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Bits and Pieces from Indian Country - December 2005

12 February 2006

The battle continues. Following the statement last month from Senator McCain that Congress needed to revisit the National Gaming Regulatory Act, Representative Richard Pombo of California is introducing a bill that would limit tribal options for off-reservation casinos and give local governments and other tribes more say in the process.

"It must be revisited, and we will," McCain told leaders of the nine main tribes in Oregon during a meeting at Portland State University…"This is an industry with a long history of corruption, so we'll just have to respectfully disagree…"I can't go back and change history," McCain said. "I'd like to go back and right all those wrongs. But all I can do is try to right the wrongs that are before us now." Seattle Times, 10-25-05

A key House Republican wants local communities to have a vote on plans by Indian tribes to build casinos away from their reservations…draft legislation released Monday by Rep. Richard Pombo, R-Calif., chairman of the House Resources Committee that oversees tribal issues. "We're trying to make sure that local governments have a role to play and their voices are heard," Pombo said in an interview…Bar tribes from moving across state lines to build casinos off their reservation land, something they now can do in some situations; Require the Interior secretary to determine that an off-reservation casino is in the best interests of the tribe and the surrounding community. Currently, the Interior secretary only has to find that an off-reservation casino is in a tribe's best interest and is not detrimental to the surrounding community; Require the governor of the state and the state Legislature where the casino would be built to agree with the Interior secretary's findings. Presently, only the governor has to agree; Require nearby Indian tribes to also agree with the Interior secretary's findings. Erica Werner, Associated Press San Francisco Chronicle, 11-1-05

As if it is needed, the investigation into the lobbying of Abramoff and Scanlon keeps Indian gaming in the public and Congress' eye, and not in a favorable light in case you haven't noticed. Years ago before Indian gaming was anything but a once-a-week bingo game or a couple of slots and blackjack tables in someone's garage, attorney Nelson Rose said that the one serious threat to the then burgeoning spread of gaming was scandal. He sited the history of lotteries and table games at the end of the 19th and beginning of the 20th century to make his case. It would seem that we are finally getting a scandal, one that is national and attracts national attention on a grand scale. This month we have had a couple of indictments and a guilty plea. This case would be bad enough for gaming in general and Indian gaming in particular if it was just about a couple of corrupt people. This case, however, threatens to involve each of the major parties and some of the leadership. In a time of highly polarized politics, the political element in this case makes gaming much more vulnerable to reforms and some kind of national oversight. The conversation currently is only about Indian gaming, but could easily bleed over on the entire industry.

Sen. John McCain (R-Ariz.) has called on the former No. 2 official at the Interior Department to testify before a Senate panel investigating lobbyist Jack Abramoff and his involvement with Indian gambling tribes. The official, J. Steven Griles, who served as deputy interior secretary from 2001 to the beginning of this year, was involved in efforts to help two of Abramoff's clients - the Louisiana Coushatta tribe and the Saginaw Chippewa tribe of Michigan - fend off casino proposals from rival tribes and may have done so while engaged in employment negotiations with Abramoff, recent news reports have said. Griles has said through spokespeople that he did not play a major role in endeavors to aid the tribes. The development marks the first time McCain has taken direct aim at the administration during the Indian Affairs Committee's year-and-a-half-long investigation of Abramoff, his associate Michael Scanlon and their efforts to extract more than $80 million in lobbying and public-relations fees from Indian tribes. Josephine Hearn, The Hill, 11-1-05

[Michael Scanlon] pleaded guilty yesterday to conspiring to bribe a congressman and other public officials and agreed to pay back more than $19 million he fraudulently charged Indian tribal clients…The document also indicated the nature of testimony Scanlon is prepared to offer against a congressman it calls "Representative #1" -- who has been identified by attorneys in the case as Rep. Robert W. Ney (R-Ohio). Scanlon, a 35-year-old former public relations executive, faces a maximum five years in prison and a $250,000 fine, but the penalty could be reduced depending on the level of his cooperation with prosecutors. His help is expected to be crucial to the Justice Department's wide-ranging Abramoff investigation, which began early last year after the revelation that Scanlon and the lobbyist took in tens of millions of dollars from Indian tribes unaware of their secret partnership to jack up fees and split profits. Investigators are looking at half a dozen members of Congress, current and former senior Hill aides, a former deputy secretary of the interior, and Abramoff's former lobbying colleagues… James V. Grimaldi/ Susan Schmidt, Washington Post, 11-22-05

