America still fights Indian wars, but today these battles center not around settlers pushing their homesteads onto tribal lands but around gambling.
Thanks to advantages given by the political system, Indian casinos may soon surpass commercial casinos in total revenue. Tribal lands often are located far away from population centers, making it tougher to attract customers. But President Obama has a two-part initiative that may soon provide the Indian owners with new opportunities and locations to expand their casinos.
Not only are non-Indians worried, but some tribes are also trying to stop other tribes from competing with them. Since the 1988 Indian Gaming Regulatory Act, tribal casinos have exploded, rising from virtually zero revenue to almost $30 billion annually, 43 percent of all gaming industry revenue in America.
Some 241 of the 566 federally recognized tribes now operate 425 gaming facilities, compared to just over 500 nontribal commercial casinos. Tribes have monopolies in many of the 28 states where they operate. (Four other states allow only lesser forms of tribal gambling.)
Exclusive rights are valuable. In the state of Alabama, lawmakers are trying to close a $250 million gap in the state budget. They just received an offer from the Poarch Band of the Creek Indians, proposing to pay $250 million, cash up front, in exchange for exclusive rights to conduct gambling in that state.
The Poarch Band has prepared the way for this big move. In the last election cycle, the tribe reportedly contributed $227,000 through PACs to 33 state legislators (21 Democrats, 12 Republicans) and funneled almost $2 million more to unsuccessful candidates. The Poarch’s current casinos bring in $300 million a year but can only offer restricted forms of gaming — restrictions that would be removed under their proposal.
Another example of exclusive rights is in Oklahoma, which has 111 tribal casinos, almost double any other state. Compacts negotiated in 2004 with former Gov. Brad Henry grant tribes exclusive rights in exchange for a cut of the take. For example, the compact gives the Chickasaw Nation “substantial exclusivity” in the gambling market in exchange for a carefully delineated list of fees.
The Obama administration is inviting more tribes to play the game. First, pending regulations would allow the Bureau of Indian Affairs to ease the barriers to federal recognition of a tribe. Instead of requiring groups to trace their existence back to 1789, groups seeking tribal status need only show they’ve claimed to be a tribe since 1934.
A second Obama initiative in 2011 allows tribes to purchase property miles away from their current or historic lands for their casino developments. So long as a state’s governor approves, tribes could gain more lucrative locations for their operations.
But even as the Obama administration invites more tribes into the casino game, some established Indian players want to keep the newcomers out. Tribes are spending a fortune to block their fellow tribes from building casinos. The infamous Jack Abramoff scandal was only one such example.
When California Gov. Jerry Brown last year approved new off-reservation casinos for the North Fork Rancheria Mono and Wiyot Tribes, competing tribes forced the move to a public vote as Proposition 48. The newcomers raised $600,000 to promote their deal to the public. Rival tribes — in particular the Table Mountain Rancheria and Pechanga Tribes, and their casino business partners — pumped big sums into an opposing campaign, defeating Prop 48 by a 20-point margin. The opponents’ winning argument was that the new casinos would not be on traditional tribal land.
Commercial casinos recognize that tribal casinos are a potential threat. Unable to beat them, many companies join the tribes by offering management services and expertise. Tribes with existing casinos want to stop newcomers. And all are concerned about Internet gambling, especially since Mr. Obama’s Justice Department has reinterpreted federal laws against online wagering.
Whenever any group gets favored political treatment, crony capitalism takes over. Some oppose the deals on principle, but others only oppose any deal that doesn’t cut them a share. So they lobby to be included in the special treatment.
Lost in all the bickering is the fact that a more orderly process could be created. The tribe’s special rights as “sovereign nations” are not based on treaty obligations or constitutional obligations. As the U.S. Supreme Court has made abundantly clear, these tribal rights are created by federal statutes and can be changed by Congress.
Some in Congress are paying attention. Rep. Don Young, Alaska Republican, convened a recent House hearing into how the bureaucracy enables what Mr. Young denounced as “reservation shopping.” These decisions should not be made by “an unelected bureaucracy in the Department of the Interior,” Mr. Young said.
Those who compete with tribal casinos, or with other tribal businesses, often find themselves at a government-created disadvantage. Our country needs to be fair to Native Americans, but not in ways that create unfairness for everybody else.
• Former Congressman Ernest Istook is president of Americans for Less Regulation. Subscribe to his free newsletter online at eepurl.com/JPojD.
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