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Taking the Lead

It seems hard to believe in 2008, but there was a time when non-tribal casino operators were reluctant to use TITO (ticket-in/ticket out systems) for their slot machines.

Why? They assumed-incorrectly, as it turned out-that one of the most entertaining aspects of gambling for players was playing with cold, hard cash.

“Operators thought patrons wanted to hear the coins drop. They thought they’d always want rolls of quarters. They thought they’d always want to insert cash,” says Knute Knudson, vice president for Native American development for International Gaming Technology, the leading supplier of gaming machines and monitoring systems in the world.

“But Indian Country was way ahead of traditional markets. There were a few holdouts, but everybody got over it, and TITO revolutionized the casino industry.”

Today, it’s next-to-impossible to find cash-based systems on the casino floor, and the operational benefits have been immeasurable. Without coin-handling equipment (which were notoriously prone to jams that held up play), casino costs have been cut as much as 40 percent. No more hand-pays means no more frustrated players, forced to suspend their games during a tedious count.

Coin-handling by staff-an arduous and downright dirty task-has also been eliminated, along with vaults, coin carts, and security personnel. TITO also made multi-denomination gaming machines possible.

Of course, it goes without saying that overflowing counting rooms, like the one immortalized in the Martin Scorsese film Casino, posed a security risk like no other. Thanks to cashless environments, that risk has now been eliminated.

Pioneering for its time, TITO was just one of several groundbreaking innovations- in back-end technology, customer service and casino games themselves-that originated in Native American casinos, then took hold in the industry at large. They include nothing less than the innovations that could soon make server-based gaming an industry standard.


Indian Country First
At first, tribal casinos were driven to technical innovation so they could offer an approximation of Vegas-style slots while adhering to Class II regulations. Their devices looked and played like slot machines-a great lure for the gambling public-but under the hood, they were really electronic bingo drawings or pull-tab games.

Few could have predicted in the 1990s that some Class II games would become the models for today’s Class III game designers. It’s due in part to the fact that many Class III games were developed and became entrenched before the technological explosion that made personal computers, internet and lightning-fast communications facts of daily life.

“Compared to where casino technology is today, yes, Class II is ahead of the curve, because most of it was developed after the turn of the century,” says Aaron Rubin, director of marketing for Video Gaming Technologies, provider of games for Class II and emerging markets. “The prototypes are faster, and just from a raw technical standpoint, we’re ahead.”

Rubin says older-generation Class III games will probably stick around a while because they’re “like the car you’ve already bought and paid for. You own it. It runs. And it’s nice not having car payments.”

But as casino games advance in complexity, speed and entertainment value, he says, those older games-just like that battered old family Buick-may have to be replaced. If games don’t remain competitive-with increased bells and whistles, dazzling 3-D graphics, digital-quality sound and superior hit ratios-they just may become an operator’s loss leaders, and even brand a host casino as behind the times.

It was necessity that made Class II game makers the industry’s mothers of invention, suggests Terry Daly, who is vice president of game systems for Rocket Gaming, which supplies Class II entertainment software and electronic players stations to casinos in 11 states.

“From a designer’s standpoint, from a game standpoint, we needed to create games that kept players interested and on the floor,” Daly says. “We developed a wide variety of entertainment-type games along with more of a gambler-type game and then a cross-section that appeals to both”-all with enough amusement value and chances to win to keep players playing.

“Gambling-type games have pure map models; you don’t win very often but you when you do, you can win big,” Daly says. “Other games are more entertainment-based, where you can play for a long time and enjoy the bonus features.” He described the company’s newest games as “entertaining and feature-heavy.

“We are right in the process of rolling out a series called Jackpot Jubilee (an umbrella for a number of different titles including One Bad Apple, Whopper and Great White Diamond). Each has its own map model and separate bonus features, but they share a common jackpot, plus there are features that take players into a secondary game that allows them the opportunity to win up to four different progressive jackpots.”

Frequent jackpots are a winning concept, says Rubin.

“Unlike at a slot machine, where you pull (the handle) a bunch of times and may never win, Class II always wins.” He adds that more social and interactive play-a fundamental tenet of Class II play-is becoming increasingly popular in non-tribal houses.

“Instead of you playing against the slot machine, you play against other players for a progressive prize. It makes for a lot more interactivity,” says Rubin.

A case in point: IGT’s Wheel of Fortune arena game, with multiple participants at adjacent terminals around a common wheel. It’s become one of the most popular slot machine games in the country.

Server First
Central determination, also referred to as downloadable technology or server-based gaming, may prove the greatest contribution from Indian Country to the mainstream gaming hall.

Born in 1995 with systems developed for California’s Pala tribe, it is now viewed as the next wave in slots technology, with manufacturers investing millions per year in research and development of Class III applications.

“Server-based technology makes a very compelling story, not just for the player, but for the operator,” says Kunal Mishra, vice president of product management and marketing for Atlanta-based Cadillac Jack, a provider of high-speed, interactive electronic games and systems to the global gaming industry.

“By definition, it got its start in Class II gaming because a server always had to be attached to a game to provide the download of content to the machine. Beyond that, it added the technological basis for operators to make instant business decisions to increase the profitability of their floor.”

With server-based gaming, tribal casinos could quickly switch game titles from a remote command center, and offer more and broader community gaming (a prerequisite for bingo, in which players compete for a communally-generated pot).

In time, as systems became more sophisticated and servers made by different manufacturers began to communicate through back-end systems, tickets could be played from one maker’s game to another. All these efficiencies in tribal gaming boosted the revenue-generating power of the casino; the value of every square foot of gaming space could be maximized.

The technology is expected to become ubiquitous across the industry. By 2005, nearly every major slot machine manufacturer brought server-based slot machines to the Global Gaming Expo in Las Vegas, and by 2006, those games were getting trials in California and Nevada.

Server-based gaming also enables operators to tailor games to player preference. Casinos are growing more interested in electronic data warehouses and analytical computer software to track who’s playing and when; in conjunction with server-based capabilities, which can alter the floor set-up and game availabilities with the click of a mouse, casinos can change from penny games to nickel games at will-all from a remote “mother ship.”

In the case of Rocket Gaming, the central base, which powers 4,000 machines, is in Oklahoma.

“The technology throughout the industry is not quite there yet, but certainly server-based gaming is a lot easier,” says Rocket’s Terry Daly. “You can change the game or denomination from a central server point at any location, rather than going out and making a physical change (at the casino); we also have the ability to maintain security. Our checks and balances make sure that everything is as it’s supposed to be, and there are several backup systems in place” so there is no possibility of a crash.

“From a service standpoint, server-based technology allows you not only to download content and change features, it also allows you to identify problems before they actually hit and have an impact on the casino.”

Analysts say server-based gaming could have the same effect on the slot machine floor as TITO, which since 2002 has sent operators scurrying (and spending millions) to replace games.

Advances in technology have also made heavyweight players of tech manufacturers. Thanks to ticket in-ticket out, for example, the stock price at International Game Technology rose more than 570 percent between 2000, when the technology first emerged, and the end of 2004.


Standing Still
Despite the increasing interest in central determination or server-based systems, few foresee the end of stand-alone casino games.

“Some people would like to think that stand-alones will be phased out,” says Bruce Rowe, senior vice president for business development for Vegas-based Bally Technologies, a leading supplier of gaming machines and technology products. “What we’re really starting to see is a migration to bidirectional networks; it’s our belief that there will be an evolution over the next several years towards a robust bidirectional networking capability.”

Such a direction will benefit the industry in a couple of ways, Rowe says:

“One, it will improve the integrity of the games by being able to (easily) hold them, interrogate them and download software. Two, it will improve marketing at the point of play so operators can do marketing and loyalty to the customer before or after their gaming session. Three, it will offer second ways to win for the customer through promotions and bonusing games.

“Those are three of the key ones, as well as improved service at the game-a ‘concierge-in-a-box’ kind of idea that also provides drink and valet services, calls for your car in advance, that sort of thing. There are other ideas for being able to configure games so you have the ideal mix by time of day and day of the week. Otherwise, it’s like having a restaurant and never being able to change the menu from breakfast to lunch to dinner.”


Borrowing Success
Sometimes, says Rowe, technologies first borrowed by the Indians from mainstream environments were improved on the Class II casino floor.

“In the early stages, tribal operations inherited the best-of-breed technology from traditional Class III environments. But as time went on, those tribes-who many times at opening were new to the gaming industry, and had limited financial backing-started to become more knowledgeable and more independent financially.”

Mostly self-governed, “they developed oversight bodies that were often more nimble in making decisions about technology than the large corporations that got them started,” Rowe says. Faced with greater competitive challenges but blessed with more independence and less bureaucracy, the tribes looked for new and better ways to run their operations-and they found them.

“As the market started to mature, so did the sophistication of the operations, the availability of cash to put back into technology and innovations, and the speed with which technology could be experimented with and deployed,” says Rowe.

In the ongoing saga of mainstream and tribal gaming, in many ways the follower has become the leader, and Native American casinos are setting the standards for tomorrow’s gaming industry.

Beyond Gaming

Some less creative reporters and editors in the mainstream media have characterized Indian gaming as “the new buffalo.” 

But some tribes are calling it a “one trick pony.” Others are looking at alternative “herds,” using hard-won expertise to generate commercial casino enterprises and other projects in non-gaming fields.

Several successful gaming tribes are forging partnerships with once bitter rivals; and looking outside of their states-sometimes way outside-to develop opportunities with a combination of gaming savvy and cash.

The Mohegan and Pequot tribes of Connecticut have fearlessly ventured beyond the protective cover of a near monopoly across state borders to take on commercial gaming companies on equal terms, playing by the same rules and sometimes as equal partners.

 

Indian Bank
Dr. Randolph Baker, Sycuan professor of Travel Gaming Management at San Diego State University-one of the few universities offering degrees in tribal gaming management-notes the recent formation by the Rincon and Colusa Indian tribes of California of the first tribally owned private equity fund: First Nations Capital Partners LLC. The tribes, from opposite ends of the Golden State, will be the primary investors, owners and managers of the specialized $25 million fund.

Rincon’s Tribal Chairman Vernon Wright commented, “Gaming has been good for us, but it’s a one-trick pony. That’s why we’ve made economic diversification one of our top priorities.”

Gaming tribes have gotten into financing before, most notably when the Southern California Viejas Band of Kumeyaay Indians bought Borrego Springs Bank four years ago.

