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Bits and Pieces from Indian Country – January 2006

12 March 2006

It sounds like a broken record: what is happening in Indian Country? Congressional investigations. It is still the truth. Until Congress concludes investigating Abramoff and lobbying and passes new legislation based on the findings from hearings on sovereignty and the Indian Gaming Regulatory Act, we won't know what is new in Indian Country. Congress is poised to redefine the landscape and all we can do is wait and watch. Abramoff's influence is going to have a greater effect on some members of Congress than on any tribe - except in exposing the inside politics of tribal recognition and battles between tribes for casino opportunities. The hearings are the real battle point for tribes - there is a great deal of pressure to change the recognition process and severely limit off-reservation gaming.

Former high-powered lobbyist Jack Abramoff pleaded guilty today to three felony charges in a deal with federal prosecutors that helps clear the way for his testimony about members of Congress and congressional staffers in a wide-ranging political corruption investigation… The plea bargain settles one of two fraud and corruption cases against Abramoff, involving charges stemming principally from his lobbying activities in Washington on behalf of Native American tribes. The other case, arising from an indictment in Miami in connection with the purchase of a fleet of casino cruise ships, is expected to be settled by another plea agreement. William Branigin, Susan Schmidt and James V. Grimaldi, Washington Post, 1-3-06

Gaming is not the only place where sovereignty is under closer scrutiny and attack. Taxation is a major issue - the question of what state taxes a tribe must collect at on-reservations businesses has been a central one for years. Both cigarette and gasoline taxes (and in rare cases, property taxes) are the taxes contested. Oklahoma, as are some other states, is also trying to use taxes as a way to back into more control of gaming.

The Supreme Court on Tuesday ruled that states have the power to tax fuel sold on Indian reservations…high court said Kansas can tax distributors who sell fuel at an Indian-owned and operated gas station near the Prairie Band Potawatomi tribe's casino. Most of the Nation Station's fuel customers are patrons of the casino, which is 15 miles north of Topeka…"Kansas law makes clear that it is the distributor, rather than the retailer, that is liable to pay the motor fuel tax," Thomas wrote. "While the distributors are 'entitled' to pass along the cost of the tax to downstream purchasers ... they are not required to do so." The tribe had argued that it already collects taxes on fuel to pay for maintaining the reservation's roads… Toni Locy, Associated Press, Newsday, 12-6-05

Gov. Brad Henry on Monday said he will ask legislators to beef up enforcement tools…proposals are aimed at a small group of wholesalers and tribal tobacco store owners who have been circumventing tobacco compacts and state laws by selling cigarettes with 6-cent stamps on packs. Tax Commission figures show about 70 percent of the tobacco stamps sold to tribal stores were the cheapest 6-cent stamps that are to be sold in areas close to Oklahoma's borders. Henry said he will ask legislators…that no wholesaler will be allowed to sell tobacco products to a tribe or tribal retailer for resale without such tribe or tribal retailer being licensed as a wholesaler by the state…Cherokee Nation Principal Chief Chad Smith said his tribe is looking for a "reasonable long-term solution to the tobacco tax situation created by the state repealing the sales tax on tobacco." Michael McNutt, Oklahoman, 12-13-05

Suffolk County police officers first showed up on the Unkechaug reservation on Thursday, about eight marked cars with lights flashing, and returned for the next four days, warning potential customers that they could suffer criminal prosecution if they purchased untaxed cigarettes on the reservation. Since the beginning of the operation, police officers have made six arrests involving felony charges. Unkechaug Chief Harry Wallace called the police presence an exercise in intimidation and harassment, an assault on tribal sovereignty and an operation that is disseminating false information about the law. But officials with the Suffolk County district attorney's office say the operation is part of an initiative to fight tax crimes and that possession of untaxed cigarettes by non-Indians is indeed a crime. While the fliers they have handed out to would-be customers state that possession of any untaxed cigarettes or tobacco products is a crime, officials say they are only going to arrest those buying in bulk with the intention of reselling. Keiko Morris, New York Newsday, 12-13-05

