Tribes make most of Indian gaming law
By George Brennan
March 31, 2013
The seeds of a $500 million casino in Taunton proposed by the Mashpee Wampanoag Tribe were planted in 1988 in the waning days of President Ronald Reagan's second term.
Reagan signed a law that allowed Indian casinos on reservation land, a direct reaction to a 1987 U.S. Supreme Court decision in California v. Cabazon that ruled states had no authority over Indian government activities, including gaming.
"The backdrop for all of this really predates the (Indian) gaming of the 1970s," Steven Light, an Indian gaming expert, said. "The true backdrop is a lot of poverty and few economic development opportunities for the rural, mostly reservation-based tribes, across the United States."
Light and Kathryn Rand are co-directors of the Institute for the Study of Tribal Gaming and Policy at the University of North Dakota and have co-authored two books on Indian gaming.
"Both Congress and the tribes were desperately looking for some means to build tribal economies," Rand said.
At the time, Indian gambling was a fledgling $100 million industry — mostly bingo halls — with little or no oversight. The 1988 law signed by Reagan, known as the Indian Gaming Regulatory Act, was considered a compromise aimed at providing federally recognized Indian tribes an opportunity for economic development and, with that, an opportunity for self-sufficiency for tribes facing serious poverty. At the same time, it provided federal oversight and an opportunity for state governments to cut a deal with tribes looking to offer gambling inside their borders.
One of the biggest misconceptions about Indian casinos is that tribal sovereignty means they are unregulated, Light said. "In fact, it is the most highly regulated form of gambling in existence in the U.S.," he said. "There is a regulatory role for the federal government, the state government and tribal governments — three levels of regulation. Commercial casinos — Trump's casino, Wynn's casino — are not regulated by three levels of government."
Few could have predicted that passage of the Indian Gaming Regulatory Act would make tribes synonymous with casinos. The new law opened the floodgates and paved the way for behemoths like Foxwoods Resort Casino and Mohegan Sun in Connecticut.
Today, Indian gaming is a $27.4 billion industry with 242 tribes operating casinos in 28 states as of 2011, according to the Indian Gaming Industry Report, an annual research report conducted by economist Alan Meister of Nathan Associates Inc. and published by Casino City Press.
"I think it's pretty clear now that Congress had no idea the Pandora's box it was opening when it created this law," said Robert Steele, a former congressman from Connecticut and author of "The Curse: Big Time Gambling's Seduction of a Small New England Town." The 2012 novel is based on Connecticut's experience with the Mashantucket Pequot tribe, which opened Foxwoods in Ledyard, Conn., in 1992. "It opened the door to tribal casinos, but also the spread of non-Indian commercial casinos as well."
game changer
Indeed, it was the 2007 acknowledgement by the federal Bureau of Indian Affairs of the Mashpee Wampanoag Tribe's existence that ignited the push for legalizing casinos in Massachusetts. Various proposals had languished for decades until the state Legislature agreed to a bill in November 2011 that provided for three casinos in the Bay State, including one that recognized the federal rights of Indian tribes, as well as a single slot parlor.
The Mashpee tribe has applied with the Bureau of Indian Affairs for an "initial reservation" under that 1988 federal law, an exemption that allows a tribe recognized after 1988 to open a casino on tribal lands. That application is still pending with the Bureau of Indian Affairs and faces a legal tangle.
Tribe leaders say it's that federal law that makes its casino in Southeastern Massachusetts "inevitable." Opponents say the hurdles tossed in the way by two U.S. Supreme Court rulings make a tribal casino highly unlikely. The Carcieri decision calls into question the authority of the Department of the Interior to take land into trust for tribes recognized after 1934. And the Patchak decision gives property owners opposed to a casino up to six years to file a lawsuit.
The Massachusetts Gaming Commission has been given a role under state law to determine whether a tribe casino is "inevitable" or "unlikely." It's a task that commission Chairman Stephen Crosby acknowledged is daunting at a March 21 public meeting on the topic.
