Gaming Guru

Bits and Pieces from Indian Country - July 2003

Tribal casinos raked in $14.5 billion last year, according to new data from the National Indian Gaming Commission, compared with $12.8 billion in 2001.  … Meanwhile, commercial casinos and racetracks nationwide – including Las Vegas; Atlantic City, N.J.; and boats along the Mississippi and Ohio rivers – saw revenues rise by only 3 percent last year to $26.5 billion. Casinos' intake in Las Vegas and Reno, Nev., even dropped last year.  Doug Abrahms, Desert Sun, 7-22-03

Tribal governments continue to rank above all other California private and public sector employers in job growth, registering a 14.8 percent increase in employment for the year ending in June 2003, state figures show.  No other industry experienced job growth anywhere near the figures posted by California tribal governments, according to figures released July 8 by the state Employment Development Department. …Civilian employment statewide rose only 1.4 percent, from 16.2 to 16.3 million.  PRNewswire, Yahoo Business, 7-15-03

The tribes are not subject to the same taxes as other casinos, and when tribes do make "payments" to the state, it is a negotiated process.  Conventional, non-tribal, casinos must sit and wait for the governors and state legislatures to work out tax policies; Indian tribes sit down directly with the governor, not as lobbyists, but as equals to work out "agreements."  The process may not be the same, but the result is getting to be much the same.  Wisconsin negotiated new compacts this season.  The tribe gained in the number of games and in the length of the compacts, but the price was an increased fee - not a tax, but a fee.  The fees are almost always calculated as percentages of revenue, which look pretty much like taxes to most of us.  The most visible of the states trying to renegotiate with the tribes for increased fees is, of course, California, but as long as Gray Davis is fighting for his political life, the compact negotiations do not seem to be a top priority.  Meanwhile, in Michigan, the governor has quietly negotiated for higher fees with one tribe and is in the process of granting an urban location.

A deal signed last week by Gov. Jennifer Granholm allows the Little Traverse Bay Bands of Odawa Indians to build a second casino, while keeping their present gaming operation in Petoskey. In exchange for the right to open the second site, the tribe agreed to pay the state a higher percentage of its revenues.  …The new deal allows a second site, with payments to the state of 10 percent of the first $50 million in slot machine revenues and 12 percent of slot machine revenues above that amount.  Edward Hoogterp, Booth News, mlive.com, 7-31-03

There is an increasing crossover from Indian gaming into the commercial gaming industry.  In the beginning of Indian gaming, tribes very often looked to established casino operators to help them get started.  Many tribal casinos still operate under a management agreement.  But as the tribes gain experience, reputation and cash, the roles are sometimes changing.  It is not surprising when a tribe contracts to work with another, but when a tribe buys a company like Full House that made its reputation in Indian country, the process has come full circle.

The Morongo Band of Mission Indians in Riverside County, Calif., has agreed to acquire a Las Vegas casino developer and assume assets as diverse as a Delaware slot machine operation and a deal to develop a casino for another tribe in Michigan.  The tribe would purchase Full House Resorts Inc. for $20.1 million, including the assumption of $2.4 million in debt.  Full House Resorts Inc. has been based in Las Vegas since 1998, the same year it sold a casino in Deadwood Gulch, S.D. where it began operations as a public company in 1992. The company's primary asset is a slot machine management contract at Harrington Raceway in Delaware, which it acquired in 1995. In 2001, the company bought out a partner's remaining interest in three casino management contracts with Indian tribes. Liz Benston, Las Vegas Sun, 7-31-03

There are still plenty of examples of the old model.  Stations just opened a major casino in California in partnership with the Auburn Tribe, and gaming companies and tribes in New York, Maine and Rhode Island are pushing for agreements.  Oklahoma doesn't make the national news often, but there is a growing industry there and, it would seem, still opportunities for management agreements, providing, of course, you can bring the financing.

Nevada Gold & Casinos, Inc. announced today it has been selected by the Muscogee (Creek) Nation as the developer and manager for a gaming resort development in Tulsa, Okla.  Pending the completion of contracts, Nevada Gold will be developer and manager of the new Creek Nation Casino along the Eastern banks of the Arkansas River. The company also will assist the tribe in obtaining project financing, which ultimately will produce Oklahoma's largest casino.  The multi-phase project will be developed on and around the site of the existing Creek Nation Casino. The first phase will include the construction of a state-of-the-art gaming center with hotel/meeting space and a new parking facility. The total investment will be approximately $75 million. Retail stores, restaurants and other entertainment venues are planned for subsequent phases. PRNewswire-First Call, Yahoo Business, 7-15-03

Not all tribes were created equal; there are tribal locations that are not suited for developing gaming, and there are tribes that don't want to be casino operators, or to have casinos on their land.  Arizona, New Mexico and California have a mechanism where one tribe can get the slot allocation of another tribe and share the revenue.  To some tribes that is the best of both worlds, the cash without the commotion.