The days when states rolled over easily and agreed to gaming compacts without a fight are over. There are tribes that would argue that the states never just rolled over and agreed - in Oklahoma and Florida the fight has last over 15 years and in Florida is just entering into another round. Oklahoma tribes finally got compacts last year, after agreeing to a "contribution" (not a tax) to the state from slot revenues, and Florida appears to be headed toward some compromise compact this year if the tracks get slots. South Carolina is still a battleground, and Montana was forced into an agreement by a federal mediator. Given the mood in Congress it seems likely that tribes will face continual battles to maintain the level of sovereignty that they enjoy - if that is the right word - today. Victories, such as the one in Montana will become rare indeed.

A judge ruled Tuesday that a 1993 agreement allows the Catawba Indian tribe to operate video poker on its reservation despite a statewide ban on the practice. But even before the ruling, the tribe's governing body was already looking to trade that right for the ability to operate a gaming facility in Orangeburg County. Judge Joseph Strickland said a portion of the settlement reached between the tribe and state and federal governments includes an exception to the statewide ban that is "contingent upon the game being operated by the Tribe after approval by the governing body of the Tribe." One sentence of the settlement says the tribe may permit video poker on its reservation "to the same extent that the devices are authorized by state law." But the paragraph also says that if the reservation sits in counties that prohibit video poker, "the tribe nonetheless must be permitted to operate the devices on the reservation if the governing body of the tribe so authorizes." The tribe sued the state in July over the ability to operate video poker on its 760-acre reservation, in York and Lancaster counties. The tribe says profits at its Rock Hill bingo hall dropped by nearly half when South Carolina adopted a statewide lottery in 2002. Meg Kinnard, Associated Press, Beaufort Gazette, 12-14-05

The Department of Interior has rejected the state's request that it require the Northern Arapaho Tribe to pay money to the state under the terms of a proposed gambling compact the state rejected a few years ago…saying the federal government would not require the tribe to pay $450,000 a year. The letter basically told the governor that the state has no standing for further negotiations with the tribe. "However, it is reasonable for local governmental entities themselves to negotiate local impact costs directly with the Tribe," Skibine wrote…Last month, Freudenthal wrote a letter to Richard Brannan, chairman of the Northern Arapaho Business Council, and Interior Secretary Gale Norton, asking each to explain why Interior did not include in its gambling procedures any "significant" provisions of an offer made by the Arapaho in 2002 in the form of a compact that was later adopted by a mediator. The letter focused on $900,000 that would be reimbursed to the state for inspection and oversight in the first two years of gambling operations, money that would be distributed to Fremont and surrounding counties. In response, Skibine wrote that the department could not require the tribe to pay the state $450,000 for regulating gaming, when the state won't have any regulatory responsibilities. All regulatory costs will be borne by the Northern Arapaho and the National Indian Gaming Commission. Jackson Hole Star-Tribune, 12-14-05

2006 does not look as good to me for Indian gaming as it does for the rest of the industry. With the exception of Foxwoods, few tribes will share in the opportunities presented by expansion into new jurisdictions, national or international. And unlike the rest of the industry, Indian gaming is faced with major new federal regulation that does not bode well for gaming tribes. In fact, I am hard pressed to think of one good outcome of the hearings, investigations and proposed legislation in Washington. The grim federal picture does not mean that some tribes will not be having great years. There will be more expansions in California; the Florida tribes should finally get a compact; Oklahoma is only beginning to see the results of Class III games; New York may finally see the expansion promised in 2001; and in general most tribal casinos are healthy and will continue to prosper - although most will be facing increased competition from other tribes and expanded conventional gaming. However, I can no longer see any event or trend that will dramatically improve or increase Indian gaming, not in 2006 or afterwards.

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.