' lobbying quest to keep their casinos operating, which has put one aspect of tribal spending in the public domain: political contributions to lawmakers.
According to the nonpartisan Center for Responsive Politics, the industry gave $1,750 in the 1990 election cycle. For the 2002 election cycle, the number jumped to about $6.6 million.
"I would be more surprised to see any industry that grows that fast and is that heavily regulated not give money," said Larry Noble, executive director of the campaign finance watchdog group.
Added Loescher: "I think Native Americans have always been in Washington, D.C., and have gotten very experienced and sophisticated as tribal governments at lobbying the government and Congress. As there is more investment in gaming, gaming is not only a source of revenue that can be used to hire lobbyists but also as a source of political contributions, so it's natural that Native Americans would begin investing in Capitol Hill."
Democrats benefit more than Republicans from Indian gaming contributions by a 2-1 ratio. The Ho-Chunk nation gave $512,000 to Democrats in the 2002 election cycle.
"It was because we figured the Democratic Party may be more sympathetic to our tribes' needs," said Anne Thundercloud, a spokeswoman for the tribe.
The tribes also have a strong presence in state government. In the crowded California gubernatorial race, Democratic Lt. Gov. Cruz Bustamante is reported to be receiving upward of $10 million from the Indian gaming industry for his campaign. This at a time when there is vigorous opposition in California's Sonoma County to an Indian casino being built. At an August 2000 ceremony in Los Angeles honoring tribal sovereignty, Bustamante told an Indian Country Today reporter: "If people could have seen tribal lands prior to gaming even the most hardened minds would be softened."
But not all government officials share Bustamante's support.
>> DANE COUNTY
Next year, the Ho-Chunk nation will find out if its DeJope bingo hall in Madison, Wis., can become a full-fledged casino. For Madison Mayor Dave Cieslewicz, the potential societal drawbacks outweigh the benefits a full-fledged casino would bring.
"I said during the campaign that I am against casino gambling and my position has not changed," he said in April. "I do not believe casinos, with their societal costs, are the way to build the local economy."
Wisconsin Gov. Jim Doyle who, like many governors, is desperately searching for ways to close a multimillion-dollar budget gap, has expressed support for expanding the facility. But neither has the final say.
Though DeJope is in Madison, a countywide referendum is necessary to keep the matter under local rule. Without the referendum, the state would have the decision. A similar measure was defeated 2-1 in 1993.
To support his point, Cieslewicz points to a 1998 study, the Dane County Regional Planning Commission did to determine the impact an expanded DeJope facility would have on the area, including the socioeconomic effect. The study concluded that the social costs could outweigh any fiscal benefit by tens of millions of dollars.
"I think that in a perfect world, it should be a city question, not a county question. But we have to play the cards we're dealt and this was the way the compact was negotiated," he said.
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