A government watchdog group Tuesday asked Congress to investigate whether lawmakers broke ethics rules by taking action that benefited lobbyist Jack Abramoff's tribal clients while accepting political donations from the lobbyist or the tribes. Democracy 21 urged the House and Senate ethics committees to investigate following an Associated Press story last week that found several members of Congress intervened with letters to Interior Secretary Gale Norton within days of receiving large contributions from tribes represented by the lobbyist or using Abramoff's restaurant for fundraising. Associated Press, San Francisco Chronicle, 11-22-05

The Department of Justice is working diligently to control the spread of Class II games. Dissatisfied with the NIGC's ruling on what constitutes a Class II game, the DOJ considers most Class II games Class III, the evil slot machine that cannot be transported across state lines as defined by the Johnson Act and is subject to federal law, and of course, federal prosecution. In Oklahoma the state is trying to use the DOJ's stance to force the tribes (and there are 19 in Oklahoma) to replace the 24,000 Class II games currently in operation with the Class III games allowed in the recent compacts. The reason is, of course, money. Oklahoma (nor does California or any other state) gets no cut of the Class II revenue. However, Oklahoma successful negotiated compacts with the state's tribes for Class III games from which the state does get a cut. Oklahoma expected and budgeted over $40 million the first year from the new compacts; so far, only 3000 Class III games have been installed and the state has collected less than $2 million.

…Two factors may reverse that trend, although neither will happen overnight. One possibility is federal legislation that would force Oklahoma tribal casinos to remove their current electronic games in favor of ones on which the state receives a share. The U.S. Justice Department recently proposed the legislation to establish a clearer line between Class II games, which are based on bingo and pull tabs, and Class III games, which include Las Vegas-style slots and card games. Oklahoma tribes pushed for a compact to offer certain Class III games. However, nearly a year after those compacts were signed, only 3,000 of the state's 27,000 machines are of the compacted variety. Tony Thornton, Oklahoma, 11-30-05

Oklahoma was supposed to be the growth state for Indian gaming this year, but like the new compacts in California, the government did not exactly get what it expected. With the hearing and pending legislation in Congress, new off-reservation or out-of-state locations are not likely, at least in the near-term. All of the debate about control and limiting Indian gaming is at a time when Indian gaming is more popular with the general population that ever before.

There's growing belief that Native American tribes, along with America at large, are winning with Indian gaming…67 percent of the 1,000 U.S. residents…supported Native American casinos, up from 64 percent in a 2002 survey…72 percent, 14 percentage points more than three years ago, believed tribal gaming benefits states and local communities… Andy Behrendt, Green Bay Press Gazette, 11-22-05

Popular? Just look at Connecticut. If the casinos there were any more popular the state would have to buy more land just to accommodate two casinos. But there are limits even there; new opportunities are going have to be found in other places and other ways. The major tribal operations like the ones in Connecticut can and are buying into the conventional part of the industry, and I suppose it is only a matter of the time before Mohegan Sun and Foxwoods join Harrah's, Isle, Sands and Wynn oversees in their efforts to grow their revenues. There is after all a limit to the billions of dollars one can invest in one property, isn't there? What is the total investment in the two properties at this time? It must be over $5 billion.

Foxwoods Resort Casino…launched a $700 million expansion project…latest Foxwoods development will add 2 million square feet to the casino complex, including a 29-story hotel tower, a 4,000-seat performing arts theater, restaurants and shopping. It also will include 1,500 additional slots and 45 table games…With two new golf courses, spas, exotic restaurants, Broadway shows and thousands of acres available for additional expansion, Foxwoods is now competing as a "lifestyle destination resort," said Robert DeSalvio, the executive "This is big for Connecticut. We want to be able to reach everyone." Rick Green, Hartford Courant, 11-16-05

The National Indian Gaming Regulatory Act passed Congress in 1988. In that year there were casinos in just two states, Nevada and New Jersey. Indian gaming was pretty much bingo, although there were a few mini-casinos in remote locations. Congress passed a law to control something that did not exist and that the members of Congress could not have imagined. In 2005 there is gaming in most states, slot machines and casinos within two hundred miles of every American. There are now five huge gaming companies in the nature of the $10-billion dollar Harrah's (which could easily double in size in a couple of years with the new projects and expansions currently being announced), and to the amazement of Senator McClain, one of the original drafters of the NGRA, an Indian gaming industry nearing $20 billion dollars. Congress may impose some controls, but no one is going to reverse an industry as large and as important to the economy as gaming, as witnessed by the impact of Katrina on the Gulf Coast economy. There is still one frontier on which to battle and where some members of Congress still believe they can control gambling, the Internet. Good luck, guys, the cat is out of bag and although there are no major American operators on the Internet, more than half of the players are American. It is a brave new world, and 1988 is the very distant past.

But now, that is simply my opinion, isn't it?

Ken

Ken Adams

Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.

Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.

Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
Ken Adams
Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.

Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.

Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.