Around the same time, the Sycuan tribe bought the U.S. Grant Hotel in San Diego. The Mississippi Choctaw have been in the electronics business for several years.

The first time a tribe went into commercial gaming was in 2000 when the Sault Ste. Marie Tribe of Chippewa Indians, which had several casinos in Michigan, opened the Greektown Casino in Detroit. Using those revenues and its reservation casinos, it bought more land while increasing services to its members.

According to Baker, “Other tribes are looking at taking their gaming bounty that won’t last once the quasi monopoly they enjoy because of Indian gaming, has diminished. As more states introduce gaming that will bite into that monopoly. Ten to 12 percent of gaming tribes bring in 80 percent of the revenue. The Seminole Indians are a classic example of going into a totally different area, of paying $1 billion to buy the Hard Rock restaurant brand. Their casinos in Florida bring in several hundred million dollars a year. You can easily afford to diversity with those kinds of revenues.

“One way tribes diversify is to go into commercial gaming. The second is what we see in San Diego county, where they are buying orange and avocado groves and reinforcing the economic engine that drove their success. The forward-looking ones say ‘this is unique opportunity that probably won’t last.”

“Good economics is good economics,” says Baker. “I see several scenarios, none of which are firm: On one hand we have wealthy tribes sophisticated enough to diversity: tribes in the Pacific Northwest, California and Connecticut. They are creating tribal corporations that are going to become multifaceted. This will provide opportunities for members of the tribes who live in adjacent communities.”
    

Expand and Diversify
An example of this kind of thinking comes from the San Manuel Band of Mission Indians, which owns San Manuel Indian Bingo & Casino in Southern California. It has chosen to invest some profits in non-gaming economic projects, although a lot is still going to expand the existing casino operation.

Spokesman Jacob Coin says, “We are mindful that the goal of IGRA is to strengthen tribal governments and create an economy. For San Manuel, creating an economy constitutes an important element to secure long-term revenues. The more diverse, the better we feel our future will be. That’s why we have chosen to look at expansion and diversification.”

San Manuel is investing in several industries, including a bottled water company that taps a source on the reservation, a home and office delivery market, and very soon 12 acres in Highland owned by the tribe but not reservation land will become San Manuel Village, a commercial development that will include a Hampton Inn Suites, an office building, restaurants, retail, banks and more.

San Manuel has partnered with three other tribes: Viejas Band of Kumeyaay Indians, the Forest County Potowatomi Community and the Oneida Tribe, both of Wisconsin, to form Four Fires. The largest business investment collaboration for American Indian tribes in history, in 2003 it began a $43 million hotel project-a 13-story, 233-suite Residence Inn by Marriott, near the Smithsonian’s National Museum of the American Indian and just blocks from the Capitol.

Another partnership, Three Fires (the same tribes minus the Forest Potowatomi) built a Residence Inn by Marriott in Sacramento near the state capital and purchased an office building in Washington D.C. and commercial office buildings in other towns.

When the Pentagon closed California’s Norton Air Force Base, the partnership acquired 100 acres in an area that seems prime for warehousing and shipping industrial uses.
   

Commercial Concentration
What about commercial casinos?

“Those kinds of projects are not as high on our list,” says Coin. “Under former Chairman Darren Marquez the tribe decided to look beyond gaming. He used to say that the more diverse your revenue stream the better your revenue stream will be. And we’ve learned the hotel business very well.

“Indian gaming is conducted in a very fragile political environment. Every day that the tribes make the progress  makes somebody wants a piece of the action. Racetracks and card clubs have tried to get slots. Those efforts are not going away. Understanding that this is a highly charged political environment, tribes are mindful that they need to look to other sources, such as hotels and motels. But that doesn’t mean we won’t look at other areas.”

Professor Baker foresees economic diversification by all tribes.

“A potential detriment is that you are seeing the ‘rich Indian syndrome appearing.’ Wise tribes are working hard to counteract that by contributions to other tribes. As economies get tight, certain tribes will face political difficulties. That’s a matter of when, not if.”

James Wortman, lecturer and director of the Gaming Education and Research Institute (GERI), was also administrator of the National Indian Gaming Association’s Casino Management Institute for Hilton College at the University of Houston. He has worked with tribes for 20 years. GERI, education partner of the National Indian Gaming Association, offers casino management courses. This gives Wortman the opportunity to travel and see a lot of different tribal operations.

He notes that the Pequot and Mohegan tribes are not the norm, either in casino profitability, or how they were built.

“The Mohegan and Pequots are sophisticated tribes,” he says. “They have good backgrounds. They make a lot of money. A lot of tribes disagree with how they did that by building up a lot of debt. Most Indian casinos are not looking to build large debt. When building takes place the tribe is ready to give a check for services. Foxwoods does it like most businesses in the U.S. do, by taking out a loan.”

He adds, “Most tribes are interested in self-determination. They use money from gaming for cultural heritage, housing, schools, designed to benefit the tribe. They tend to feel that Foxwoods doesn’t follow that model.

“Foxwoods and the Mohegans are now looking to be investment partners with those tribes, serving as a bank, giving expertise and running and financing operations.”

Some tribes that diversify, says Wortman, do so out of a desire to weather economic storms. “They are saying that maybe it will affect our income and maybe we need to diversity our businesses to be able to survive an economic downturn.

“There’s also a concern, I’ll attribute to Steve Wynn, that right now gaming is a socially acceptable form of entertainment in the U.S. but we are one serious calamity away of being where we were 30 years ago. Gaming could suffer some serious problem. Twenty years ago tables were kings, and then slots and tables. Today, hotels, food and beverage, and retail are profit centers and some casinos bring in more from those areas than from slots.”


Founded by Foxwoods
Gary D. Armentrout, president of the Foxwoods Development Company, recalls how four years ago the tribe developed a two-fold strategy that was defensive and offensive.

“The Pequot tribe realized that as successful as they were with Foxwoods that their market was shrinking as surrounding states contemplated expanded gaming,” he says.

The defensive strategy: invest significant additional capital into the Connecticut property. Make it bigger, better, grander, with more nightclubs, meeting spaces, slot machines and hotel rooms. That resulted in the $750 million MGM Grand at Foxwoods, which will open later this year.   

The offensive strategy: diversify outside of their market by creating the Foxwoods Development Co. to leverage financial and human resources in hotels, casinos and entertainment operations outside their existing market.

“A commercial entity doesn’t have the advantages or baggage of a tribal entity,” says Armentrout. “We are 100-percent owned by the tribal nation. Our six-member board of managers runs and oversees the company.” 

Armentrout was hired in October of 2005 to head the company. His mission: “to leverage the tribe’s financial and human resources by finding opportunities to invest in, partner with, develop and acquire, hospitality-related projects.”

One motivation for creating the company was to provide career opportunities for Foxwoods’ team members.

“Part of our mission is that any project we become involved in we are not a bank-we don’t loan money or make passive investments. We only invest in projects where we have a role to play in development and management. This creates opportunities for employees to move up in their own careers. Anyone we take out of the operation in Connecticut will create a vacancy that creates a ripple effect, letting others move up,” says Armentrout.

Their first project, in early 2006, was consultant to the Chukchansi Gold Resort and Casino in Southern California, near Fresno.

Foxwoods spent six months with them, analyzing their operation, making recommendations on facilities, operations and senior management.

“It gave us an opportunity to utilize many senior management from Connecticut as advisors and consultants,” recalls Armentrout. “It proved very successful both for us and the tribe.”

Next, they answered an RFP from the Pauma Band of Luiseño Mission Indians of San Diego County. They negotiated a development with the tribe, which failed twice before to partner to expand its existing small casino. The ground breaking date hinges on a memorandum of understanding with San Diego County, required by the compact negotiated with Governor Arnold Schwarzenegger, which more than doubled the tribe’s allotment of slot machines.

The estimated $650 million cost includes financing and soft costs. “We’ve worked together to come up with a design (with the architectural team of Hnedak Bobo) for an all-inclusive resort, 400 hotels rooms, large rooms, and 2,250 slots,” says Armentrout.

Foxwoods provides predevelopment funding, oversees the architect, interior design team and consultants retained to do the environmental report and negotiate the MOU, whose main issue unresolved is traffic on the two-lane State Highway 76, still a winding country road.

This historical partnership is the first time one tribe has reached out to help another do a large-scale development.

“Tribes have partnered with commercial gaming companies before. This is the first example of a tribe providing that kind of financial and gaming expertise to another tribe,” says Armentrout.

It’s a testament to the company’s national perspective that its headquarters is in St. Louis, Missouri, not Connecticut. Its initial focus has been with tribes in California, Oklahoma and New Mexico. “It made more sense to be centrally located as we became so geographically diverse,” says  Armentrout.


Philly Foxwoods
Foxwoods’ third major project is in Philadelphia, where in 2005 it partnered with local investors to pursue a slot parlor gaming license. Competitors for the two licenses included Trump Entertainment Resorts and Pinnacle Entertainment.

This created a philosophical dilemma. Pursuing a commercial license required a full background and suitability assessment, scrutiny tribes normally don’t tolerate. It required soul-searching, discussion and debate to proceed. It was, says Armentrout, a significant step for the tribe to willingly to open its books to a third party.

“I’m happy to report that the tribe and the board of management and the facilities managers, were thoroughly investigated and found suitable,” says Armentrout.

“This is the first time that a Native American-managed gaming company has competed successfully against commercial companies for a highly sought after licensing agreement,” he adds.

Foxwoods Casino Philadelphia is still in the permitting process. Groundbreaking is expected this summer. The $640 million project includes three phases: 1) The casino with 3,000 slot machines; 2) A riverfront entertainment district with a promenade, boardwalk, shops, restaurant and additional gaming space to bring the total machines to 5,000; 3) a two-tower hotel of 250 rooms, or residential condominiums, depending on the market.

Like other commercial gaming companies, Foxwoods is monitoring the debate in Massachusetts over three proposed commercial casinos.

Foxwoods went international in March with an agreement with Dublin-based Harcourt Developments, which acquired the former Royal Oasis in Freeport, Grand Bahama, destroyed by hurricane, vacant for three years. Harcourt is committed to gut, renovate and rebuild the hotel tower, casino and two golf courses, with Foxwoods as consultant through design and development and manager after it opens.

The other significant development is Foxwoods’ relationship with MGM Mirage. They jointly created Unity Gaming LLC, based in Las Vegas. Under its tent, they will identify opportunities to develop or acquire gaming operations.

