The Myth of Indian Casino Riches

Indian gaming is a very political issue that is terribly misunderstood outside of Indian country, and I dare say, not well understood within it

If I had a nickel for every time someone asked me about receiving money from Indian casinos, I might be relatively rich. No such luck. Non-Native people generally assume Indians are getting rich from tribal casinos, and often engage in intensive question-and-answer sessions when challenged. People have difficulty reconciling public myth with factual information, especially about a subject so politicized. In my opinion, lack of knowledge combined with the complexity of federal-state-tribe relations contribute to common misconceptions about Indian gaming.

First things first: What exactly is Indian Gaming?

Traditionally, most tribes had some sort of gaming—shell games, archery, etc. Contemporary Indian gaming ranges from ceremonial games to Vegas-like operations. Congress established control of Indian gaming with the 1988 Indian Gaming Regulatory Act (IGRA). IGRA categorized gaming into Class I, Class II, and Class III (25 US 2703). IGRA also established the National Indian Gaming Commission (NIGC) to regulate federally recognized tribes’ gaming operations.

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Consisting only of ceremonial and social gaming for nominal prizes, Class I is subject to tribal regulation only—not state or federal. Class II and III gaming are subject to regulation under IGRA. Class II gaming generally means bingo, lotto, pull tabs, poker, etc.—only games played against other players with winnings based on how many people play and “pay” into the pot. Class III operations are what most people think of as Indian casinos, including games of chance not included in Class I or II gaming operations; e.g., slot machines, craps, blackjack. IGRA stipulates a tribe opening a Class III gaming enterprise must have (1) a tribal-state compact or agreement, (2) approval by tribal ordinance, and (3) approval by the NIGC. Lastly, Indian gaming activities may only occur in states where gaming is legal. Tribes in Utah may not open Class II or III operations.

A 2008 government report emphasizes, “One final characteristic of gaming under IGRA should be noted because it is so often overlooked in the public conceptions of Indian gaming: Indians do not have the right to offer gaming. Tribes do. Indian gaming is not ‘privilege for one group of citizens.’ It is a power of government.”

The common myth about Indian Casino Riches goes a little something like this:

Every tribe has a casino in which every Indian has a job—if the Indian wants one. But why would the Indian want to work when every Indian gets lots and lots of money from the profits of the casino?

Here are the facts:

Not every tribe has a casino. In 2011, NIGC reported out of 566 federally recognized tribes (there are currently 567 federally recognized tribes), only 246 tribes operate 460 gaming facilities in 28 states. Thus, 324 tribes (57 percent) have no gaming operations. Indeed, the rural and unpopulated geographic locations of many Native nations discourage gaming.

Not every Indian has a job. As of the first half of 2013, Natives experienced unemployment at 11.3 percent—greater than the nation average of 6.9 percent. Many tribes operate gaming facilities primarily to generate employment. The total number of jobs by Indian gambling created nationwide is impressive: 628,000. But up to 75 percent of those jobs go to non-Indian employees. Areas of extremely high unemployment with a high density of Native folk are the exception—80 percent of gaming employees in North and South Dakota are Indian. But jobs at Indian Casinos are low-paying and lag behind national wages for the same group of workers.

Not every Indian gets money from casino profits. Whereas other gambling institutions may do as their stakeholders please with their net profits, tribal nations must follow strict rules. Per IGRA (25 USC 2710), gaming net profits may be used only to:

1) Fund tribal government operations or programs;

2) Provide for the general welfare of their members;

3) Promote tribal economic development;

4) Donate to charitable organizations; and

5) Help fund operations of local government agencies

This means the tribe must use gaming revenue to improve its infrastructure, develop education opportunities, and provide social programs for the people. Even if tribes want to distribute gaming revenue in per capita payments to their tribal members, they must first develop a “revenue allocation plan” and gain approval of the plan from the DOI Secretary.

The idea that money just flows freely into Indian people’s hands is pure fantasy. Approximately 72 tribes give per capita payments from gaming revenue, ranging from hundreds of dollars annually to many thousands. Very few distribute large sums—Foxwoods stopped. Actually, a 2008 report finds that tribal leaders don’t like to disburse cash, contending “large per capita payments lead to citizen dependence on tribal governments, undermine the work ethic, and discourage young citizens from finishing their educations.”

So where do the profits go?

The scope of Indian gaming is exaggerated. There are resort-type casinos, but many “tribal facilities” are just trailers with bingo. Former NIGC Chairwoman, Tracie Stevens testified before the Senate Committee on Indian affairs that in 2009 tribal facilities generated gross gaming revenue of $26.5 billion—merely 21 percent of gaming nationwide. But Indian gaming also generated $6.2 billion in federal taxes, $2.4 billion in state income, and $100 million in local income through payroll, sales taxes, and direct revenue sharing through government agreements.

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And I’m genuinely surprised that people seldom question how ANY tribe pulled millions out of its back pocket one day to start a casino. IGRA stipulates that no entity other than a tribe may possess an ownership interest, but there are layers of lenders. For example, the Mohegan Sun recently refinanced $1 billion in debt. Foxwoods is working to refinance its $2.3 billion.

But before lenders get paid, think about those “tribal-state” compacts again. Connecticut receives 25 percent of the “hold” of slot machines, i.e. the money left after winnings are paid out. In January 2012, Connecticut’s share came to $24.8 million, and in the last two decades, over $6 billion from Indian Casinos. Pennsylvania requires 55 percent of the hold. Former NIGC Chairman, Harold Monteau states that only about 10 percent of tribes receive the majority of the revenue. Just how many hands are in the money jar?

Gaming is an indigenous legacy, but Indian gaming is a very political issue that is terribly misunderstood outside of Indian country, and I dare say, not well understood within it. If I’ve done my job, you have questions or criticisms, or maybe, this piece resonates with you. Please take the time to educate yourself or someone else about Indian gaming. Together, we can dispel the myth of “Indian casino riches.”

Dwanna L. Robertson is a citizen of the Muscogee (Creek) Nation, a doctoral student at the University of Massachusetts, Amherst, a public sociologist, and an invited speaker. Having grown up in Oklahoma, attending stomps and going to wild onion dinners, she can’t wait to get back west as soon as possible.

This column originally appeared  June 23, 2012 and has been updated. 

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The Myth of Indian Casino Riches

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