Dan Simplicio, tribal council member, said no casino will be on Pueblo of Zuni lands, either in Arizona or New Mexico. The tribe has more than 450,000 acres in New Mexico and Arizona, about 400,000 acres of it in New Mexico.  The agreement allows the transfer of 475 slot machine licensing rights to the Gila River Indian Community in Sacaton, Ariz. The Gila River Indian Community has three Arizona gaming facilities, one in Wild Horse Pass, one in Vee Quiva and one in Lone Butte. The 475 slot machines the Gila River Indian Community can buy with the Zuni licensing rights will be added to the community's allocation.  Simplicio said in return for the licensing rights the pueblo will get more than $3 million a year.  Tom Purdom, Gallup Independent, 6-27-03

Since 1988 and the passage of the National Indian Gaming Regulatory Act, there have been many partnerships between tribes and gaming companies.  Most of those agreements were successful, but there were those that did not work.  The cultures were often too far apart and the goals too diverse, and there were instances when one side was simply trying to exploit the other.  That model, unfortunately, is also still alive and hunting its prey.

Native Americans have formed some odd alliances in setting up casinos on their reservations. But are they ready to get in bed with Heidi Fleiss?  The former Hollywood madam says she's been talking with Indian leaders about opening some very sexy casinos. Fleiss helped hatch a brothel in Australia, but she says she's not talking about prostitution here. Instead of heading for Nevada, where hooking is legal, she wants to open gambling-and-showgirls resorts in Palm Springs, Calif., and in the Black Hills of North Dakota.  "This isn't going to be some truck-stop joint," she tells us. "It'll have a five-star restaurant. And, of course, the girls have to be up to my standards."  …She declines to name her "major financial backers." She also won't say which Indians she's approached, but asserts, "The tribal leaders are all excited about this."  New York Daily News, 7-21-03

On the other side of the ledger, the Indian wars continue.  In California, even if the governor has been distracted, many of the opponents of Indian gaming have not been.  And in Rhode Island the state police raided an Indian tobacco "smoke" shop, in a manner reminiscent of the Mohegan raids in New York, or the casino raids in Arizona and Washington in the early days of Indian gaming.  Passions are inflamed -- one wonders if Elliot Ness has returned.

Fearing that protests against expansion of the San Manuel Bingo and Casino operation might escalate into violence, Mayor Judith Valles said she plans to seek enhanced police patrols in the area.  She said Monday that she is very troubled by reports from tribal security that residents blocked cars entering and leaving the casino and on at least one occasion a vehicle was struck by a protest sign.  Valles called for calm, asking that neighbors and casino patrons respect each other's wishes and property.  After meeting with tribal officials Monday to discuss her concerns about the expansion, Valles said she will ask Police Chief Garrett Zimmon to send officers to patrol the protests, which have been occurring on Saturday evenings.  Ben Schnayerson, San Bernardino Sun, 7-15-03

A state police raid on an illegal Narragansett Indian tobacco shop turned violent and ugly Monday in a stunning confrontation that Gov. Don Carcieri said was really about casino gambling – not tax-free cigarettes.  With dogs and a search warrant, two-dozen police officers moved in on a small trailer Monday shortly after 2 p.m., intent on shutting down a tax-free tobacco shop that opened Saturday.  Within minutes, a melee erupted as Indians and state police fought and wrestled each other to the ground. News crews captured the incident on videotape, including an image of a police dog nipping at the clothing of a man lying handcuffed and face-down on the ground.  Eight tribal members were arrested, including Chief Sachem Matthew Thomas, who fought violently with Rhode Island State Police, at one point jumping on the back of an officer, police said. The state police said there were no serious injuries.  "This action is truly regrettable, but clearly necessary," said Carcieri, who ordered the raid Monday after negotiations through the weekend failed to forestall the confrontation. He said the tribe was trying to blackmail him into supporting a tribal casino and blamed Thomas for causing the clash.  Rick Green, Hartford Courant, 7-15-03

There are more soldiers in the field than just Elliot's boys and disgruntled neighbors.  In Congress, forces supporting California's resistance movement, and, by the way, trying to protect their own constituents are working to control, if not the outcome, at least the process.  And in Maine, an odd player has joined the fray, MBNA.