MGM brings the added financial capacity, MGM Mirage brand, plus opportunities that Foxwoods might not otherwise be aware of.

Unity’s first project is one that Foxwoods had worked on before: a bid for one of four Kansas regional casinos, in Sumner County.

Unity’s $425 million project, Chisholm Creek Casino Resorts, includes a 250-room hotel, casino, restaurants, and convention facilities with additional phased commercial development.

At any one time Foxwoods Development has a half a dozen projects in the works.

“Originally our focus was on gaming and non-gaming hospitality but the tribal council more narrowly defined it to be exclusively gaming,” says Armentrout. “Having been licensed and found suitable in commercial gaming opens the door for other gaming jurisdictions, including Nevada.”
   

Mohegan Matters
The Mohegan Sun, Connecticut’s other gaming giant, through its Mohegan Tribal Gaming Authority, while also engaged in multimillion dollar “defensive” expansion at home, recently opened phase one of the Mohegan Sun at Pocono, a commercial racino in Pennsylvania. Phase two will add 1,000 slot machines, dining, a nightclub and retail. It will also continue as a racetrack.

According to Lynn Malerba, tribal vice chairwoman, one advantage of operating the racino is that it can cross-market both operations, separated by a four-hour drive.

“Right now Pocono Downs is small, but once we enter phase two, cross marketing will take on more energy. It’s a wonderful opportunity for folks who may not know about the Mohegan Sun. We have piqued their curiosity about our Connecticut facility.”

Halfway across the continent and on the Pacific coast, the tribe acts as developer and manager for the $300 million casino project of the Cowlitz Tribe in southwestern Washington and of the Menominee tribe of Wisconsin’s proposed Kenosha Entertainment Center and Casino project.

“We have a contract to develop and manage for seven years and then turn them over to them,” says Malerba.

Like the Pequots, the Mohegans have discovered the wisdom of phased projects. “It makes sense. You need revenues from the first phase to help finance the second and not be so leveraged,” says Malerba. The Wisconsin and Washington tribes are responsible for their own financing, although the Mohegans helped obtain favorable rates.

They are one of 13 bidders in the Kansas market, targeting Kansas City, in Wyandotte County. And like the Pequots they are monitoring the Massachusetts market.

“In the short term we are looking at economic diversity,” says Malerba. “Our tribe (whose population is about 1,700) has a changing demographic. Our average age is 26 years. We experience a birth a week. We anticipate a lot of growth and want to continue to provide for education, elder and social care. This is our core competency and helps spread risk. We would certainly look at other industries if we possessed the competency, such as hospitality. It is important to diversify from a geographic perspective but from another business as well so that we are not solely focused on one industry.”

The tribal council is also board of directors for the Gaming Authority. While its executive team advises it on the due diligence of projects it proposes, the council has the last word.

Malerba doesn’t see the Indian gaming boom going away, but she recognizes that now there is more competition from commercial gaming.


Preparations for the Future
The old buffalo herds went away once before, maybe the “new buffalo” might do the same.

“In the Northeast,” says Malerba, “there was a 6 percent growth in how much money was spent on gaming, but a 14 percent growth in machines. It’s one thing to be efficient but what distinguishes us from our competitors is our level of service and amenities, which are unparalleled in the Northeast.”

From her perspective the tribe has made “incredible strides in the last 12 years. We opened the first phase of Mohegan Sun in 1996. We have gotten very sophisticated in how we look at our projects and have established ourselves as a leader.”

The tribe has reclaimed burial grounds in Norwich and repurchased another burial ground that had been made into a park.

“We believe we are paying homage to our ancestors by making sure that our burial grounds are well maintained. One of the most important benefits of gaming is that our history and culture remain very vibrant,” she says. “Hopefully there will never be ‘the last of the Mohicans.'”

Class Act

When the NIGC opened its office on the morning of March 10, 2008, it surely found its fax machine inundated by comments filed in response to the four proposed rules to govern Class II gaming. The comment period had ended at midnight the night before. Hundreds of letters were filed in the final few days, ending a long, strange year in which the NIGC solicited unprecedented input into its regulatory process.


The Bright Line
In the spring and summer of 2006, the NIGC proposed two sets of rules. The first would set up classification standards for Class II games, and also redefine an “electronic or electromechanical facsimile of a game of chance,” which the Indian Gaming Regulatory Act excludes from Class II gaming. The second proposal created a set of technical standards for Class II games: the detailed specifications imposed on manufacturers seeking approval on matters of game integrity and security.

The response to both proposals was overwhelmingly negative. When the commission’s own economic impact analysis revealed that the promulgation of those rules would devastate the existing Class II market, the commission, to its credit, paused in its process.

Somewhat later, after a series of work sessions with industry experts had convinced the commission that its own technical standards proposal was dramatically unsuited to the technological realities of Class II gaming systems, the commission paused further. It withdrew the proposed rules and began to listen some more. For more than a year, it had a lot to listen to.

Working Together
December 2006 marked the formation of what became known as the Tribal Gaming Working Group (TGWG), an informal collection of tribal leaders, tribal gaming operators and regulators, businessmen and engineers with expertise in Class II gaming development, and lawyers representing all those interests. The TGWG formed to deliver additional assistance to the Tribal Advisory Committees charged with providing expertise to the NIGC in the formulation of Class II rules.

Through a series of intense meetings held throughout the country, interspersed with conference calls that ran for hours, the TGWG deconstructed the NIGC technical standards. It exposed the original proposal as resting on the mistaken assumption that Class II gaming systems should be measured by technical requirements appropriate to stand-alone slot machines. The TGWG advocated that the technical standards be restructured to reflect, instead, a system in which central generation of numbers in a bingo game is transmitted to a collection of player interfaces, enabling players to play against each other in a common game. This approach preserves the structure of bingo for any medium of play, whether manual ball draw and paper cards or electronic designation of bingo balls displayed on players’ electronic screens.

TGWG work continued with the knowledge and occasional involvement of NIGC staff, with eventual dialogue in which NIGC staff, the Technical Standards Tribal Advisory Committee (TTAC) and members of the TGWG discussed, attacked and defended proposed revisions to the technical standards developed by the TGWG.

Nearing the end of the process, the NIGC continued to make changes that the Advisory Committee and TGWG asserted would undermine the purpose and efficacy of the technical standards. But a revolution has certainly taken place, in that the NIGC, in its most recent proposal on October 24, 2007, now proposes to regulate Class II gaming systems, and not some renamed slot machine.

At a Minimum
A similar process addressed Class II Minimum Internal Control Standards (MICS). For some years, the NIGC has required that tribal gaming operations adhere to the Minimum Internal Control Standards set forth at 25 C.F.R. Part 542. Tribes have successfully challenged the commission’s authority to impose such standards on Class III gaming. The remaining provisions, purporting to regulate Class II, were woefully inadequate, and the NIGC determined to develop a new Part 543 to address Class II alone. It reconstituted a MICS Tribal Advisory Committee (MTAC), and eventually agreed to subject its own proposed new MICS to the scrutiny, comment and suggestions of the still active TGWG.

Over a period of several months, the MTAC and TGWG worked with NIGC staff to reorganize the MICS to reflect the play of the game of bingo, with the goal of enabling tribal gaming regulators to monitor the play of each of elements of the game, tracking the criteria of bingo as set forth in the IGRA. Like the technical standards, the revised MICS aimed to provide satisfactory controls for the play of bingo whether or not technologic aids were used.

Throughout this productive and extraordinarily cooperative effort, proposed changes to the classification standards were nowhere to be seen, and were not available for discussion. The NIGC broadly indicated that it had had enough input from prior discussions, and was eager to complete the task of establishing a “bright line” between Class II and Class III gaming. Those who had been laboring to establish that same bright line between such forms of gaming through carefully crafted MICS and technical standards were disappointed that the NIGC declined to consider that work sufficient, or at least to avail itself of the assembled expertise of all facets of the Class II industry.

    
Technological Aids
On October 24, 2007, the NIGC published its set of four new Class II definitions, in the Federal Register. Public outcry was immediate and intense. A principal objection was (and is) that the NIGC’s proposed classification standards departed from the statutory bingo criteria, the same criteria held be courts to be the “sole criteria for bingo,” created new and arbitrary requirements for the play of the game of bingo only if that game is played through technologic aids. Even though the IGRA expressly authorizes the play of Class II games with equal force “whether or not technologic aids are used,” the regulatory scheme would impose significant restrictions on game play for all forms of the game not using paper.

But the NIGC went even further. Not content that its artificially restricted bingo game would be significantly distinct from a Class III game (and significantly degraded in economic viability, according to the NIGC’s own new economic impact study), the commission undertook to redefine the facsimile definition presently in force. Adopted in 2002, and approved by reviewing courts, the existing definition tracks the language in the Senate Report accompanying IGRA, requiring that a permissible technologic aid be “readily distinguishable from the use of electronic facsimiles in which a single participant plays a game with or against a machine rather than with or against other players.”

The proposed new definition eliminates the distinguishing limitation that precluded play against a machine. Instead, the NIGC would establish, essentially, that all games played exclusively with electronic aids are facsimiles. It then purports to establish a safe harbor for any that achieve compliance with the classification standards, which are applicable to all games played solely through electronic aids. But that effort may not work.

The IGRA categorically excludes facsimiles from Class II gaming. If the NIGC determines that all solely electronic games are Class III facsimiles, then it may not have the ability to bring such games back into the realm of Class II merely by determining acceptable standards for such facsimiles. Class III gaming is outside the NIGC’s regulatory scope of authority. While it may seek to determine where the bright line exists between Class II and Class III gaming, it lacks governmental power once it crosses that line. Many fear that the facsimile definition alone may be enough to wipe out the now vibrant industry of Class II electronic bingo. At the very least, the facsimile definition is merely a surplus requirement to comply with the classification standards.

Hey Grandfather
The NIGC stumbles into yet another paradox. Recognizing that the classification standards would render nearly all existing games obsolete, the NIGC proposes a “grandfather” provision that would delay application of the new standards to existing games for a period of five years. Many object that even such a five-year term would improperly truncate the useful life of a Class II gaming system. But many more are concerned that the NIGC’s own language could render the grandfather provision wholly meaningless. The rule itself states:

“Nothing in this part is intended to authorize the continued operation of uncompacted Class III machines that allow a player to play against the machine.”

Given that games not compliant with the classification standards, are, by the NIGC’s terms, uncompacted Class III machines, this sentence could make it impossible to rely on or apply the grandfather clause.  

