Gaming Guru

Bits and Pieces from Indian Country - February 2004

Gov. Tim Pawlenty's strong signal Thursday that Minnesota's Indian tribes may lose their exclusive hold on casino-style gambling unless they are willing to explore "a better deal for Minnesotans" could be the opening shot in an intense battle. Pawlenty's remarks in his State of the State address came on the heels of a private, high-level meeting Jan. 26 with chiefs of nine of the state's 11 Indian tribes. During that meeting, Pawlenty reportedly told the tribes that public sentiment on gambling had changed and that he wanted a reply within a week on whether they would agree to further talks on the future of gaming in the state. Patricia Lopez, Minneapolis Star Tribune, 2-6-04

In Wisconsin, Ho-Chunk, in a trend that is becoming common in California and other states, took their case to the voters and lost. The million dollars spent on the campaign was a lot considering the size of the electorate but not enough. It would be difficult to try and draw too many lessons for Ho-Chunk's results, as every community will be different. But even if there is no lesson to be learned from the results, there is a lesson in the process. Participating in the decision over a casino is what most communities say that they want; the cynic in me thinks they want a vote only if they win. Ho-Chunk seems to have felt the same and promises to continue to look for a site.

For the Ho-Chunk Nation, $1 million spent trying to convince Dane County voters to approve turning its Madison bingo hall into a full-blown Las Vegas-style casino couldn't buy a win. Residents rejected the proposal by a 2-to-1 margin Tuesday…Only the governor has the power to authorize casinos in Wisconsin. Gov. Jim Doyle told The Associated Press Tuesday night that he would abide by the result of the nonbinding referendum. Associated Press, Minneapolis Star Tribune, 2-18-04

Indian gaming at some levels is just like casino gaming in any other jurisdiction. The problems tribes and their casinos face are usually the same ones casino operators face in other jurisdictions. There is one very large and significant difference: casinos are simply businesses, governed by the laws of the state; Tribes are sovereign governments, subject to their own laws, the laws of the federal government and some very specific state laws, as defined by federal legislation. To be recognized as a tribe requires formal federal recognition; recognition conveys to tribe sovereignty. Recognition and sovereignty are the keys to operating a casino on tribal land and are magnets for opposition. Wherever there is local opposition, sovereignty is one of the targets. That is not to say the opposition lacks the usual moral objections or objectors; in fact, you can anticipate Tom Grey's presence as part of every campaign. But even Tom-gambling-is-destroying-the-country-Grey is using federal recognition and the resulting sovereignty as a point of attack.

A national antigambling coalition is calling for a moratorium on Indian casinos in a bid to derail plans by the Bay State's Nipmuc Nation and dozens of other American Indian tribes to roll out giant gambling resorts. The Washington-based National Coalition Against Gambling Expansion wants President Bush to halt granting tribal recognition and casino venture permits, including a pending decision by the Bureau of Indian Affairs on whether to officially recognize the Sutton-based Nipmucs. Tom Grey, director of the anti- gambling coalition, said the freeze on American Indian gaming is needed to prevent an explosion of tribal casinos, in New England and across the country. - Scott Van Voorhis, Boston Globe Herald, 2-19-04

February had a couple of legal issues that brought unwelcome attention to Indian country. The FBI is investigating the lobbying efforts of some tribes, the U.S. Interior Department's inspector general and Congress' General Accounting Office are investigating the BIA and one tribe's enrollment and casino initiative, and the National Indian Gaming Commission has stepped into the Seminole of Florida's way of operating and distributing funds. All three are dangerous precedents and will play poorly in the debate over the recognition process and the relationship betweens tribes and states. Besides Tom Grey, the tribes have serious opposition from legislatures in Connecticut, Wisconsin and other states. The argument over enrollment in California is one of more than ten such in California alone; when tribes purge membership, the disenfranchised all claim that gaming profits are involved. It is a perfect script for the opponents of Indian gaming; look for the debate to get uglier, like an electoral contest in October.

A powerful Washington lobbyist and a former aide to House Majority Leader Tom DeLay, R-Tex., have persuaded four newly wealthy Indian tribes, including the Agua Caliente of California, to pay their firms more than $45 million over the past three years for lobbying and public affairs work, a sum that rivals spending to influence public policy by some of the nation's biggest corporate interests. Susan Schmidt, Washington Post, 2-23-04

The FBI is investigating the relationship between the Saginaw Chippewa Indian tribe and two Washington lobbyists after tribal leaders questioned the $14 million they paid for lobbying services, members of the tribe said Thursday. Associated Press, Las Vegas Sun, 2-27-04

A once-tiny, nearly destitute American Indian tribe is pushing hard to build a $100 million casino - but it's not traditional tribal members gunning for riches. Hundreds of people have been newly added to the Ione Band of Miwok Indians' membership rolls, which were opened up by regional Bureau of Indian Affairs officials. Among the new members are several BIA employees and dozens of their relatives. Don Thompson, Associated Press, San Diego Union-Tribune, 2-23-04

The U.S. Interior Department's inspector general and Congress' General Accounting Office said Tuesday they are launching probes into alleged conflicts of interest involving officials of the Sacramento-based regional office of the Bureau of Indian Affairs. Don Thompson, Associated Press, Las Vegas Sun, 2-25-04