The fight to thwart the proposed casino on Highway 37 in Sonoma County has gained support from both sides of the aisle in the U.S. Capitol.  Republican Rep. Jim Gibbons representing the Reno area of Nevada has joined Congressman Mike Thompson (D-St. Helena) and Lynne Woolsey (D-Petaluma) in sponsoring a bill that would require added state and federal input for planned Indian casinos.  The opposition to the casino is being coordinated by a group known as, No Las Vegas in the North Bay.  Napa News, 7-21-03

Credit card giant MBNA has joined several of the state's other large employers in a campaign against a Maine casino.  The Delaware-based company announced Friday it is joining the effort by Casinos No to defeat a November referendum question that could allow the Penobscot and Passamaquoddy tribes to build the state's first casino resort in Sanford.  Las Vegas Sun, 7-15-03

Indian country has always been political.  Survival of every tribe, at one time or another, required understanding federal politics and the system. For 200 years tribes have gone to Washington to negotiate for their rights, land and sovereignty.  Indian gaming has been part of that political process.  Cash and sophistication have strengthened and broadened the tribes' approach.  In 2000, the tribes banned together to defeat Senator Gorton of Washington, a longtime opponent of Indian sovereignty.  Last year, John McCoy of the Tulalip Tribes was elected to the Washington state legislature.  In California, the tribes are a very powerful lobby, but what better way to add to their influence than elect a tribal member to the state legislature?  And in the spirit of political alliances, when threatened with an Alaskan invasion, the tribes have joined a traditional enemy such as Nevada's Harry Reid to fend off the invaders.

A Morongo Band of Mission Indians councilwoman is trying to move beyond the leadership of her tribe and take part in the leadership of the state.  Mary Ann Andreas, 57, will announce today her candidacy for the 80th Assembly District, which includes most of Riverside County east of Hemet and Banning, as well as Imperial County. She would run as a Democrat.  Ben Schnayerson, San Bernardino Sun, 7-11-03

Gambling lobbyists for American Indians have formed an unlikely alliance with Sen. Harry Reid, D-Nev., to head off an amendment that could allow Alaska native corporations to open casinos anywhere in the mainland United States.  Sponsored by Sen. Ted Stevens, R-Alaska, the powerful chairman of the Senate Appropriations Committee, the amendment would authorize the Secretary of the Interior to take land into trust in the lower 48 states for Alaska native corporations for gambling purposes.  Stevens first considered attaching the amendment to an omnibus spending bill late last year but did not follow through. This year, he was eyeing a defense appropriations bill, which passed the Senate last week, but still has not proposed the amendment, sources said.  Tony Batt, Stephens Washington Bureau, Las Vegas Review-Journal, 7-25-03

Indian gaming wasn't always so sophisticated.  In the days before IGRA, before Cabazon, there were tribes and tribal leaders that envisioned using sovereignty and gaming for economic development.  The economy of most tribes was completely dependent on federal largesse, unemployment was 10 times the national average, alcohol and drugs burdened most tribes.  It was a seemingly hopeless world.  It took true leaders and visionaries to imagine a different future.  Fred Dakota was one of those leaders.  Now he is making another run at leadership; I wonder what he has been cooking in his garage now?

"Grandfather of Indian Gaming" to run for council  The former chairman of an Upper Peninsula Indian tribe who was convicted of accepting bribes and evading taxes in a scheme involving casino slot machines plans to run for the tribal council.  Fred Dakota, the former chairman of the Keweenaw Bay Indian Community, says a threat to the sovereignty of the tribe is the main reason he will seek a spot on the council in an election in December.  Dakota, known as the "Grandfather of Indian Gaming," started the first American Indian gaming operation in this country from the garage of his home in the late 1970s. His tribe has been involved in a tax dispute with the state of Michigan in recent years, and Dakota said that's the main reason he is running for office.  Milwaukee Journal Sentinel, 7-18-03

July, more than any month in 2003, shows gaming as a mature industry.  Gaming has become a commodity, or almost.  Gaming is readily available to every interested consumer.  As typical of a commodity, it is an industry driven more by price than brand loyalty.  Competition and not innovation drive change, margins are decreasing and the growth rate is very close to the GNP; "Don't invest in new venture, just give me dividends."  Maturity produces some strange alliances and unusual bedfellows as the major players fight off would be competitors.  In a mature world, Heidi Fleiss finds she has an Indian grandmother; Harry Reid moves into the National Indian Gaming Association offices, Terry Lanni discovers Manchester United, though sadly for us after Beckham has moved off to Spain, and governors across the land find gold under the flap of the tepee.  However, regardless of the alliance or bedfellow, in most cases, the taxman still has to be paid and the levy is going up.