The details of the proposed classifications standards are not significantly different from the version proposed in May 2006. To its credit, the NIGC eliminated some of the requirements whose goal was patently to delay and extend the duration of game play.

But many other restrictions remain. The initiation of each game is delayed by two seconds, except in the most heavily populated gaming facilities. Players are required to interact with the game at least twice, and often (and unpredictably) more times, according to the NIGC’s additional rule requiring that slept bingos trigger additional ball releases and extended play for others in a game. All games must have an overly precise label (“This is a game of bingo”) that seems too simple to offer much in the way of education to a player.

Bingo game rules created by the NIGC pose significant threat to future options for game development, which may require more flexibility in the configuration of a bingo card than the NIGC permits. This is yet another arbitrary distinction not found in the many jurisdictions in which paper bingo and other electronic bingo have flourished. Games similar to bingo are defined out of existence. The play of Bonanza bingo is forbidden in electronic form (even though it remains permissible in paper play).

Compliance issues are unclear for bingo minders, or for future development of other compact, handheld play, thus handicapping an obvious avenue for new technology. But only for tribal play, because the rest of the electronic bingo industry will continue to develop, leaving tribal Class II play fossilized and unprofitable.
 

Other Concerns
The myriad comments raise other serious questions.

The NIGC’s economic impact study suggests that the effect on Class II gaming operations would be immense, with billions of dollars of quantifiable losses. The study itself cannot measure the economic harm imposed by depriving tribes of leverage to negotiate new compacts, or to seek less restrictive compact amendments.

Nor can mere dollar figures adequately represent the catastrophic harm incurred when a small tribal facility, one whose revenues primarily support job creation, can no longer keep its doors open because the Class II games can no longer compete with nearby Class III-type games in a recalcitrant state that refuses to compact. While the NIGC has announced its intention to commission a cost/benefit study, that study has not been completed. Many wonder how the NIGC will attempt to justify benefits sufficient for the adverse regulatory costs.

Finally, the process of the NIGC’s rulemaking, and its substance, pose substantial threats to tribal sovereignty. The NIGC’s rule threatens to eviscerate Class II gaming, the one form of tribal gaming that the states cannot control. Tribes seeking to conduct gaming will, as a practical matter, be at the mercy of states that cannot be compelled to compact in good faith, and which will demand more concessions of revenue and regulatory control. Moreover, the proposed regulatory structure substantially transfers tribal regulatory power to classify games to private laboratories, whose “certification” of games as Class II would occupy the place of a primary (non-governmental) regulator. Tribes are prohibited from using their own laboratories to conduct such certification.

And lastly, the process itself illuminates the defect in the NIGC’s own consultation efforts. While the NIGC discussed some aspects of rule development with its tribal advisory committees, it did not engage in broader, meaningful consultation with tribal governments that may not have had representation on the committees. And while the NIGC did benefit from the significant expertise of the TGWG, that group did not function in the role of government consultation, and its advice was roundly rejected on all matters critical to classification determinations.

If the NIGC is to protect the critical asset that is Class II gaming, it should avail itself of all the information necessary to make good decisions. In particular, it must both seek and apply all available technical and governmental expertise to all facets of Class II rulemaking.

Now that the comment period has ended, the NIGC must fulfill its obligation to consider how the comments affect its determination to go forward with the proposed regulations. Chairman Phil Hogen has frequently commented that the commission is not unalterably committed to all the rules. If the shortcomings in the MICS and technical standards can be addressed, then those rules can provide useful tools for tribal regulation of Class II gaming.

Undoubtedly, the classification standards and facsimile definition, if adopted, will give rise to significant litigation. Even if tribes do not file immediate challenges, the defects will likely encourage the United States Department of Justice to resume its own enforcement proceedings against games the NIGC has newly determined to be uncompacted Class III games. The proposed rules threaten a new era of legal uncertainty, unnecessarily raising the cost of doing business in Class II.


Blazing the Trail

Indian gaming is a relatively new phenomenon. If someone had casually mentioned driving to an Indian reservation to play blackjack in 1978, they’d have been sent to a padded room for observation. But in less than a generation, Indian casinos have become an economic force to be reckoned with-a billion-a-year business, and growing. In addition, the social, political, and cultural impact of Indian gaming goes far beyond dice and slot machines. It has lead to a historic reversal of United States-Indian relations. Once denied their land, forced to assimilate, and marginalized from society, American Indians have gained increasing economic and political power in the last 30 years. And casinos are a big part of the reason.

But casinos didn’t magically appear on the American landscape. The current regime of Indian gaming wouldn’t have been possible without the hard work, perseverance and foresight of dozens of men and women. Indian gaming isn’t something that happened; it’s something that was created deliberately.

We are fortunate to still have most of the innovators and mavericks who created American Indian gaming still with us. Though the general public is still ignorant of the true complexity and significance of the Indian gaming phoenix, those close to the industry know much of the “real story.” And, most importantly, those who built the industry into what it is today are still here, sharing their stories.

It would be impossible to list, let alone chronicle the contributions of everyone who contributed to the advent of Indian gaming. But there are some people whose involvement is noteworthy for both the impact it had and its symbolic importance. Of this group, we are featuring a small fraction in these pages. This is not a definitive list of the most important men and women in Indian gaming; it is merely a way of starting the conversation.

First, some background to put the enormity of the Indian gaming victory in context.

From the initial colonization of the North American mainland by European settlers in the 17th century, the new arrivals systematically pushed Native Americans from their lands. United States policy explicitly sought to end Indian independence: with the passage of the Dawes Severalty Act in 1877, the government actively worked to suppress all traces of traditional culture and language and dissolve tribal governments as legal, land-owning entities. By the turn of the 20th century, Indian land holdings had shrunk to a fraction of their former size.  

By the 1930s, it was clear that such policies had not helped Indians assimilate into white American life or achieve material success. So reformers launched an “Indian New Deal.” The Indian Reorganization Act of 1934 brought back collective land ownership and established procedures for self-government. But these efforts did little to improve the lives of Indians. Starting in the late 1960s, budget deficits throughout the nation led many jurisdictions to embrace lotteries and, later, casinos. The national plight of American Indians even more serious, as unemployment, under-employment, and lack of opportunity remained endemic of reservation life. Around this time, the federal government renewed its commitment to encouraging the political, cultural, and economic self-determination and self-sufficiency of Indian tribes.

So it made sense when, in these years, tribes sought to use their last remaining assets-sovereignty and reservation lands-to their benefit. With little possibility for commercial or industrial development and a growing tide of legalization around the country, gaming made perfect sense to tribes desperate for advancement. But few could have predicted just how effective it would become, thanks to the diligence of the men and women chronicled here-and thousands who shared their dedication.

 


First Things First 
Ginny Boylan

Virginia W. Boylan has been deeply involved in Indian law for over 20 years. As deputy staff director and senior counsel to the U.S. Senate Committee on Indian Affairs, she was responsible for legislation and oversight of federal management of Indian trust resources and economic and social services programs, environment, economic development, gaming, energy and minerals development, water and land claim settlements, federal recognition issues, housing and education.

Boylan, currently a partner at Drinker Biddle and Reath, LLP, started work on the bill that became the Indian Gaming Regulatory Act in 1987, at the behest of new Indian Affairs Committee Chairman Daniel Inouye, who had long championed a congressional role in Indian gaming. Two weeks after the bill was introduced, the Cabazon decision unleashed a flood of interest in the bill. In getting the bill passed into law, Boylan pivotally worked to balance pressure coming from several sides: Indian tribes, congressional representatives and the administration.

At the time, neither Boylan nor the bill’s proponents foresaw the large-scale development of Class III gaming. In an era of shrinking federal appropriations for Indian country, Boylan thought IGRA would help bolster Indian economic development and self-determination; her biggest surprise today is that tribes are in the role of providing money to states.

According to Boylan, the bill’s proponents felt commercial gaming would overwhelm Indian gaming, and that they had to pass the bill before this window of opportunity closed. “Instead,” she recently recalled, “states have seen the benefit of confining gaming to tribes, and as a result, both tribes and states have benefited.”

 

House Edge 
Frank Ducheneaux

Frank Ducheneaux has had a long and distinguished role as a key legislative advocate for Indian interests. As legal counsel for U.S. Congress committees charged with Indian policy, he served a pivotal role in shepherding many bills into law, including the Menominee Restoration Act, the American Indian Religious Freedom Act and several other laws that have a significance far broader than gaming. He blended a tireless support for the rights of Indians with an understanding of the legislative process, and is rightfully recognized as one of the framers of the Indian Gaming Regulatory Act.

Joining the staff of the House Interior Committee in 1973, Ducheneaux served on the committee-and its successors-until 1990, after which he continued his work as an attorney, consultant and member of the Minnesota Indian Gaming Association.

A member of the Cheyenne River Sioux Tribe of South Dakota, Duchenaux made history when he became the first Native American to serve as legal counsel to the Interior Committee, giving unprecedented influence on shaping congressional Indian policy.

Ducheneaux exerted his greatest influence on the development of Indian gaming as one of the architects of 1988’s Indian Gaming Regulatory Act, the pivotal piece of legislation that provided the regulatory framework for Class III casino-style gaming on Indian reservations. The idea of an act to systematize Indian gaming had been floating around Congress for a few years, but the Supreme Court’s ruling in the Cabazon case in 1987 jumps-tarted the process.

Back in 1987, it would have been hard to believe that Indian reservations would host a multi-billion dollar-a-year business, but the passage of IGRA in 1988 made the possible. Though Frank Ducheneaux’s legislative legacy is impressive, he deserves equal credit for his role in helping create the framework for this economic and social dynamo.

 

Legal Action 
Glenn Feldman

Without Glenn Feldman’s legal expertise, Indian gaming might have developed quite differently. Feldman, currently a shareholder in the law firm of Mariscal, Weeks, McIntyre & Friedlander of Phoenix, Arizona, has focused on federal Indian law throughout his career. In 1987 he successfully argued the landmark tribal gaming case, California v. Cabazon Band of Mission Indians, before the United States Supreme Court.

Winning a case before the highest court in the land would be the pinnacle of any attorney’s career, but Feldman doesn’t rest on his laurels; he still serves as general counsel of the Cabazon Band, a position he has held since 1979 without interruption, and has continued to advise many other tribes.

