Occupations - Native American Casinos—a Matter Of Self-rule

The Indian Gaming Regulatory Act (PL 100-497, 1988) gives tribes "the exclusive right to regulate gaming on Indian lands if the gaming activity is not specifically prohibited by federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity." The law requires that only tribes, not individuals, run gaming operations. The tribes do not need state approval for Class 2 casinos, supposedly bingo halls, but which in many cases have slot machine parlors that skirt the law. (The electronic version of bingo is played by single individuals who "daub" their cards, as required by federal law, by pressing a play button marked "daub," and are instantly informed if the card is a winner.) Class 3 casinos offer slots, roulette, craps, and poker, but require state approval. Thus, governors strike deals with tribes, granting class 3 approval in exchange for a share of the profits going to the treasury. With many states facing severe budget problems, tribal gaming has become an attractive

TABLE 4.13
Five cities with largest number of American Indian- and Alaska Native-owned firms compared to American Indian- and Alaska Native-
owned firms in state, 1997

						Percent city to state
City	Firms (number)	Receipts (million dollars)	State	Firms (number)	Receipts (million dollars)	Firms	Receipts
Los Angeles, CA	2,842	2,095	California	26,603	5,836	11	36
New York, NY	2,391	*	New York	6,443	1,417	37	*
Gallup, NM	2,140	48	New Mexico	6,838	580	31	8
Houston, TX	1,737	285	Texas	15,668	3,320	11	9
Tulsa, OK	1,527	482	Oklahoma	15,066	2,646	10	18
*Withheld to avoid disclosing data for individual companies.
SOURCE: "Table E. Five Cities with Largest Number of American Indian- and Alaska Native-Owned Firms Compared to American Indian- and Alaska Native-Owned Firms in State: 1997," in Survey of Minority-Owned Business Enterprises: American Indians and Alaska Natives, U.S. Census Bureau, Washington, DC, 2001

source of revenue. Tribal gaming, as a result, has gained considerable political influence. What is less certain is how much tribal gaming has helped the Native American population as a whole.

In December 2002 Time magazine published a scathing and controversial review of tribal gaming. According to the article, when tribal gaming emerged in the late 1980s "in a frenzy of cost cutting and privatization, Washington perceived gaming on reservations as a cheap way to wean tribes from government handouts, encourage economic development and promote tribal self-sufficiency." But the 1988 Gaming Act, in the words of Time, "was so riddled with loopholes, so poorly written, so discriminatory and subject to such conflicting interpretations that fourteen years later, armies of high-priced lawyers are still debating the definition of a slot machine." Time maintained that only a handful of tribal gaming establishments, those operating close to major population centers, were successful, while the overwhelming majority were either too small or too remote in location: "Casinos in California, Connecticut and Florida—states with only 3 percent of the Indian population—haul in 44 percent of all revenue." According to Time, in 2002 "290 Indian casinos in twenty-eight states pulled in at least $12.7 billion in revenue." Of that sum, Time estimates, "the casinos kept more than $5 billion as profit. That would place overall Indian gaming among Fortune magazine's twenty most profitable U.S. corporations." But "just thirty-nine casinos generated $8.4 billion. In short, 13 percent of the casinos accounted for 66 percent of the take." In 2004 total revenues were projected to top $15 billion.

Also controversial was the authenticity of the tribes involved in gaming. One of the most successful of the Native American casinos is Foxwoods, located near North Stonington, Connecticut. It is run by the Mashantucket Pequot tribe, which was virtually eradicated by English settlers and rival tribes in 1637. By the early 1970s just two tribe members remained on a 200-acre reservation. When they died, or moved, Connecticut planned to turn the reservation into a state park. A grandson of one of the surviving tribal members, Richard Hayward, a welder, relocated a number of people with Pequot blood to the land in order to save the reservation and managed to launch a few small businesses. It was not until 1986 and the start of a high-stakes bingo parlor that the Pequot began to turn the corner. With the passage of the 1988 law, Hayward recognized an opportunity to build a major casino that was closer to the New York metropolitan area than Atlantic City. While Atlantic City casinos paid 8 percent of their revenues to New Jersey, and Nevada casinos paid 6.2 percent to the state, Hayward offered Connecticut 25 percent of Foxwood's annual slot machine take, which accounted for the lion's share of a casino's revenues. The Pequot could make such a generous offer because the tribal government was exempt from local realty and federal income taxes. By the mid-1990s the Pequot tribe numbered 450. To qualify, members at first had to prove that they were at least one-sixteenth Pequot, but these requirements were loosened so that people who could trace their lineage to a Pequot listed in a 1900 or 1910 census could become part of the Pequot tribe if the current tribal members voted to approve the application. The rewards of becoming a Pequot were substantial: housing assistance, free medical coverage, child and elder care, paid education through graduate school, a stake in the casino and other Pequot businesses, plus annual cash bonuses.

According to Time, leaders of tribes involved in gaming "are free to set their own whimsical rules for admission, without regard for Indian heritage. They may exclude rivals, potential whistle-blowers and other legitimate claimants. The fewer tribe members, the larger the cut for the rest. Some tribes are booting out members, while others are limiting membership." Moreover, many "long-defunct tribes and extended families" have attempted to gain Congressional certification in order to become involved in tribal gaming. In New York State some tribes that are not even recognized as New York tribes, including tribes from Oklahoma and Wisconsin, have teamed with area developers to buy land in the Catskills and elsewhere in the state in hopes of building casinos. They are opposed, however, by local communities—as well as the likes of Donald Trump—who fear further competition to casinos operating in Atlantic City.

Proponents of tribal gaming point to a number of success stories. The Oneidas of Wisconsin, for instance, took advantage of a bingo hall to lower the tribe's unemployment rate from 40 percent to 17 percent in the early 1990s and also used proceeds to build an elementary school and subsidize a Head Start program. The Suquamish in Washington State have used gambling profits to buy back former reservation land. While only a handful of tribal casinos generate large revenues, even those operations that break even create jobs that benefit many Native Americans. Tribes not able to take advantage of gambling can also benefit from revenue-sharing programs, such as the one set up in California, where sixty-one tribes with gaming compacts share profits with seventy-five qualifying tribes.

Much of the recent growth in tribal gaming, which is outpacing both Atlantic City and Las Vegas, is due to the expansion of facilities into full-fledged resorts. Wary that the future might see the curtailment in revenues, some tribes are looking to diversify by investing proceeds into non-gaming businesses, thereby establishing an economic base independent of gambling. To counter adverse publicity regarding tribal gaming, the National Indian Gaming Association, with 184 member tribes, has launched a public relations effort. It has also funded a study to be done by Harvard University to determine the effects of gaming on Native American communities, which will be the first comprehensive study of its kind.