Bits and Pieces from Indian Country - September 2006

12 November 2006

By Ken Adams

Washington is an interesting state for gambling. Long thought by gaming observers to be a conservative, almost anti-gambling state, it has proven on closer examination to be very much a pro-gambling state. Even before Indian gaming, gambling was big in Washington. The total revenues from the lottery, charitable bingo, and pull tabs were over a billion dollars. Washington was also one of the four most important sources of tourism and gambling dollars for northern Nevada. The tribes in Washington were ahead of most states in compacting with the state to operate casinos; the Tulalip Tribes signed the first compact in 1991.

With each new generation of Indian gaming, state and local legislators tried to find ways to “level the playing field” for the non-Indian operations. Over time most of those efforts have failed, mostly because the tribes even with the efforts of the legislators have managed to stay ahead of competition with the types of gaming, number of games, and limits that they can offer. There are other issues that contribute to the situation and the gradual decline of non-Indian forms of gaming. The obvious one is taxation; local operators pay a tax that the tribes do not pay. Another issue, one that is beginning to play itself out in other states as well, is anti-smoking legislation. Washington has banned smoking in all public places, but cannot ban it in Indian casinos. That certainly tips the balance even further in favor of the tribes.

Representatives from three of the seven house-banked card rooms currently operating in Spokane County say competition from Northern Quest, anti-smoking regulations, and taxes assessed by local government entities are making it difficult to stay in business. Nontribal gaming operations are having a tough time surviving in Spokane County because of a mix of regulatory and competitive pressures, industry representatives say. Four casinos have shut down over the last five years and others are struggling to turn a profit, raising the specter of other closures as well. At the same time, the nearest tribal casino, Northern Quest Casino, in Airway Heights, steadily has expanded its operations. It now has 1,200 employees, 1,225 electronic games, and 39 gaming tables…Like a bell curve, the number of licensed house-banked card rooms in Spokane County rose annually from 1997 until 2000, and has since dropped off. It was 1997 when the state of Washington legalized house-banked card rooms, and December 2000 when Northern Quest Casino, owned by the Kalispel Tribe of Indians, entered the local gambling market…The number of such card rooms that report their revenues to the state grew here from six in 1997 to 11 in 2000, and was reported at eight in mid-May by the Washington state Gambling Commission. Since then, Bluz at the Bend, at 2721 N. Market, has closed its gambling operations. Rocky Wilson, Spokane Journal of Business, 8-18-06

The tribes have been responsible and productive citizens of the state even if they have not paid taxes directly on their gaming revenue. Besides the people employed by the casinos, the tribes buy their supplies from the local community, and by compact contribute approximately 2 percent of their table revenue to local charities. And as the casinos’ profits substantially improve the living situation on reservations where the standard of living prior to Indian gaming was significantly below the rest of the state, the tribes are diversifying and creating other businesses that also make important contributions to the local economy.

Washington's 29 tribal governments are creating new economic opportunities on Indian reservations and in nearby communities, and are generating tens of millions of dollars in local and state taxes, according to a leading national economist who has just completed a major, two-year-long profile of the state's Indian economy…Tribal governments "are building, buying, selling, hiring and investing like never before," reports Jonathan Taylor, an independent economic consultant based in Cambridge, Mass… The total value-added, multiplier effect of tribal government and enterprise spending within Washington exceeds about $2.2 billion a year. Taylor calculates that sum yields an estimated $141 million in state and local taxes in Washington… For generations, there were few opportunities for employment on reservations. Because reservation land is held by the federal government in trust for tribes, it was difficult or impossible to attract private investment for economic development. Tribal government gaming is the first economic development tool that has been successful on Indian reservations across Washington and revenue from it is being to finance other investments. Ron Allen, Seattle Post-Intelligencer, 8-14-06

If Indian gaming in Washington, with just 29 tribes and 33 casinos, is that important, just how important is Indian gaming in California, with over 56 casinos and close to 60,000 slot machines? Important enough for Governor Schwarzenegger, when he took office, to base part of his proposed financial turn-around on revenues from tribal casinos. He didn’t quite get what he predicted – in fact he has not managed to get much yet. But therein, as the famous bard said, lies the tale. Arnold has been back at the bargaining table, willing this time to grant some significant concessions, while at the same time not tolerating any attempt by tribes to make an end run around him and operate any “gray” games at all. He made significant progress in August, announcing within a week, six new agreements that would gain the state billions of dollars over time and permit nearly another 25,000 slot machines.

Unfortunately for the governor and the tribes, the “guys” in Sacramento have the final say and they won’t. Won’t what? Won’t say – anything, except that they were annoyed by the timing and didn’t like the labor component of the agreements.

Schwarzenegger signs deals with tribes for more slot machines; the announcement came just a day after the state Assembly rejected a similar deal between the governor and the Agua Caliente Band of Cahuilla Indians in Palm Springs. Deals announced Tuesday by Gov. Arnold Schwarzenegger would allow two of California's richest Indian tribes to vastly expand the number of slot machines in their casinos in return for paying billions of dollars to the state. Robert Jablon, Associated Press, 8-28-06

Unless the Legislature acts quickly, by Thursday, Big Lagoon Rancheria's gaming compact will be about as profitable as snake eyes on the craps table. The much-debated compact, signed with Gov. Arnold Schwarzenegger on Sept. 9, 2005, would allow the Big Lagoon Rancheria to own and operate a casino in Barstow, some 700 miles away from the Rancheria's North Coast trust lands. Jessie Faulkner Eureka Times-Standard, 8-30-06

Democrats on Thursday blocked new compacts that Gov. Arnold Schwarzenegger negotiated with five of the state's richest casino tribes, stalling action on more than 22,000 new slot machines until next year. Democratic leaders refused to vote on one bill ratifying the agreements, saying the governor sent details of the compacts too late for proper scrutiny before the end of the legislative session at midnight Thursday. Assembly Democrats defeated a second bill that would have granted a third casino to the Agua Caliente tribe in Palm Springs. Clea Benson, Sacramento Bee, 9-1-06

The failure of the compacts to get legislative endorsement does not necessarily mean they are dead; it just means that for this year, if not dead, they are in a coma. Just as gaming is gaining more prominence in elections in many states, Indian gaming is a significant political issue in those states with Indian gaming. In Washington and Oklahoma, there are Indians serving as representatives in the state legislature. The tribes have money and they spend it in their best interests and that includes electing people who are sympathetic to their cause. We can expect more tribal members to be elected and eventually to have them also serving in Washington, D.C.

Gaming is part of our culture, and it is becoming more of a factor in politics, not in the backroom way of Jack Abramoff and his associates, but in the “up front at the ballot box way” that is at the heart of American politics. Abramoff hurt gaming, and he hurt Indian gaming, but the Abramoff effect as it is being called will eventually pass. We don’t need another of his ilk, but we do need representation.

Gaming needs incumbent and prospective elective officials who are willing to stand up and represent gaming openly. The industry needs to get over its embarrassment and unwillingness to stand in the spotlight and make its case. Gaming pays billions of dollars in taxes and contributes billions more in other expenses and ancillary industries; gaming employs hundreds of thousands of people. In New Jersey the casino workers are being wooed as a block to express, at the polls, their dissatisfaction with the politicians who allowed the casinos to close, which caused the workers to lose wages, benefits, and tips. Every state with gaming casino employees should be encouraged to vote to support their industry, just as autoworkers, steelworkers, and members of other unions vote to support their industries and jobs.

Gaming may be vulnerable to the uncertainties of politics, but it would be less so if all of its employees, investors, and other beneficiaries voted for its best interests.

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

Ken