After leaving Capitol Hill in 1979, Feldman joined former South Dakota Senator James Abourezk, for whom he had worked in the Senate in private law practice. Since Abourezk had a background in Indian affairs, several tribes sought their services.

The first tribe to do so was the Cabazon Band of Mission Indians, who in the coming year found themselves enmeshed in the first of a series of court cases. When, in 1980, the tribe’s leaders chose to open a card game under California’s “local option” law, police from the nearby city of Indio raided the newly-opened poker room, made several arrests, and declared the enterprise closed. For the next three years, the case wound its way upward to the 9th Circuit of Appeals. That court ultimately ruled that, since the card room wasn’t within the city’s jurisdiction, municipal authorities were powerless to close it.

Shortly thereafter, Riverside County sheriff’s deputies raided and closed the poker room. The county argued that its jurisdiction was incontestable, and the tribe sued to re-open yet again. After winning in both District Court and the 9th Circuit, Feldman and the Cabazon legal team learned in the summer of 1986 that the Supreme Court would hear the case. He felt confident, and knew that if he won the case would set precedents, though he had no way of knowing the magnitude of that precedent.

In the Cabazon decision, the Supreme Court ruled that, if a state permitted a certain type of gambling, its regulation was a matter of civil rather than criminal law, and therefore an Indian tribe whose reservation lies within that state’s borders has the sovereign right to run such games without state restriction. This case centered primarily on card rooms and bingo, though the court concluded that its implications went far beyond gambling: by running high-stakes games, the Cabazon Band was “generating value on the reservations through activities in which they have a substantial interest and they dedicate bingo revenues to promoting the health, education, and general welfare of the tribal members.”

Though Feldman knew he had a strong case, he concedes that, had the Supreme Court ruled against it, Congress likely wouldn’t have passed IGRA in the following year.

“No one could have predicted in 1987 that the Cabazon decision would open the door to a $25 billion tribal gaming industry,” he says, “but those of us who have been involved since the beginning and have seen the many benefits that gaming has brought to Indian Country are proud to have been a part of that history.”

 


Foxwoods Founder 
Richard “Skip” Hayward

Foxwoods Resort Casino is one of the largest casinos in the world, and perhaps the most striking illustration of the power of Indian gaming. Richard “Skip” Hayward is, more than anyone, responsible for both the improbable resurgence of the Mashantucket Pequot and the striking rise of Foxwoods.

Hayward refused to let the Pequot legacy fade after the death of his grandmother, Elizabeth George, who had for years been the sole remaining descendant of the Connecticut Indian tribe living on its small reservation. Securing first state and later federal recognition for the Mashantucket Pequots, Hayward tried several tribal business ventures before hitting the gaming jackpot: high-stakes bingo gave way, in 1992, to a full-fledged casino after Hayward negotiated a compact with Governor Lowell Weicker.

Foxwoods proved to be a casino powerhouse. Located between New York City and Boston, its success proved that New Englanders are just as willing to embrace gaming as those in other sections of the country. Though Hayward was deposed as tribal chairman in 1998, his contributions to both the Mashantucket Pequot and the Indian gaming industry are beyond debate.


Business Savvy 
Lyle Berman

Lyle Berman is one of the few Indian gaming pioneers who’s equally accomplished on both sides of the gaming tables. Berman was inducted into the Poker Hall of Fame in 2002, and he owns three World Series of Poker bracelets. But Berman isn’t counted among the most influential figures in Indian gaming history because of his card playing.

Berman helped to found Grand Casinos, which would become one of the first management companies hired by tribes to operate their casinos. He moved into the area almost by happenstance. He had recently sold his leather business, and a friend who had secured contracts to manage two bingo/slot parlors invited him to participate, chiefly because of his poker pedigree. Berman agreed and financed the start-up, becoming president.

After opening day at the Mille Lacs casino, Berman realized how lucrative the business could be, and he quickly took the company public. Berman parlayed his Minnesota success into a small gambling empire, with management contracts in several states. Berman recalls there being several differences between running a Indian casino and operating a private business. The managers are responsible to tribal leadership rather than their own interests, and leaders often let political or cultural concerns override concern for the bottom line.

Minnesota, Berman insists, has been a leader in Indian gaming since the earliest days, though the state has enforced some idiosyncratic rules. There were to be no slot machines, for example; only “video gaming terminals.”

At its peak, Grand also owned and operated three Mississippi casinos. When Park Place Entertainment absorbed Grand Casinos in 1998, Berman spun off its Indian gaming operations into Lakes Gaming, a company that became Lakes Entertainment in 2002. As partial owner of the World Poker Tour, Berman was instrumental in creating-and capitalizing on-the poker boom of the early 21st century.

Berman sees a far different landscape for management companies today than in years past. There aren’t many great opportunities for management companies, since most tribes that want gaming already have it. Still, the future for the industry as a whole is fantastic.

If you want to know, Berman says that running company successfully is a far greater thrill than winning a World Series of Poker tournament. Still poker has value for business, since it “teaches you ramifications for decision-making.” Playing poker, Berman became used to instantly knowing the results of his calculations and hunches, and immeasurably steeled his resolve in making tough choices from executive offices.

 


The Chairman 
Rick Hill

From a young age Rick Hill seemed destined to be a leader, but few could have predicted just how far he would go. Elected to the tribal council of the Oneida Tribe of Wisconsin at the age of 23, he was the youngest member ever to serve his tribe on the council. In 1983 he won election as tribal vice chairman, a post that his father had held for nearly 20 years before his death in that year. Hill’s star continued to rise, and he won the chairmanship of the Oneida in 1990.

Hill served as tribal chairman until 1993, when he stepped onto the national stage. In that year he was elected as chairman of the National Indian Gaming Association, the premier Indian gaming lobbying and public awareness organization. Hill remained chairman and chief spokesman for NIGA until 2001. His tenure as leader of the organization saw incredible victories for Indian gaming and Native Americans, and under his leadership NIGA more than doubled its membership

The changes during Hill’s years at the help of NIGA go far beyond the numbers. Presiding over the group during much of the 1990s, Hill helped to solidify the image of Indian gaming as a legitimate industry and responsible community member.

For Hill, Indian gaming has been a means to an end-the increasing economic empowerment of Native Americans. This goes far beyond casinos. A Washington, D.C., Marriott Residence Inn that opened in early 2005 epitomizes Hill’s vision for the future of American Indians. Under Hill’s guidance, four Indian tribes formed an unprecedented partnership. Joining together with Marriott, they invested in a non-gaming hotel with a perfect symbolic location, three blocks from the National Museum of the American Indian and only five blocks from the U.S. Capitol.

 


Seminole Sentinel
Jim Shore

Jim Shore is an Indian gaming pioneer whose accomplishments are nearly outweighed by the dramatic story of his life. Born on the Seminole’s Brighton Reservation near Okeechobee, Florida, Shore trained as an auto mechanic before an accident shattered his life-at the age of 25, Shore was permanently blinded after a car crash. Shore didn’t give up, though; he enrolled in Stetson University and studied history before attending-and graduating from-the university’s law school. Shore was the first Seminole to earn a law degree, and on his graduation in 1980 he immediately joined the tribe’s legal team.

At the time, the tribe was in the midst of an epochal legal struggle: the state of Florida attempted to shut down the Seminole’s high-stakes bingo operation, triggering a round of lawsuits that ended in a favorable federal appellate court ruling. The Seminole decision opened the door for the expansion of high-stakes bingo on tribal lands nationwide, and laid the groundwork for the Supreme Court’s favorable Cabazon ruling.

As general counsel for the Seminole from 1982 forward, Shore shaped the tribe’s legal strategy. Though he was unsuccessful in forcing the state to negotiate a Class III compact in 1994, he fought off state attempts to check the tribe’s Class II gaming machines. And Shore was ultimately vindicated when, in 2007 Florida Governor Charlie Crist negotiated a pact that brought full casino gaming to the Seminole casinos.

Shore played a key role in restructuring the tribe’s gambling operations after allegations of impropriety-such a vigorous role that, in 2002, he was shot three times and left for dead in what has been described as a “mob-style hit.” Shore survived, and though his would-be killer has not been brought to justice, he made a complete recovery in time to guide to Seminoles to international providence.

When, in 2004, the Seminoles opened two Hard Rock casinos, they were merely licensing use of the Hard Rock name and brand. In late 2006, at Shore’s urging, tribal leaders jumped at the chance to acquire the entire Hard Rock empire-restaurants, hotels and over 70,000 pieces of rock-and-roll memorabilia. This significant purchase illuminates the newfound economic and cultural vitality of both the Seminole tribes and all Native Americans.

 


Mille Lacs Miracle
Marge Anderson

Minnesota Indian gaming doesn’t usually get the headlines that casinos in California, Florida, and Connecticut do, but it’s a potent economic force nevertheless; it is the fifth-largest Indian gaming market in the country and has an aggregate statewide economic impact of over a half-billion dollars a year.

Marge Anderson is one of the prime movers behind this taciturn gaming behemoth. As chairwoman and chief executive of the Mille Lacs Band of Ojibwe from 1991 to 2000, she guided the band through a decade of tremendous growth, growth made possible by the success of Grand Casino Mille Lacs and Grand Casino Hinckley.

As leader of the band, Anderson set three priorities that determined how the Mille Lacs reinvested the profits generated from the casinos. She insisted that the band work to strengthen its cultural identity, return to economic self-sufficiency, and increase the prosperity of both the reservation members and their neighbors.

Before the advent of Indian gaming, Minnesota Indian reservations were among the poorest and bleakest in the nation. Now, those same reservations host businesses that employ thousands, Indians and non-Indians alike, while pumping millions of dollars into the state’s economy. Marge Anderson is one of the quiet forces behind this social and economic revitalization.

 


Ongoing Struggle
Brenda Soulliere

The daughter of former tribal chairman John James, Brenda Soulliere grew up keenly aware of the importance of leadership-and of the terrific responsibilities that comes with authority.

Last year, Tribal Government Gaming described her dramatic confrontation with local authorities, who jailed her for participating in what the Cabazon Band of Mission Indians considered to be legal gaming, in the form of bingo.

For more than 20 years, Soulliere has worked for the Cabazon Band. It has been a momentous tenure. In her early years with tribal administration, the Cabazon decision (1987) and Indian Gaming Regulatory Act (1988) vastly expanded the horizons of Indian gaming. Throughout the 1990s, Soulliere championed the cause of California Indian self-determination and economic development, a campaign that culminated in victories in Propositions 5 (1998) and 1A (2000), and more than 50 state-tribal gaming compacts being signed in 1999.