"We know there are strong interests, strong rights, strong economic impacts, strong emotions on many sides of this issue," Crosby said during the meeting.
The tribe has estimated it could have shovels in the ground by the end of 2014. Opponents put the estimate at six to 10 years, if ever.
corruption concerns
With the onslaught of Indian casinos in the 1990s and 2000s came something else inevitable.
Rand said Congress had worried when it passed the law in 1988 that organized crime would infiltrate Indian casinos. That never materialized.
Political corruption, on the other hand, was rampant — much of it surrounding disgraced lobbyist Jack Abramoff.
Abramoff's misdeeds are well-documented — using political payoffs and influence to help tribes gain federal recognition that ultimately would lead to the right to build casinos.
The Mashpee Wampanoag had a leadership scandal of its own. Former tribal council Chairman Glenn Marshall pleaded guilty to political corruption and embezzlement charges in 2009 and served more than three years in federal prison.
Despite what happened with Abramoff and the Mashpee tribe, Light and Rand say the Indian Gaming Regulatory Act has by and large done what it was supposed to do. Most Indian gaming facilities across the country are not like the Connecticut giants, but are more modest facilities aimed at providing jobs for tribe members and a revenue stream for the tribe.
"Folks tend to think about Foxwoods and the Pequots as the example of Indian gaming," Rand said. "But out here in North Dakota, our tribes more typically have thousands of members, our tribes have more typically experienced generations of extreme poverty — 50 percent unemployment or more on our reservations."
That 50 percent matches the unemployment rate among the 2,600 members of the Mashpee Wampanoag Tribe, Chairman Cedric Cromwell said. The tribe's casino would not only provide much-needed jobs, but would boost health care outreach, housing and education, Cromwell said.
"We want to create a situation where our people can be lifted out of poverty," Cromwell said. Indian gaming will give the tribe the ability to provide self-determination and self-sufficiency by giving resources to a tribe that he said has been "underfunded" and "severely neglected" by the federal government. "It's very important for us to provide for our services to our people and lift our people — give them a hand up so they can have a better quality of life."
In recent days, after an Associated Press story on the tribe that owns Foxwoods receiving $4.5 million in federal grants over the past five years despite years of earning millions in casino cash, Indian casino opponents have pointed to that as galling.
Rand said while she understands the outrage, federal support for tribes is not need-based. "That's part of federal government's obligation to protect and assist tribes because of the long historical circumstances between tribes and the federal government," she said. "That responsibility exists regardless of the relative wealth of the tribe."
too many casinos?
Connecticut got hooked on the revenue it receives from Foxwoods and Mohegan Sun, Steele said. The tribes were in the right place at the right time and have had a nearly two-decade monopoly on the New England gambling market, he said.
Now with Massachusetts about to enter the game and New York expanding, the Connecticut casinos are hurting from the competition.
The proliferation of Indian and commercial casinos is reaching a saturation point, Steele said. Revenue from Foxwoods and Mohegan Sun to the state of Connecticut is down more than $130 million per year from its peak of $430 million, he said. Once Massachusetts casinos open and New York expands, the future doesn't look bright for the Pequot or the Mohegan tribes, he said.
"I keenly appreciate how enormously attractive and seductive these offers seem to be on the surface," Steele said of casino revenue. "You look at what's happening in Connecticut and if you were having the same debate again in Massachusetts about legalizing casinos, it's hard to believe you'd come to the same conclusion."
Both Light and Rand said that, back in 1988, there was no crystal ball to predict the explosion of Indian casinos across the country or the voracious appetite of consumers for gambling.
Tribes have proven they are capable of operating successful, complex enterprises like casinos and leverage them into fairly robust tribal economies. Ultimately, that's what the intent of the Indian Gaming Regulatory Act was all about, Rand said.
"There may have been an assumption that this wouldn't go very far because tribes didn't have the capacity to take it very far," Rand said. "But tribes have taken the opportunity of Indian gaming and used it to as full advantage as they possibly can for tribes and tribe members."
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