Tribal Casino Communities Provide Important Lessons for Economic Spin-off

21 August 2002

By David Waddell

The Native American casino gaming industry grew rapidly following the enactment of the Indian Gaming Regulatory Act (IGRA) in 1988 by the United States Congress. IGRA outlines what procedures a Tribe must compile with in order to open a Las Vegas style casino gaming facility. In addition, IGRA created a federal agency called the National Indian Gaming Commission to regulate and oversee tribal casinos in the United States. This federal law requires that any Tribe that wants to operate a casino first obtain an agreement, called a Tribal-State Compact, to operate a casino. The Compact outlines certain provisions for how the tribal casino must operate, what the state oversight role will be, what games can be offered, the location of the casino and the fees paid to the state in connection with the operations.

There are some states, such as Florida and Alabama, that have refused to negotiate Compacts because they contend that federal law does not require them to do so. Other states that have entered into Compacts for casino style gaming have had issues related to the requirements or obligations that can be put on a Tribe. These two issues are extremely contentious and the source of litigation in a number of states. However, Native American gaming has rapidly become a large employer in Michigan and elsewhere. It is an Industry that is often misunderstood in that the federal government (not the state) is the primary regulatory body that oversees its operation. In addition, it is an industry that is regulated to assure that the public interest is protected and that the games are fair. Also, several studies have been conducted that indicate it is an important economic engine for the municipalities where tribal facilities are located.

Native American gaming has grown each year since its inception. It has helped Native American Tribes become self-sufficient, creating jobs and generating revenue for Tribes that were once some of the most economically depressed people in our country. There are 340 Native American gaming facilities in the U.S., operated by 212 different tribes. Tribal casinos can be found in 30 of our 50 states. Twenty-three states have Tribes that operate Class III gaming facilities, which can include slot machines, video and electronic games of chance, house-banked card games, craps, roulette and pari-mutuel wagering. Five states have Tribes that operate Class II gaming facilities, which are allowed to offer bingo, pull-tabs, lotto, punch-boards, tip jars, instant bingo and certain non-house banked card games. Two states offer tribal gaming run by non-profit organizations. The industry employs nearly 300,000 people nationwide and pays about $5.5 billion in employee wages. Last year alone, tribal gaming facilities generated approximately $12 billion in gaming revenue (net win of the facility minus pay-outs to winners). Tribal gaming facilities generated another $1 billion in non-gaming revenues (food, beverage, hotel, retail and entertainment revenues at gaming facilities).

The 46 Native American gaming facilities in California generated a total of over $2 billion in gaming revenue last year, leading the country. Connecticut's tribal gaming industry, with just two facilities, brought in over $1.7 billion in 2001. Wisconsin, with 28 tribal casinos; Michigan, with 18; and Minnesota, with 19 facilities, each generated nearly $900 million in gaming revenue last year. Moreover, tribal gaming facilities nationwide continue to expand. Gaming space has increased and, along with it, the number of slots and table games offered. Beyond that, hotels are springing up and growing larger in tribal casino vicinities. Restaurants, bars, theaters and various other entertainment venues have been a part of the expansion process surrounding tribal gaming facilities. Considering both primary and secondary economic impact, it is estimated that the United States' Native American gaming industry contributed about $32 billion in net economic output, and $12.4 billion in wages paid to nearly 490,000 employees.

No place are the economic spin-off benefits more obvious than in the Northern Michigan communities which host tribal casinos such as Sault Ste. Marie, St. Ignace and Mt. Pleasant. Anybody who saw the before and after pictures of these communities could not deny that casino gaming has created and attracted new business. In each of these communities, the casinos have been embraced and integrated into the business climate in a way that builds on the strength of having such an important entertainment venue, and blends it with the other attractions of the area. Hotels have sprung up everywhere, bringing visitors to the area for more than just a one-night visit. Hopefully, Detroit will quickly reap the same benefits now that the permanent casino issues are resolved.