Class III gaming in California was not an easy fight. During the 1998 campaign Nevada gaming interests actively opposed Proposition 5, not without cause: a significant portion of Nevada’s visitors come from California. But California voters voted overwhelmingly in favor of the referendum, which wasn’t pitched as gaming expansion but as protecting “Native Americans’ rights to have limited gaming, restricted to their tribal land.” Californians felt that by allowing Class III gaming on Indian reservations, they could support the self-determination and self-reliance of Native Americans.

After the courts struck down Proposition 5, a similar measure, Proposition 1A, passed in 2000. This time, Nevada interests dropped their opposition, and the referendum passed with more than two-thirds of all voters in favor.

As chairwoman of the California Nations Indian Gaming Association from 2001 to 2003, Soulliere played a pivotal role during the transition from Class II to Class III gaming on California Indian reservations.

Soulliere has been outspoken in her defense of Indian gaming, and has argued that legislative and electoral successes do not mean the end of the struggle. “In fact,” she wrote in a CNIGA newsletter, “the battles have grown even more significant, the threats to sovereignty and self-reliance more ominous. ”

Brenda Soulliere will continue to champion Indian rights, because, as she says, “the fight will never end.”

 

Barona Baron
Joe Welch, Sr.

When Joe Welch, Sr., chairman of the Barona Indians of San Diego County, presided over the opening of a small bingo hall on April 15, 1983, few thought that he was making history. Running bingo games out of a converted community gymnasium didn’t seem a momentous step in the saga of the Barona tribe, which lived in Southern California for centuries before the first Europeans arrived.

But the bingo hall represented more than an entertainment venue. It was a symbol for Welch’s continuing efforts to improve the lives of his fellow members. Like many Indian tribes, the Barona were mired in poverty, and little seemed to help. Welch hoped that bingo would, at the most, give members of his community a chance. Prosperity was unthinkable.

Barona didn’t get bingo without a fight. Along the way, the tribe won a landmark United States 9th Circuit Court of Appeals decision that preserved their right to offer the game.

After Welch stepped down as chairman, he continued to serve as a council member, and has offered sage advice as the bingo hall has evolved into a full-fledged casino resort, with a 400-room hotel, quality restaurants, an 18-hole golf course and-thanks to Propositions 5 and 1A-a casino.

Barona has become one of the leading casinos in Southern California, creating thousands of jobs and countless opportunities for tribal members and Southern Californians. If not for the perseverance of Joe Welch, none of this might have happened.

The foundation that he laid in the early 1980s became the base for one of the great success stories in Indian Country.


Public Service, Private Victories
Jana McKeag

It’s not uncommon for regulators to follow their roles in public service with second careers as advocates, and Jana McKeag has been distinguished in both roles. She was first drawn to a career in public service by her grandmother, who worked for the Bureau of Indian Affairs’ Osage Agency in Pawhuska, Oklahoma, and impressed upon her the importance of helping her people. She found two other mentors: Forrest Gerard, a partner of Frank Ducheneaux, and Chuck Trimble, the executive director of National Congress of American Indians. Before long, she started working for the Bureau of Indian Affairs, which she found both rewarding and educational.

In more than a decade with the bureau, McKeag gained a sensitivity to many issues surrounding Native American communities and learned that by working in Washington, D.C., on behalf of Indian issues, she could have a significantly positive impact on the quality of life for Native Americans throughout the country.

Serving as a founding member of the National Indian Gaming Commission from 1991 to 1995 was a fitting culmination to her long career with the federal government. These were not easy years to serve on the regulatory body: IGRA had just been passed, the commission was new, and commissioners had to weather criticism from both sides: some wanted very strict regulation, while others preferred a more liberal regime. McKeag and her compatriots resisted political pressure from both sides and instead made decisions that they felt reflected both the letter of the law and the original intent of Congress. McKeag quickly determined she was not a cop. She resisted pressure and used her position on the commission to help tribes.            

This was a crucial period for Indian gaming-without a credible national regulatory body, states might try to encroach on tribal sovereignty. By design, McKeag and her fellow commissioners created a stable regulatory system that has stood the test of time.

After her term on the NIGC ended, McKeag joined Venture Catalyst (VCAT), initially as a consultant, though she soon was named the company’s vice president of governmental relations. In this role, McKeag advised both the company and government officials on potential legislation.

In her current position as president of Lowry Strategies, (her husband Tom Foley is vice president) McKeag represents tribes and entities working with tribes in a variety of roles. She’s helped to get legislation passed, mitigated decisions of the Department of the Interior, helped tribes work with Congress, and assisted them as they’ve established their own regulatory systems.

“Indian gaming has surpassed anyone’s expectations,” she says. “Tribes have stepped up to the plate to ensure credibility of gaming operations.”

But the road ahead is not a cakewalk: “There are challenges-there’s a lack of information inside the Beltway, so there’s still a need for educating Congress and the general public. I’ve been working in Indian Affairs for over thirty years, and we’ve overcome a lot of very difficult issues, so I’m confident that tribal leadership will continue to be successful.”

Off the Reservation

The U.S. Department of the Interior has been thrust into the spotlight of the gaming industry for the remainder of 2008 with its January denial of 22 total applications for off-reservation tribal casinos. The department’s process of communication, notification and application with the tribes during the past year has come under great scrutiny from the tribes themselves, and has touched off a cultural, legal and political battle sure to last throughout 2008.

“We always knew what (Secretary of the Interior) Dirk Kempthorpe’s philosophical differences were to gaming and off-reservation casinos, but this is to do with policy, not philosophy,” says Leslie Logan, spokeswoman of the St. Regis Mohawk Tribe in New York, whose application was denied. “To pull this out of thin air when we were at the finish line with our application has left us stunned.”

Eleven of the 22 letters to tribes informed them that their application for off-reservation gaming was incomplete, while the remaining half were notified that the Department of the Interior would not exercise its discretionary authority to take the respective properties into trust.

“I think he felt that if he would have granted one application, he would have had to grant them all,” says Logan.

Through 1934’s Indian Reorganization Act (IRA), the Secretary of the Interior has discretionary authority to take off-reservation Indian land into trust. The act was enacted to provide a tribal land base on which tribal communities can flourish.

Specifically, Part 151 of Section 151.11 details the factors the Department of the Interior is to consider when exercising its authority. Part 151 details two provisions relevant to applications that involve land that is a considerable distance from the reservation. As the distance increases between the tribe’s reservation and the land that is to be acquired increases, the secretary has to give greater scrutiny to the tribes’ justification of anticipated benefits from the acquisition and greater weight to the concerns raised by state and local governments as to the acquisition’s potential impacts on regulatory jurisdiction, real property taxes and special assessments. However Part 151 does not specifically elaborate further on how or why the department is to give greater scrutiny or greater weight to these factors as the distances increase.

“Our proposed project couldn’t get any more support than it has,” says Logan. “We have documented support from government representatives and agencies at the local, state and federal levels.”

Officials from the Department of the Interior declined interview requests from Tribal Government Gaming, and instead provided copies of the January letters sent to the 22 tribes along with the detailed Section 151 of the afore mentioned Indian Reorganization Act and the Indian Gaming Regulatory Act of 1988 (IGRA).

Along with the 22 tribes notified, the department also declined to comment on the eight off-reservation tribal casino applications that have been left untouched without ruling during the entire process.


A Question of commutability & Communication
According to the department’s documents, distance, or communicability had to do with the denial of the 11 applications in January. The proposed distances range from 70 miles away for the United Keetoowah tribe in Oklahoma to 1,500 miles away for the Seneca-Cayuga tribe in Oklahoma. However, many distances are in the middle, including the Choctaw’s application for an off-reservation site 175 miles away in Mississippi, Lac du Flambeau’s application 304 miles away in Wisconsin and the St. Regis Mohawk tribe’s application 350 miles away in New York.

“We knew all along that Kempthorpe was opposed to off-reservation gaming, but when he was sworn in he made statements as if he were going to uphold IRA,” says Logan.

In the guidance issued to tribes in the department’s January correspondence, it clarifies how to interpret and apply the Part 151 terms “greater scrutiny” and “greater weight” when considering the taking of off-reservation land into trust status for gaming purposes. The guidance asks that specific questions be reviewed for those applications with lands that exceed a “commutable distance” from the reservation because of the impact that a distant acquisition may or may not have on life on the reservation. The guidance also emphasizes that as distance from the reservation increases, greater weight should be given to state and local concerns, including jurisdictional problems and potential conflicts of land use and the removal of the land from the tax rolls.

“The St. Regis Mohawk Tribe out of any tribe can demonstrate that we are a commuting tribe,” says Logan. “We have been commuting more than 100 years and can show a foot trail of Mohawk iron workers to Washington, D.C., Montreal, Detroit and New Hampshire.”    

Along with these cities, tribe members still also commute on a monthly basis to Philadelphia; Columbus, Ohio; Buffalo and a dozen other cities.  

“For them to say commutability and distance is a factor without even consulting with tribes and without due process makes us feel like we have been screwed,” says Logan.

At hearings in Washington, D.C. in late February, St. Regis Mohawk Tribal Chief Lorraine M. White testified before the House Natural Resources Committee’s oversight hearings on the Department of the Interior’s recently released guidance. White’s testimony was based on a series of favorable determinations over nearly 12 years.

“It is wholly apparent that the Interior is not only a vortex of contradictions, but is intent on making up rules as they go along, as it suits them,” White wrote in an open editorial letter dated March 3.

According to White’s letter, Committee Chairman Nick Rahall (D-West Virginia) questioned Assistant Secretary of the Interior Carl Artman’s communication with the tribes, of which he was unsure. White’s letter states that Artman testified that the Interior believed in tribal consultation, but reserved it for “special occasions” and explained there was “some communication” with tribes but was unable to specify exact consultations.

“It is a federal obligation that they did not fulfill,” says Logan. “Commutability is not a policy and they are masquerading it as a management tool and guideline.”

White’s letter states that Congressman Dale Kildee (D-Michigan) stated to Artman that “Indian tribes are not social clubs but are sovereign entities requiring more than casual communication.”

Logan says the St. Regis Mohawk Tribe attempted to initiate communications and meetings with the Department of the Interior numerous times in the past year, but that the department has been resigned to a strategy of “delay, delay and deny.”


