Tribal casinos are struggling like everyone else

Indian gaming under the regulation of the National Indian Gaming Regulatory Act has been around for 25 years.  Most of the newness and strangeness has worn off, and in most communities with Indian casinos, Indian gaming is pretty well-understood.  However, there are still a couple of myths that persist about Indians, Indian casinos and the law; the most common of which deals with Indian wealth.  It is a remake of the oil myth; in the oil myth all Indians got rich from oil wells.  That myth was prevalent in the middle of the 20th century; the modern version has all Indians getting rich from casinos.  There is also the myth that Indians pay no taxes.  And there many regional myths about local tribes and their customs, quirks and strange rituals.

Yes, there are some individual Indians who have made a great deal of money by being members of a tribe with a successful casino; nearly everyone has heard stories about the fabulous wealth of the members of the Mashantucket Pequot and Shakopee Mdewakanton Sioux tribes.   And everyone has heard of the most successful of the Indian casinos; Mohegan Sun, Foxwoods, Oneida Casinos, Mystic Lake and the Seminole casinos.  But even among those really successful casinos, not all of the tribes do individual distributions and even among those that do distributes, most do not distribute all of the casinos’ profits.

Tribes are not individuals; tribes are collective entities formed and functioning as a unit. Each of those units has an elected government.  Tribal governments provide the same services to its members as your city government provides to you; the primary source of funding of many tribal governments is the casino revenue.  The public services are the first priority of every tribe.  Distribution of tribal casino profits to individual tribal members is at best second on the list of priorities.  Some tribes do not do any individual distributions.

Even tribes that previous gave each tribal member a significant amount of money each year have had to cut back distributions or eliminate them completely.  The Mashantucket Pequot tribe, which owns Foxwoods casino in Connecticut, was once famous for its distributions, said to be between a quarter and a half of a million dollars a year to each tribal member.  Things have changed drastically since those heady days; Foxwoods has lost business continually for years, first to Mohegan Sun and then to new non-Indian casinos in the region.  It has struggled to pay the debt it acquired during the pre-competition expansions; those two factors, competition and debt, led the tribe to end its distributions completely.

That story is becoming a common one in Indian gaming.  The tribal casinos are subject to same economic and competitive pressures as anyone else.  New casinos popping up in the region affect the Indian casinos in Connecticut, just as they do the casinos in Atlantic City.  Two stories from California on June 20th illustrate how those same factors, the economy, debt and competition are impacting tribes in California.

When city folk daydream about ditching the rat race and settling down somewhere peaceful, they imagine a place like the Pala Indian reservation. Nestled near the base of Palomar Mountain in north San Diego County and just a few miles east of I-15, it’s 12,000 acres of gorgeous hilly countryside and red earth… Today, each [tribal member] receives monthly payouts that add up to more than $150,000 per year, as well as free health care and free college…with big money has come some big problems: Longtime members have been kicked out, resulting in bitter feuds about who should be considered a member of the tribe… There are hints that the end may already be coming. The tribe’s payouts dropped last year, and the casino’s business model seems threatened.  Ben Westhoff, LA Weekly, 6-20-13

The ongoing leadership dispute at the Picayune Rancheria of Chukchansi Indians has put the tribe at risk of defaulting on its bonds for Chukchansi Gold Resort & Casino, according to a lawsuit filed Tuesday in New York.  A $250.4 million agreement was reached last year when Chukchansi’s economic development authority restructured its financing after the tribe struggled to pay its debts.  But the tribal dispute over who controls the Coarsegold casino’s funds left the development authority unable to make its full May payment.  “The actions of the tribal parties and individual defendants endanger the collateral (casino revenue) and place the financial well-being of the casino in danger,” the suit filed by Wells Fargo Bank said. Marc Benjamin, Fresno Bee, 6-20-13

The only tribes that are nearly immune to those forces are the ones that are located on very remote reservations.  Their casinos have no competition and small rural economies are much more apt to be stable and self-sufficient than those in large urban areas. That is the good news, but then there is bad news; being far away from major population centers means the casino won’t have very many customers; therefore, there will not be any money to distribute to tribal members.  Those remote tribes have often been the last to get a casino.  No institution, corporation or individual wants to loan them any money to build a casino and no casino company is interested in managing casinos in those locations.

For tribes in those locations it often takes years to get a casino.  Again from California, the Los Coyotes Band of Cahuilla and Cupeno Indian Tribe want to build a casino in Barstow.  Barstow is a town of 20,000 people located 55 miles into the California desert from the nearest population center.  Not an ideal place for a casino.  Still, the city of Barstow wants the tribes to build a casino  and the tribes want to build one.  But for 10 years that is all there is – the desire for a casino.  Doesn’t not sound like the key to riches, does it?

City officials will travel to Sacramento to attend meetings with Gov. Jerry Brown’s office and the Los Coyotes Band of Cahuilla and Cupeno Indian Tribe on July 2 to continue discussions about the Barstow Casino Project.  Efforts to open a casino in Barstow have been ongoing for more than 10 years. City officials declined to discuss details of the upcoming meeting.  The Barstow City Council approved $400 in travel funds for Mayor Julie Hackbarth-McIntyre and Mayor Pro Tem Tim Silva at Monday’s council meeting. Barstow City Manager Curt Mitchell and Assistant City Manager Oliver Chi will also be participating in the trip, according to the agenda notes. Brooke Self, Victorville Daily Press, 6-20-13

So the next time someone tries to tell you how rich Indians get off casinos and how easy it is for them, you have a couple of stories can tell them about the struggles of Indian tribes.  In 2013, most tribes with casinos are struggling just to survive in business.  Indian casinos are struggling just like casinos in Atlantic City, Detroit, Reno, Gary and Wheeling.  The gravy days of easy money in the casino world are pretty much gone for everybody.


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