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Indian Gambling on Reservations - Seventeen years later
C.L.Henson is a former Director of the Special Education Unit of the Bureau of Indian Affairs and a member of the Cherokee nation. In this article he reviews the effects of the Indian Gaming Regulatory Act of 1988. This is an update of C.L's article first posed on 21 November, 2005.

Posted 20-Feb-2014

by C.L.Henson

Read CL's earlier article from 2005

Picture credit: Linda Riley

The Indian Gaming Regulatory Act (IGRA) was passed in 1988 and during the first year produced about $100 million in revenues with only a few tribes operating gambling establishments. Forward 17 years later and we find in 2004 that 224 tribes operated 354 gaming establishments and produced revenue of more than $19.4 billion. This is a phenomenal increase in just 17 years and I would guess that it exceeds by far the expectations of legislators who passed the Act in 1988.

This kind of revenue would indicate that Indians are getting very rich and no longer need the assistance of the Federal Government. In extreme cases this might be true but for the majority of Indian tribes it is not. When you reduce revenues by expenses the total becomes far less. There are 562 tribes and 224 have some type of gambling operations. This means that 60% (or 338 tribes) are not participating in the gambling business at all. This is not to say that they may not participate in the future and as of now the door is still open.

It has often been said that Indians do not pay taxes. That statement is not true even thought it continues to be perpetuated. Tribes and Indians pay Federal taxes. Tribes generally do not pay state taxes because they do not receive state services for the most part. However, states do enjoy the benefits of gambling on the reservation as tribes are forced to enter into compacts with the states and generally pay a percentage of revenues to the states which amount to millions of dollars. Also, states do provide monitoring of Indian gambling and this expense is paid for by proceeds from gambling operations. It should also be pointed out that on a nationwide basis approximately 75% of employment in Indian gambling goes to non-Indians who pay both Federal and state taxes. Indians working in the industry who do not live on reservations are also required to pay State taxes as well as Federal taxes on income from their employment. Additionally, casinos purchase millions of dollars of goods and services from off-reservation businesses which also produces taxes for local and state governments and employment for their citizens.

Tribal casino revenues for 2005 were $22.6 billion. Some tribes have included additional amenities such as resort hotels, shopping malls, golf courses, dining and entertainment. Income from non-gambling was $2.7 billion. Tribes are seeing the benefit in adding additional amenities to their gambling operations and more and more are developing hotels, golf courses and other operations. This not only provides a revenue source for the tribes but broadens employment opportunities for tribal and non-tribal members.

Looking at the legislation that allows Indian gambling, there are five areas that revenues from operations can be used for: (1) Funding tribal government operations or programmes; (2) Providing general welfare of the Indian tribe and its members; (3) Promoting tribal economic development; (4) Donating to charitable organizations and; (5) Helping fund operations of local government agencies. Somewhere in this mix is the authority to contribute to politicians; which is done with regularity.

About 25% of tribes make per capita payments to their members using revenues from gambling. The Secretary of the Interior is required to approve per capita payments based on a Revenue Allocation Plan, which is a plan developed by the tribes approved by the Secretary stating how gambling revenues will be used. Also, tribal members are required to pay federal income tax on per capita payments and mayor may not pay state taxes, depending where they live and other factors.

 Tribes, for the most part, have done a good job in providing for the welfare of their members by building housing for their elders and other tribal members. They have also added to school curriculums and after school programs and scholarships for tribal members. Additional health services, which have been severely under-funded for years by the Federal government, have also been provided as well as enhancing their tribal governments and adding funding for tribal police and courts, which has also been severely under funded for years. These are only a few of the benefits afforded Tribes and their members as a result of Indian gambling. The current situation pertaining to lobbyist Jack Abramoff needs to be looked at as a classic example of the "Indian ripoff'. It has been reported that Abramoff and his associates were paid millions of dollars by tribes for lobbying services which never materialized. In fact, Abramoff was reported to have lobbied for two tribes who had opposing needs. This case is still pending and several careers have been ended because of the allegations that have been made and the nations Capitol is holding its breath, waiting for this trial as many legislators have been named as Abramoff friends and possible co-defendants. Some politicians have even given donations back to Abramoff. Imagine that, a politician giving money back.

This is a sad commentary to an otherwise successful program for some, but is seems that there are always unscrupulous people who are waiting in the wings to take advantage of people. We have only to look at the "contractors" who always follow a natural disaster such as Hurricane Katrina, taking advantage of people by taking their money and providing shoddy or unnecessary repair work or sometimes not providing any work at all. Such is the evil in heart of man.

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