An Environment for Economic Efficiency?
Both sides argue that the economic benefits of the tribes is its top priority. In the Department of Interior’s letter of denial to the St. Regis Mohawk Tribe and others, the department clearly states that the remote location of the proposed gaming facility can have significant negative effects on reservation life. The letter states that since the proposed casinos are not within a communicable distance of the reservation, residential tribal members would not be able to take advantage of the job opportunities if they want to remain on the reservation, or would be forced to move away to take advantage of the job opportunities. Neither scenario does anything, the department states, to cure the problem of high unemployment rates that plague most of the tribes.

Employment of tribal members is an important benefit of tribal economic enterprises and the department is concerned that the departure of a significant number of reservation residents and their families could have serious and far-reaching implications for the remaining tribal community and its continuity as a community.

With the majority of tribes located in isolated rural areas, Logan and other tribal representatives worry that the “blanket guidelines” issued by the department will effect numerous smaller tribes who are attempting to place land into trust for residential use, not only for off-reservation gaming.

“There has to be a way for tribes to become more economically self-sufficient,” says Logan. “Forty percent of our tribe suffer from a lack of health services and we have a serious housing crunch, too. Every year the federal grants and contracts shrink, while costs and our population continues to increase.”


Moving Forward
In many ways the January issuance of letters of denials to the tribes opened more questions than it answered about the future of off-reservation gaming. Because of pending and possible litigation, many parties involved are reluctant to publicly speak about the issue, but all involved are unsure what the future holds.

Chairman Rahall may suggest legislation into law that ensures tribal consultation during the off-reservation gaming application process, or there may be a reversal from the courts or Congress that returns the applications back to the department for additional review. Another possibility is a grandfather clause, already suggested by several members of Congress that would reanalyze the 11 tribes denied.

“Since we were the closest, furthest along and most supported, if anyone deserves to be grandfathered in, it’s the St. Regis Mohawk Tribe,” Logan says.

Currently, the most likely scenario is held with the pending and anticipated legal action against the Department of the Interior. The St. Regis Mohawk Tribe has filed suite against the department for abuse of office and the failure to follow the letter of the law. Other tribes are anticipated to follow the St. Regis Mohawk Tribe’s lead.

“The department said they welcome any legal response and that is what we did,” says Logan. “If you put a nail in the coffin for off-reservation gaming without due process there are a lot of people who are going to be negatively affected, not just Indians.”  


The Pro-Active Approach

In 2006 I received a research grant from the Sycuan Institute on Tribal Gaming at San Diego State University to document tribal activities related to responsible gaming. Throughout the research period, I collected and analyzed a sample of the responsible gaming programs and materials offered by tribal government gaming facilities in California. I was particularly interested in the scope and effectiveness of current responsible gaming activities in California, including whether there was a coordinated approach to evaluating the effectiveness and the return on investment for these activities.

Tribal governments in California, as in other regions, are proud of their commitment to promoting responsible gaming. Tribal nations have invested heavily in a range of responsible gaming activities, including funding non-profit counseling services, supporting and promoting 24-hour toll-free help lines and committing to employee training about disordered gambling.

Required Reading
While local and state governments have encouraged-and sometimes required-tribal governments to support these activities, there is little or no research about their impacts or outcomes. This lack of documentation and evaluation has hindered public relations efforts since tribal governments and organizations are left to frame their commitments to responsible gaming in solely financial terms, leaving them open to criticism that they are not spending “enough,” regardless of the amount of their investments.

This research on responsible gaming-and the recommendations based upon its findings-is critically important and timely for a number of political reasons, including the negotiation of new and amended tribal-state gaming compacts in California, the publication of a California prevalence study, the creation of a problem gambling prevention program by the state’s Office of Problem Gambling and the tribes’ collective commitment to address responsible gaming.

As in other states such as Washington or New Mexico, where tribal-state gaming compacts specifically allocate funds to responsible gaming, the tribal governments in California are investing heavily in programs and materials about this important issue. But while the academic study of disordered gambling is still an emerging field, there are certain practices that are shown to be more effective than others. Certainly, casinos have an important role to play. Because casino employees and management are on the “front lines” of the problem, training and education of casino personnel is a critical piece of any prevention and education strategy.

There is work to be done, however, to make the kind of progress we all hope for. Currently, responsible gaming programs across tribal gaming facilities in the United States are a patchwork of strategies, principles and practices. And while tribal gaming representatives are committed to the issue and many have taken initial steps to address it, many are unsure of how to develop a comprehensive approach that will have a demonstrable impact and generate a positive economic and political return on their investment. The Indian gaming industry is also unable to fully document its commitment to responsible gaming due to a lack of good data.


Planning for Success
It is my conclusion that there is great need for a coordinated strategy of nation building and corporate governance in Indian Country, and tremendous potential for success in coordinating intertribal political and economic initiatives as they relate to responsible gaming initiatives. There also is an identifiable need for a comprehensive program and science-based, peer-reviewed resources to promote responsible gaming among tribal government employees and guests and to provide meaningful data to the public and policy makers about the Indian gaming industry’s commitment.

In fact, just such a program is now available. The National Center for Responsible Gaming (NCRG) has for the first time made its state-of-the art responsible gaming program available to tribal governments through its new Partnership for Excellence in Education and Responsible Gaming (PEER).

The NCRG is the only national organization exclusively devoted to funding academic research and education that helps increase understanding of pathological and youth gambling. It created the PEER program to give tribal governments full access to the comprehensive set of tools needed to develop and implement a world-class responsible gaming education program, no matter the size of the facility or number of employees.

If a tribal gaming facility decides to become a PEER program member, they’ll have access to an exclusive password-protected section of the NCRG website housing the online PEER Resource Guide, a virtual “one-stop shop” for addressing responsible gaming at your casino.

Yearly Reviews
All PEER education and training materials are based on peer-reviewed scientific research, and the program allows for an annual review of the tribe’s program that can be shared with regulating authorities. The annual report card also can serve as a symbol and measurement of the tribe’s commitment to responsible gaming education. These PEER materials, along with the EMERGE training program for employees, can be customized for tribal content and branding, making them an important way to educate employees about responsible gaming generally, and facility and tribal government information specifically.

For tribal governments who wish to start a new responsible gaming program, complement the one they already have, or satisfy a local or state government mandate that they create one, the PEER and EMERGE programs translate the latest research into practice. My own research revealed the need for a coordinated strategy and the NCRG research has provided the means to achieve one. For more information, I encourage interested parties to visit www.ncrg.org.

Members can view and download materials including:

  • Videos, worksheets and other learning tools for employees
  • Information on responsible gaming training programs, including special member pricing for EMERGE, the premier employee responsible gaming training program
  • Best practices resources outlining elements of successful existing programs, as well as links to examples to help tribal facilities customize their own program or add tribal-specific content
  • Brochures, signage and other materials, educating employees and patrons about responsible gaming, the odds of casino games, unattended minors and related topics
  • Materials and resources for setting up a self-exclusion program
  • Tools and best practices to train employees on preventing underage gambling/unattended minors
  • Guidance in designing and implementing a responsible alcohol service policy
  • Guidelines for advertising.

Turning Twenty

When I was growing up in and around New York City in the 1950s, Indians were a big part of my life. After all, Westerns were the great subject in movies and in the early days of television. So the images of American Indians as the bad guys were shoved down my throat at every turn.

But somehow, the Indians in these programs were much more intriguing than the cowboys. They were invariably brave (if a little too bloodthirsty), and they were almost always honorable (if a little too vicious). They were magic on the screen (even if they were mostly played by white actors).

But mostly, they were something that one encountered in real life only on the great Western plains, not on the East Coast.

In New York City, the only time the Indians were mentioned was when they were receiving $24 in trinkets from Peter Minuet in what could only be described as one of the greatest swindles in history (and now, of course, recognized as a total fabrication).

As I was maturing during the ’60s, I took a great interest in U.S. history and grew to understand that the images presented on the TV and movie screens were just a figment of some writer’s (most likely a white one) imagination.

When I first began to meet actual Native Americans in the late 1960s, I was shocked that their lifestyle had not changed much at all from the days they were forced onto reservations in the 1800s. And when some radical factions of the Native American movement took over the Bureau of Indian Affairs in the early ’70s, I covered that event as a young student-journalist and felt a kinship with the occupiers.

So since my life evolved into a journalist covering gaming more than 25 years ago, I have always been moved by the success that Indian gaming has brought to some of the nation’s poorest and most destitute tribes. I have repeatedly said over the past 20 years that Indian gaming is the best story ever to come out of the casino industry.

While some have criticized gaming as a product and a service with no positive result, all I have to do is to point to Indian gaming as proof that gaming can make a hugely important difference in the lives of ordinary (and extraordinary) people.

In this issue of Tribal Government Gaming, we opted to look at the impact of the Indian Gaming Regulatory Act, 20 years after its passage in 1988. While all previous issues of Tribal Government Gaming have presented the good news about Indian gaming and the impact it has had on tribes and the surrounding communities, this issue takes a look at the controversial IGRA and its ramifications in Indian Country; for it has shaped the Indian gaming industry in ways good and bad.

NIGC Chairman Phil Hogen takes the position that Indian gaming, as defined by the IGRA, represents a great victory.

On the other side of the coin, NIGA’s Ernie Stevens proclaims the California vs. Cabazon decision to be the high-water point of Indian gaming and says the IGRA watered down that victory.

And take the furious Class II debate. While the National Indian Gaming Commission has sought to provide a “bright line” between Class II and Class III gaming machines for years-in order to provide the Department of Justice some clarity about how to identify the two versions of the machines-every proclamation that the NIGC has reached the “eureka” moment has been challenged by both tribes and manufacturers as potential economic disaster for Indian Country.

Judy Shapiro describes the latest machinations that have occurred during the past year, beginning on page 24.

Kate Spilde-Contreras focuses on the important issue of responsible gaming in Indian Country. Native Americans have always had a compassion for people, both on the reservations and off, so Kate’s important work in this area should be understood, starting on page 8.

David Schwartz, who is quickly becoming the leading researcher in the gaming industry, gives us a historical perspective of the IGRA and Indian gaming pioneers on page 16.

And finally, we examine some of the ways Indian gaming has impacted its communities, tribes and the commercial gaming industry, with three stories on economic diversification, technological advances in gaming equipment that began in Indian Country and possible changes to the IGRA being contemplated by Congress.

We hope you enjoy this fifth annual edition of Tribal Government Gaming. As always, it is dedicated to the men and women of Indian gaming and their commitment to providing a better future for all of us. 

