Casinos: Native American Tribal Casinos - The Story Of Native American Casinos In Two States

tribe tribes connecticut slot

Connecticut Tribal Casinos

Tribal casinos are not required by law to make their financial records public. Although exact figures are not known, various reports indicate that the tribal casinos operating in Connecticut are extremely profitable. In October 2003 the American Gaming Association (AGA) attributed $2.0 billion in annual revenue to Connecticut's tribal casinos, making them the fourth largest casino market in the country, behind only the Las Vegas Strip, Atlantic City, and Chicagoland.

Only two tribal casinos were operating in Connecticut as of mid-2004. The Foxwoods Casino and Resort is operated by the Mashantucket Pequot in Ledyard, and the Mohegan Sun is operated by the Mohegan in nearby Uncasville. Both are located in a rural area of eastern Connecticut.

The Foxwoods is often described as the world's largest casino complex. In August 2004 the resort featured six casinos, 1,400 hotel rooms, a spa, a golf and country club, a 12,000-square-foot shopping mall, dozens of restaurants, and a 4,000-seat arena. The Foxwoods has more than 6,400 slot machines, 350 table games, and the world's largest bingo hall. It also offers keno and sports gambling. The resort receives about 40,000 visitors every day. The Mohegan Sun has just more than 1,000 hotel rooms and twenty-nine restaurants. It also includes a 10,000-seat arena, its own gas station, a showroom, extensive retail complex, and 295,000 square feet of casino floor.

The Foxwoods in particular has an interesting history. According to Kim Isaac Eisler in Revenge of the Pequots: How a Small Native American Tribe Created the World's Most Profitable Casino (New York: Simon and Schuster, 2001), a law was passed in Connecticut in the 1980s that allowed the wagering of "play-money" on casino games such as blackjack, roulette, craps, and poker. The law was championed by the Mothers Against Drunk Driving organization to encourage high schools to hold casino-type events following proms in order to reduce drunk driving by teenagers. Under this law, the Mashantucket Pequot Tribe was able to get a license for a "charity" gambling casino. They also procured $60 million from an Asian investor named Sol Kerzner to begin construction.

The Foxwoods Casino opened in 1992. At that time, slot machines were not permitted. In 1993 the tribe negotiated a deal with Connecticut's governor that provided the tribe with exclusive rights to operate slot machines within the state. In return, the tribe agreed to make yearly payments to the state of $100 million or 25% of their slots revenue, whichever was greater. The next year the Mohegan tribe signed its own compact with the governor to operate a casino. The Mashantucket Pequots granted the Mohegan permission to include slot machines in their new casino. In return, the state set the annual payment required from each tribe at $80 million or 25% of their slots revenue, whichever was greater. The Mohegan Sun opened in 1996 after receiving financing from Sol Kerzner, but by 1997 Foxwoods was the largest and most profitable casino in America.

The Mashantucket Pequot's standing as a tribe is not without controversy. In Without Reservation: The Making

TABLE 5.3

Connecticut tribal gaming payments to state general fund, 1992–2004
Casino
Fiscal year end 06/30 Foxwoods Mohegan Sun Subtotal
Notes:
1Revenue transferred on cash basis per fiscal year.
2The above transfers represent actual Casino contributions through July 15, 2004, based on reported video facsimile/slot machine revenue through June 30, 2004.
SOURCE: Adapted from "Transfers to General Fund," in Connecticut Division of Special Revenue Transfers to General Fund, Accumulative to Date—through June 2004, Connecticut Division of Special Revenue, July 26, 2004, http://www.dosr.state.ct.us/PDFFolder/stmt2004.pdf (accessed September 28, 2004)
1992 $30,000,000 $30,000,000
1993 113,000,000 $113,000,000
1994 135,724,017 $135,724,017
1995 148,702,765 $148,702,765
1996 145,957,933 $57,643,836 $203,601,769
1997 165,067,994 91,007,858 $256,075,852
1998 173,581,104 113,450,294 $287,031,398
1990 189,235,039 129,750,030 $318,985,069
2000 190,683,773 141,734,541 $332,418,314
2001 199,038,210 169,915,956 $368,954,166
2002 196,300,526 190,953,944 $387,254,472
2003 196,300,528 190,952,944 $387,254,472
2004 196,883,096 205,850,884 $402,733,980
$1,884,174,459 $1,100,307,343 $2,984,481,802

of America's Most Powerful Indian Tribe and Foxwoods, the World's Largest Casino (New York: HarperCollins, 2001), Jeff Benedict claimed that the Pequots never should have been legally recognized as a tribe by the federal government in 1983 because some members were not actually descendants of the historic Pequot tribe. The tribe achieved its recognition by an act of Congress. Benedict made the allegations a major theme in his unsuccessful run for Congress during the summer of 2002. He later helped to found the Connecticut Alliance against Casino Expansion (CAACE), a nonprofit coalition that lobbied against additional casinos is Connecticut and successfully led the drive to repeal the state's "Las Vegas Night" law that provided the legal opening for the original casinos. The CAACE additionally seeks federal legislation to reform the tribal recognition process.