The U.S. government has warned the Seminole Tribe of Florida it will shut down its casinos unless the tribe stops using illegal gaming devices and ceases a free-wheeling spending program that pumped millions into luxury cars and gifts for council members' cronies. National Indian Gaming Commission chairman Philip N. Hogen issued the dire warning earlier this month in a private meeting with the Seminole Tribe's elected council members in Washington, D.C. Jeff Testerman, St. Petersburg Times, 2-26-04

For every negative story from Indian country, there is also a positive story. Nearly every month, there is a positive story involving a different tribe's efforts at diversification; tribes that have become successful in gaming look to other industries for diversification and toward a time when gaming may not be the cash cow it is in 2004. The Tulalip Tribes of Washington are typical. A mixture of several different tribes placed on a small reservation north of Seattle in the 1850s, the tribe has existed on fishing, lumber leasing and later bingo. Tulalip Tribes negotiated a compact in Washington in 1992 and opened the first casino in 1993. It wasn't always as profitable as some would like, and at times it was rocked by controversy and scandal. But, the tribe stayed the course and tribal leadership never lost sight of the seventh generation, regardless of the problems. So the tribe and the casino moved forward, and so did the plans to create a self-supporting village. The Oneida of New York is another tribe that has constantly looked for ways to diversify and strengthen the tribal economy. Casinos, retail, cigarettes and power plants -- that certainly sounds like a diverse economy to me; the Middle East would be much more stable with such diversity.

Snohomish County will get a major new outlet mall in 2005, and the Tulalip Tribes will get increased economic security under an agreement approved Tuesday with a New Jersey firm that operates 60 such shopping meccas. The mall, to be developed and operated by the Chelsea Property Group of New Jersey, will have 100 to 120 designer and name-brand stores on 47 acres north of the new tribal casino at Quil Ceda Village, tribal officials said. "This is the synergy we have wanted to create to make our casino a success and to make our tribe a success for generations to come," said Herman Williams Jr., tribal chairman, as he and other board members signed the agreement. "This is very important to the tribe." Tribal officials hope that people going to the new casino will be attracted to the outlet mall, and vice versa, ensuring the success of both. The lease agreement, which extends for 75 years, should initially bring the tribal government $1.2 million annually, Williams said. Mike Benbow, Everett Herald, 2-4-04

The Oneida Indian Nation says it has found natural gas in Madison County that will help power the Turning Stone Resort and Casino. The nation is building a $13 million energy plant that could provide most of the electricity and heat for the resort. Nation spokesman Mark Emery said the nation eventually hopes to provide all the energy needed to run Turning Stone [casino], which is undergoing a $300 million expansion that includes three hotels. "Ultimately the goal is to attempt to take the nation off the (power) grid," Emery said. "That would leave a lot of available power for a lot of other people." Glenn Coin, Syracuse Post Standard, 2-4-04

Class II gaming got some good news; first the Oklahoma Legislature passed a gaming bill, which allows tribes and race tracks to use the same games that the tribes are currently using; and then the Untied States Supreme Court let stand U. S. appeals court rulings on certain Class II electronic games. The cases cover two tribes in Oklahoma and one in Wyoming. As one might guess, the stock of slot manufacturers went up on each instance.

Shares of gambling-machine makers rose Friday after the Oklahoma Legislature passed a measure to allow three horse-racing tracks to operate the same electronic betting games being played at the state's Indian casinos, and assured the legality of the tribal-operated games. …The measure has the support of Oklahoma Gov. Brad Henry and the state's horse industry and Indian tribes. Shares of Austin, Texas-based Multimedia Games Inc…rose $1.66, or 4.1 percent, to $42…Alliance…was up 41 cents, or 1.7 percent…IGT…rose $1.84, or 4.9 percent. Gambling Magazine, 3-1-04

The U.S. Supreme Court today rejected a Bush administration effort to limit the types of gambling offered by Indian tribes that aren't authorized to operate casino-style games such as slot machines. …The high court eliminated "significant legal uncertainty" surrounding the company's ability to sell its products to the tribes, Multimedia Games said… Laurie Asseo, Bloomberg News, Las Vegas Sun, 3-1-04

Asensio & Company, Inc., a leading equity research firm, announced that it has published a report on Multimedia Games…The report gives background to the Supreme Court's decision and a detailed factual analysis of the consequences of the decision on Multimedia's market share and operating margins. The…decision allows industry leaders such as IGT and Alliance to offer Oklahoma casinos Class II games. Business Wire, 3-1-04

As is the case whenever a state passes new gaming legislation, the developments in Oklahoma bode well for the major slot manufacturers. A few casino operators may profit with each expansion, but the major manufacturers always profit from it. Tribes all around the United States should also benefit from the Supreme Court decision; but that news is somewhat offset by the growing opposition that may lead to new and more limiting federal Indian legislation. The American legal system is one of opposing forces, legislative and judicative. After legislatures pass legislation, courts review it, after courts limit legislation, legislatures pass new legislation: round and round we go, where we stop, nobody knows. We only know the legislatures are in session, and the courts are constantly sitting in judgment of their laws.

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

Ken