Dogged Determination

For many Americans-especially those who know little about Native American history-it is difficult to understand the depth of poverty that existed throughout Indian Country and continues to persist in some areas today. On most reservations, plumbing and electricity were unattainable luxuries. Tribal governments struggled to provide basic services such as education, health care, fire and police services. Unemployment rates on reservations routinely topped 80 percent.

One of the most significant turning points for tribal governments took place just two decades ago when two California tribes fought for their sovereign right to create economic opportunity on the reservation. In 1987, the United States Supreme Court ruled in California v. Cabazon Band of Mission Indians and Morongo Band, that Indian tribes have “sovereignty over their members and their territory,” and that states have no right to interfere with tribal self-government. The high-stakes bingo operations run by these two tribes were protected aspects of tribal sovereignty because in the words of the court they “are generating value on the reservations through activities in which they have a substantial interest and they dedicate bingo revenues to promoting the health, education, and general welfare of the tribal members.”

The decision in Cabazon represents a significant milestone for Indian Country and is critical to the achievements we are seeing today. It offered tribal governments hope and an opportunity to lift up their economies after two centuries of government policies that sought to terminate tribal governments. This decision lit the fuse for a brand new wave of economic development for Indian nations.

Unfortunately, following the Supreme Court’s decision, California and other states turned to Congress in order to limit the reach of the Supreme Court’s ruling.

Barely a year later, Congress passed the Indian Gaming Regulatory Act (IGRA) in 1988. While the law has become synonymous with solidifying and protecting tribes’ future in gaming, make no mistake about it; IGRA is a diminishment of tribal sovereignty. Tribes were forced to surrender hard-fought gains in self-government through the collective will of Congress and the states.

The passage of IGRA also did not mark the end of disputes or controversy between states and tribes. In fact, challenges continually occur on both state and federal levels. In 1992, the Supreme Court ruled against the Seminole Tribe of Florida and invalidated IGRA’s mandate that states must negotiate gaming compacts in good faith.

Recently, the Fifth Circuit Court in Texas ruled against the Kickapoo Tribe and U.S. Department of Interior over Class III compacting rights. Due to the Seminole decision, the state of Texas has been able to stall compact negotiations with the Kickapoos and other Texas tribes.

The Kickapoo Tribe sought to invoke the Interior’s alternative compacting procedures and offer gaming as an economic opportunity for its tribal members. However, the Court found the Interior’s alternative compacting regulations invalid, leaving the Kickapoo Tribe without an adequate remedy to challenge the state of Texas’ reluctance to enter into good faith compact negotiations.

The National Indian Gaming Association and its member tribes stand united in their support for all tribes that have been wronged for years as a result of the Seminole decision. The Kickapoo Tribe and tribes in other states trying to negotiate compacts, are deprived of a right that they have retained since long before the United States became a country: the right to engage in economic development as a sovereign government.

However, one thing is for certain: since the Cabazon ruling, states that have gaming compacts with tribes have benefitted greatly.

According to NIGA’s 2007 preliminary Economic Impact Report, tribal gaming is not only continuing to succeed, it has contributed to the economic health of states, counties and local municipalities.

Nationwide last year, 223 Indian tribes in 28 states used Indian gaming revenues to create new jobs, fund essential government services and rebuild communities. This is just a snapshot of what tribal governments generated in 2007:

  • $26 billion in gross revenue from Indian gaming (before wages, operating expenses, cost of goods and services, capital costs, etc. are paid)
  • 700,000 jobs nationwide for American Indians and our neighbors (direct and indirect jobs created by Indian gaming’s economic multiplier effect)
  • $8.9 billion in federal taxes and revenue savings (including employer and employee social security taxes, income taxes, excise taxes, and savings on unemployment and welfare payments)
  • $2.5 billion in state taxes, revenue sharing, and regulatory payments (including state income, sales and excise taxes, regulatory payments and revenue sharing pursuant to tribal-state compacts)
  • More than $100 million in payments to local governments


In a similar study released recently, researchers at the University of California Riverside released a report that Indian gaming in California significantly reduces poverty and improves employment, incomes and educational attainment in communities near the casinos, particularly in the poorest regions of the state.

The report, “Lands of Opportunity: Social and Economic Effects of Tribal Gaming on Localities,” was presented in the September issue of Policy Matters. Authors of the report found that gaming operations have beneficial effects on the tribes, on communities near gaming reservations and on California generally.

Because tribal casinos are generally located in poorer regions of the state, economic activity resulting from tribal government gaming tends to concentrate employment and other benefits in counties that need economic development the most, the study said.

In California, tribes opened at least 25 casinos in the early 1990s, not long after Congress passed the IGRA. Today, 57 tribes operate casinos in the state. Analysis of U.S. Census data reveals the benefits have been significant. According to the University of California Riverside study:

  • California’s gaming tribes experienced a 55 percent increase in average income per capita between 1990 and 2000, compared to a 15 percent increase on non-gaming reservations. The average income per capita on California’s gaming reservations was $12,526 in 2000, only 53 percent of the average income for all Americans, the researchers found.
  • The number of families living in poverty on the state’s gaming reservations dropped from 36 percent in 1990 to 26 percent in 2000, the researchers found. Even so, poverty rates were more than twice as high as the state and national averages.


This study, like others, demonstrates that Indian gaming has improved both social and economic results on tribal lands and their surrounding areas. Each and every day, tribes across this country create more jobs and fuel the economies of the states and the nation while building new schools, health clinics, housing, police and fire protection, as well as the many infrastructure needs of their communities.

As we acknowledge the 20th anniversary of the Cabazon decision, we are reminded that the decision merely upheld tribes’ inherent sovereign right to govern their internal affairs. This is a right that our ancestors fought and died for and that commitment is embodied in the constitution and our treaties. Our tribal citizens, elders and ancestors would expect nothing less than for the current generation to hold the federal government to their word.

As Indian Country moves forward, we are determined to continue building upon the positive economic gains we have made since Cabazon while continuing to defend our sovereignty and right to tribal self-government. We hope to make good on these promises so that our future generations have the same opportunities to improve the lives of not just our tribal citizens, but of all citizens living in this great country.

Happy Birthday, IGRA

If ever a congressional enactment deserved a big birthday cake on its 20th birthday, the Indian Gaming Regulatory Act (IGRA) would certainly qualify. While there was cautious optimism that this legislation would foster economic development in Indian country when passed in 1988, I doubt that any of the sponsors or supporters would have envisioned the vibrant healthy industry that the act has fostered. In commemorating this landmark legislation, it must be quickly noted that it was not IGRA that started the Indian gaming industry, rather, IGRA “caught up” with a burgeoning, albeit small, Indian gaming industry that was the creature of tribal ingenuity, entrepreneurship and tenacity, sometimes in the face of formidable obstacles. Again, “Indian gaming” is not a federal program; the Indian Gaming Regulatory Act merely gave some structure to economic development tools that many tribes were already utilizing and likely would have further developed in some similar form had the legislation not been adopted.

Historically, the legalization and success of gambling businesses in the United States has been cyclical. The Indian gaming industry fortuitously began its growth, fostered by IGRA, after other jurisdictions, primarily Nevada, learned difficult lessons about the risks of inadequately regulating legalized gambling. Building on those lessons, the Indian gaming industry, and the approach which was taken to its regulation, got a running start.

All effective gaming regulatory structures first focus on making suitability determinations for those who participate in gaming’s operations; secondly, they write and enforce rules to assure the fairness of the play by the gamblers and the operators of the gaming facility; and thirdly they intensely follow and document the flow of revenues to assure that the proceeds remaining after payment of the prizes flow to the intended beneficiaries. In the case of Indian gaming, IGRA not only mandates that these three principals be followed by tribal operations, but that tribal governments place such requirements in their tribal gaming ordinances that govern gaming in Indian country.

IGRA rightfully placed primary responsibility for the regulation of tribal gaming on the tribes themselves. The tribes have responded magnificently to that challenge. Today, tribal gaming commissions or tribal gaming regulatory authorities are among the most sophisticated regulators anywhere in the gambling industry. Congress created the National Indian Gaming Commission (NIGC) to validate the regulation primarily tasked to the tribes, giving NIGC a general oversight role, and specific oversight role with respect to class II or bingo and similar games. States roles are to be determined by the compacts tribes would negotiate with them for the regulation of casino gaming. While there have been instances of concern in the 20 years that IGRA has been applicable, the vast majority of tribal gaming has been problem free and has proved to be the economic development tool Congress intended in IGRA.

One of the more specific changes which IGRA brought about 20 years ago was to remove the absolute prohibition of “gambling devices in Indian Country,” which had been imposed with the enactment of the “Johnson Act,” passed by Congress in 1951. Court victories which tribes won over states that attempted to apply state criminal limits and regulations to tribal gaming, such as the landmark Cabazon decision in 1987, established tribal rights to regulate their gaming on their lands.

Slot machines and electronic facsimiles of games of chance-far and away the largest revenue generators in modern gaming facilities-were not permissible until IGRA’s enactment. Such gaming, of course, even under IGRA, is only permissible if tribes enter into negotiated Class III compacts with their states for that activity. Those compacts increasingly bring the requirement of sharing gaming revenues with states in exchange for some degree of exclusivity to conduct casino gaming. Today several states look to tribal gaming revenue sharing as a major source of funding. A continuing challenge to the Indian gaming industry is to clearly identify the dividing line between computers and electronic and technologic aids which tribes may utilize to play bingo and such “Class II” games, from that equipment which remains impermissible under the Johnson Act without a tribal-state compact.

Not withstanding the presence of some ongoing challenges, the success of the economic development IGRA has helped bring to Indian nations, Indian people, and the communities where they are located, cannot be questioned. Like so many other industries, gaming flourishes best in densely populated metropolitan areas, and of course many tribes are in remote and rural areas, where huge revenues cannot be generated from gaming. However, even many of those tribes bring needed employment to their reservations with their bingo halls and small casinos. With gaming revenues, tribes have been able to meet the needs of children, education, elders, health care and many other areas, which otherwise would go unmet.

For decades, many tribal nations were practically invisible in their states and communities. With the economic success gaming brought, they have finally been recognized and respected as they had not been previously. Throughout Indian Country, tribal members walk with a new spring in their step, and a new sparkle in their eye, due in no small part to the fruits and success of Indian gaming, built on the framework which IGRA’s passage 20 years ago established.

Happy birthday, IGRA, and many happy returns!