In Connecticut, legalized gambling is regulated by the Division of Special Revenue, which conducts licensing, permitting, monitoring, and education. It also ensures that the correct revenues are transferred to the state's general fund and to each municipality that hosts a gaming facility or charitable game. Table 5.3 shows the annual and cumulative revenues paid into the general fund by the Foxwoods and Mohegan Sun casinos. Nearly $3 billion had been collected through June 2004. This includes $1.9 billion from Foxwoods and $1.1 billion from Mohegan Sun. This revenue comprises 33% of all gambling revenue collected by the Connecticut general fund since 1972, even though the casinos have only been operating since 1992 and 1996, respectively. (See Figure 5.2.)

FIGURE 5.2

In June 2002 two other Connecticut tribes achieved federal recognition: the Eastern Pequots and the Paucatuck Eastern Pequots. The BIA determined that the two bands, which share a 225-acre reservation in North Stonington, are actually one tribe to be called the Historic Eastern Pequots. North Stonington is less than ten miles from the town of Ledyard, where Foxwoods is located. The Eastern Pequots and Paucatuck Eastern Pequots originally petitioned the BIA for recognition in 1978 and 1989, respectively. The recognition was fought by state and local officials, who argued that the two bands were not a legitimate tribe and that the recognition process was too political.

Tribal spokespeople said that recognition was not pursued just to be able to open casinos, but that a casino was in their plans. The Paucatuck Eastern Pequot band's recognition campaign was largely financed by Donald Trump. He has threatened to sue the tribe if it leaves him out of future casino plans. The tribe has a reservation but wants to use it for living purposes only. In order to develop a casino on other lands, the tribe would have to take land into trust and negotiate a new tribal-state compact with Connecticut. Local officials have indicated that they are opposed to any tribal efforts to take more land into trust.

California Tribal Casinos

California has forty-five gaming tribes, by far the most of any state. The state's tribal casinos earned nearly $4.7 billion in 2003, approximately one-fourth of the nationwide tribal total. Industry analysts predict that this percentage will continue to grow as the California market matures. The state includes 108 federally recognized tribes, nearly one-fifth of the national total. Most are described as small extended family groups living on a few acres of federal trust property called rancherias. Some tribes have only a handful of members.

Prior to 2000, California tribes were largely limited to bingo halls because state law prohibited the operation of slot machines and other gambling devices, certain card games, banked games, and games where the house collects a share of the amount wagered. In 2000 California voters passed Proposition 1A, amending the state constitution to permit Native American tribes to operate lottery games, slot machines, and banking and percentage card games on tribal lands. The constitutionality of the measure was immediately challenged in court.

In January 2002 California governor Gray Davis signed sixty-two gambling compacts with California tribes. The compacts allowed each tribe to have a maximum of two thousand slot machines. The governor also announced plans to cap the number of slot machines in the state at 45,000. At the time, there were already 40,000 slot machines in operation and dozens of tribal casinos in the planning stages. The governor put a moratorium on new compacts while the constitutionality of Proposition 1A was challenged in court. In August 2002 a U.S. district court ruled that tribal casinos were entitled to operate under the provisions of the state gaming compacts and Proposition 1A.

In 2003 the State of California suffered a severe budget crisis. Governor Davis was ultimately forced out of office through a special recall election held in October 2003 in which Arnold Schwarzenegger became the new governor. In televised campaign ads Schwarzenegger promised voters to make tribal casinos "pay their fair share" arguing that "their casinos make billions, yet pay no taxes and virtually nothing to the state." The California Nations Indian Gaming Association (CNIGA) was outraged and issued a press release calling the remarks "hurtful" and accusing Schwarzenegger of having "a complete and almost frightening lack of understanding of the legal status of Indians and tribal governments." CNIGA also reminded voters that the gaming tribes paid more than $100 million per year into a special fund designated to pay for impacts of tribal gaming on local communities ("Schwarzenegger Far Off the Mark on Tribal Governments," California Nations Indian Gaming Association Press Release, September 23, 2003).

In June 2004 Governor Schwarzenegger signed new compacts with five California tribes preserving the tribes' exclusive gaming rights. The five tribes are as follows:

  • Pala Band of Mission Indians
  • Pauma Band of Mission Indians
  • Rumsey Band of Wintun Indians
  • United Auburn Indian Community
  • Viejas Band of Kumeyaay Indians

The slot machine cap was also increased above two thousand machines per tribe. In exchange the tribes agreed to pay the state $1 billion up front and a licensing fee for each new slot machine added above the current limit. This is estimated to result in payments of $150–275 million per year through the compact's expiration date in 2030. The governor announced plans to negotiate similar deals with other tribes in the state. However, several tribes announced plans to fight the new compacts. The Rincon Indian Tribe sued the state, arguing that the new compacts showed favoritism to some tribes and put others at an economic disadvantage. Other tribes announced plans to push for statewide ballot initiatives that would tax tribal casinos at fixed rates, but allow expansion of casino-type gambling in the state.

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