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Gaming in Indian Country

By C.L. Henson


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 argues that the rapid growth of gaming on Native American reservation has not always been as beneficial as its proponents had hoped.

Posted 21 November, 2005

C.L. Henson

Picture credit: Linda Riley

C.L. has posted an update to this article on 6th November 2007

Gaming has been a part of the American Indian culture for hundreds of years. My Cherokee grandfather lived in eastern Oklahoma in the 1880s and had a string of racehorses. He would go from town to town racing his horses. Tribes have had games of chance such as ring and pole games, hand games, snow snake games and lacrosse. They regulated the games themselves without interference. In the late 1970s and early 1980s some tribes in Florida and California started high stakes bingo that netted large amounts of money. The states tried to close the bingo games and the tribes sued them in federal court. Two of the cases that came out of those suits were Seminole Tribes v. Butterworth and California v. Cabazon Band. The courts ruled in those cases that if state law prohibits it then tribes within the states were prohibited also. But, if states allow gambling, tribes within the state may also engage in gaming and without state control. This presented no small dilemma for the states.

The Indian Gaming Regulatory Act was passed on October 17, 1988. The states lobbied mightily for the compact provisions of the act that requires states to negotiate gaming compacts "in good faith". This provision further erodes the sovereignty of tribes in that it allows states to have some control over tribal activities. The Gaming Act sets forth time restraints on states to act on tribal requests for compacts. As you might expect, some states are disenchanted with the compacts so they have filed court actions, which have delayed the full implementation of the act as it was intended. States not only want more control of this process but are now demanding part of the revenues from the tribes. These lawsuits will undoubtedly continue for years to come.

The Gaming Act sets up three classes of gaming:

         Class I        Social games solely for prizes of minimal value and traditional forms of Indian gaming.

         Class II       Bingo and related games.

         Class III     All other forms of gaming. Class III is the only class of gaming that needs a compact negotiated with the state.

The Gaming Act established a National Indian Gaming Commission further eroding tribal sovereignty in that there is another regulatory body that determines Indian activities. The Commission has regulatory requirement for tribal gaming operations and has final approval of all Indian casino management contracts. Indian gaming has more stringent regulations and security controls than any other type of gaming in the world. Operations are regulated by the tribal government, state government, the National Indian Gaming Commission with other federal agencies such as the Bureau of Indian Affairs and the Internal Revenue Service. The Justice Department has the responsibility for prosecuting crimes and the Federal Bureau of Investigation has the responsibility for investigating criminal acts. The U. S. Treasury is responsible for monitoring cash transactions. In the year 2000 tribes spent $164 million on internal oversight and regulation and provided state authorities with an additional $40 million to cover their regulatory expenses. During that same year tribal gaming employed 2,721 people in regulatory roles, twice as many as employed in Nevada and New Jersey and all state gaming facilities throughout the United States.

Federal law requires tribal gaming income to be spent on the general welfare of tribal members, on infrastructure, business diversification, health and social services and charitable donations. One-fourth of the gaming tribes make per-capita payments to tribal members, but even with these tribes, the vast majority of gaming income is reserved for paying off start-up costs for gaming operations and for general tribal programs. Some tribes have built health facilities, schools and homes for the elderly.

Approximately 75 percent of tribal gaming employees are non-Indians. Tribal payrolls are in excess of $5.5 billion annually and a majority of this income goes to off-reservation non-Indians. Hundreds of millions of dollars are spent annually to purchase goods and services from non-Indians, off reservation businesses. These payrolls and purchases generate over $4 billion in local, state and federal taxes. Tribes also pay hundreds of millions of dollars annually to local and state governments as a form of revenue sharing based on percentages of gaming income. Tribal gaming income has led to reduced taxpayer-supported public assistance and welfare payments to tribal members. Some tribes are becoming major contributors to local, regional charitable groups and projects, many serving non-Indians. Charitable donations were more than $68 million in the year 2000. Numerous referenda, opinion polls and surveys have demonstrated repeatedly that the public strongly support the right of Indian Tribes to conduct gaming.

There are approximately 562 federally recognized tribes and Alaskan Native Villages but only 201 are involved in Class II and Class III gaming. Tribes have gaming operations in 29 states in 340 facilities. Only a few tribes have income totally from gaming. Some have opened and then closed gaming operations due to negative income flow. About one-third of Indian tribes still live in a cycle of poverty. American Indians make up one-half of one percent of the entire U.S. population yet, according to the 1990 census, 30.9 percent live in poverty compared to 13.1% for the U.S. Tribal unemployment averaged 45.9% with some as high as 80% while the average for the U.S. is around 6%.

It is difficult to say with any assurance what the future will be for Indian gaming. A Senate bill was introduced last session to provide for the conduct of gaming "to promote tribal economic development, and for other purposes." It would seem obvious that this would have been put in the original legislation but it was not. The Wall Street Journal in an editorial dated April 4, 2002, referred to Indian gaming as unregulated and corrupt with mob influence even though there is no evidence that this has any truth. This kind of story is detrimental to tribal gaming and to the tribes themselves. Initiatives are being introduced in states that would require the state-tribe compacts to pay a percentage of revenues to the state in addition to the money that is given to state to provide oversight of gaming operations.. This was not part of the original Gaming Act legislation passed in 1988 but is something the tribes do voluntarily. The state of Arizona has passed Proposition 202 that will require future compact to include the provision that the tribes pay the state 8 percent of their gaming revenues.

It is true that some tribes are starting to overcome years of neglect by operating casinos that produce substantial income, but gaming is not the answer to the "Indian problem" when two-thirds of Tribes and Native Villages do not share in this revenue stream.

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