How a 30 Billion Dollar a Year Indian Casino Industry Has Left Its Native American Members in Poverty -A Brewing Scandal of Volcanic Proportions Image

How a 30 Billion Dollar a Year Indian Casino Industry Has Left Its Native American Members in Poverty -A Brewing Scandal of Volcanic Proportions

December 10, 2013 | Leonard L. Finz, Former NYS Supreme Court Justice

The Indian Gaming Regulatory Act (IGRA) became law in 1988.  It had the meritorious purpose of benefiting Native American tribes by allowing gaming ranging from bingo to Las Vegas-type gambling on their reservations.  But despite its good intentions, the law unfortunately has proven to be a failure.

Today, 25 years after IGRA’s enactment, Native Americans still make up the largest poverty group in the country.  Its unemployment rate is twice the nation’s average while its per-capita income is equal to one half of that of the average American.  Shockingly, its poverty rate in such large cities as New York, Houston, Chicago, Denver and Phoenix reaches an incredible 25 to 30 percent, where in some rural areas, the poverty rate even peaks to a shameful 50 percent.

There are 566 federally recognized Native American tribes in the United States, among which 226 have used IGRA in instituting some form of gaming on their reservations.  Disappointingly, all of this has been accomplished with little benefit to its tribal members. 

In addition to other factors, IGRA was designed principally to elevate Native Americans from the lowest rung of the economic ladder and thus offer a path to financial security which would result hopefully to a dignified independence from government’s largess and welfare. 

But notwithstanding that gambling revenues will come close to the staggering sum of 30 billion dollars in 2013 from Indian casinos (compare this to the combined 2012 gambling revenues of Las Vegas and Atlantic City), the average Native American continues to struggle with intolerable debt and dehumanizing squalor. 

Thus the big question that shouts out is:  who is receiving the benefit of the Indian casino boom that has seen a remarkably steady growth over the last 25 years?  And who, in reality, are the real beneficiaries of IGRA?

The sad irony is that despite bloviating speeches of  “concerned” politicians decrying the poverty of Native Americans, almost 67 cents of every casino dollar is fattening the net worth of investors and entities other than tribal members.  Foreign money merchants from Asia and South Africa have drawn billions through unconscionable deals made in the late 80’s that carry over with huge rewards and with millions paid annually even to the present day.

In addition to the casinos’ repayment of loans bearing full-blown interest plus payments from annual revenues throughout a period of 20 or more years, the tribes have paid obscenely high percentages of their gaming revenue to “management”, “operators”, and “consultants”, toward the “development”, “operation”, and “promotion” of their casinos.  And while these “operators, et. al”, grow richer, the average tribal members remain stagnant in their economic quagmire.

Amazingly, two of the largest revenue producing casinos in the universe, (plus other smaller ones scattered around the country), suffer in such deep debt as to be bordering dangerously close to bankruptcy despite annual revenues of the two referenced mega casinos in the billions of dollars. And aside from the foreign investors who are giants in the worldwide gaming market, there are those “management” companies that have amassed enormous profits as the casinos they are paid so handsomely to operate, struggle just to survive.

Can anyone believe that by passing the Indian Gaming Regulatory Act of 1988, congress really intended to enrich the Las Vegas casino operators such as Ballys, MGM, Caesars, Harrahs, Sands, Station Casinos, Hard Rock Café, and others, with management fees ranging from 30 to 40 percent of all Indian casino net revenues?  And how about the 25% or more from all slot machine monies paid annually and directly to the state as a condition for the state to sign off on a compact with a tribe that seeks a license to permit gambling upon its reservation?  By this practice, the state is acting with no more bona fides than the Nevada cadre of casino operators as both the state and “big Vegas” engage in the same money-grab from tribes that have a lesser bargaining position.  In law, such imbalance in negotiating strength is frowned upon as an “adhesion contract”, but this disparity among contracting parties, i.e., mega Vegas corporations, a state, and a far less powerful Native American tribe, goes unnoticed.

Although there exists an Indian casino lobby in Washington that on its surface purports to advance the welfare of the average Native American, such a lobby is financed principally by the non-Indian casino operators who spend millions in passing along huge political contributions to members of congress and the executive branch to insure a government hands-off policy thus allowing the casinos to operate with little or no oversight by government authorities.  It has been reported that the Indian casino lobby is one of the most powerful in Washington except that its mighty influence is unleashed not necessarily to secure needed benefits to the tribal members, many of whom languish in abject poverty, but for the financial aggrandizement of those who indeed are the de facto beneficiaries of the Indian Gaming Regulatory Act.  This includes the Vegas faction, the foreign investors, a few fat-cat tribal chiefs, as well as those host states that sign a compact with a tribe.  Exacting a high yearly revenue payment to the state in this regard, is tantamount to the state holding a tribe hostage while receiving a healthy ransom in return. 

Therefore, having witnessed IGRA’s 25 year history of failure, I propose the following:

  1. A special commission called for by the President of the United States;
  2. Full subpoena power to be given to the commission enabling it to obtain all investor documents, management contracts, state compacts, and other relevant papers related to the distribution of all gaming revenues (while there will be a well-orchestrated objection by tribal councils regarding sovereignty issues-heavily financed by the non-Indian entities-the proven failure of IGRA should be legally sufficient to meet a court challenge);
  3. Should a tribe refuse to cooperate with the commission, it risks the loss of its license to operate a casino issued originally by the Bureau of Indian Affairs (BIA);
  4. The special commission shall file its report with the House and Senate within one year of its establishment;
  5. The House and Senate shall draft a bill reforming IGRA incorporating the recommendations of the special commission;
  6. There shall at all times be transparency of the special commission’s work under the Freedom of Information Act;
  7. Overall, the special commission shall make recommendations to insure that revenues generated from Indian casino’s will benefit the Native American tribes by bringing their numbers on par with the national average of employment income, education, and quality of life.

Justice demands that Native American Indians enjoy economic advantages available to all Americans and that the past volcanic 25 year record of scandal must give way to a future 25 year record of success.

Additional Info: Other

Tags: Indian Casino, Native American Members in Poverty

Read More Other Legal News »

Comment on this News Item:
Comment by Marilee Montgomery
August 13, 2014

The very fact that tribal governments are secretive with no system of checks and balances works to the advantage of both non- tribal investors and partners as well as corrupt tribal governments. Great article, good proposal. Many Native Americans would welcome transparency of any kind in their governments. Most are too afraid of being disenrolled to voice their true feelings.

Recognized Leadership