The History of Native American Tribes in the Casino Industry

The first casino was opened only four years after the Indian Self-Determination and Education Assistance Act of 1975 was passed, allowing Indian tribes to conduct operations more independently, as well as the opportunity to enter contractual agreements with the Secretary of the Interior. This meant they gained access to services provided by the Federal Government such as health, education, and other welfare programs. As a result of this policy, Indian Nations were able to quickly strengthen their economies and well being of their communities. It was because of this quick improvement that Indian nations were able to even consider opening gaming facilities and casinos. It was necessary for the Indian nations to be in a good enough place financially and economically for them to consider revenue-producing ventures such as the entry into the gaming industry. Benefiting them even further, these casinos provide an immense amount of job opportunities for native people who would otherwise either have a very low paid, labor-intensive job, or, even worse, be unemployed.

The first Indian casino was built in Florida in 1979 by the Seminole tribe who established a successful high-stakes bingo parlor. The incentive for people to gamble at the location was that they were able to offer larger prizes than those casinos operating under state law. As a result, these earlier Indian casinos gained a lot of traction and accumulated large amounts of foot traffic from non-native people, generating a lot of revenue very quickly. Other indigenous nations saw this opportunity and were quick to establish casinos of their own, resulting in more than 150 tribes in 24 states having active casinos or bingo operations on their land by 2000. 

In Riverside County, California, two federally recognized Indian tribes lived on reservations where they played bingo and card games open to both Indians and non-Indians. These games provided employment for many Indians on reservations and attracted mostly non-Indian customers. However, California state and Riverside County officials wanted to apply state and local gambling laws to reservation games that would have banned card games.

The tribes argued that the state government's gambling laws infringed on their sovereignty,  a common argument among Indian tribes when states or local governments seek to regulate activities on Indian reservations. This is because Indian reservations are considered sovereign states in the United States with their own governments and laws, and state and local governments do not have the authority to regulate activities on reservation lands without Congressional approval. However, there are precedents for applying state laws to Indian reservations. The Supreme Court ruled that state criminal laws can be enforced on Indian reservations if necessary to protect the health and safety of the population. But when it comes to civil law, including gaming regulations, the federal government has generally said those laws cannot be enforced on Indian reservations without the approval of Congress. 

A main catalyst for the IGRA was the opening of a Seminole Tribe high-stakes bingo hall in Florida in 1979. The tribe sued a local sheriff after he threatened to arrest anyone who played at the bingo hall. This resulted in a series of court rulings, all of which ruled that states' bingo laws could not be applied to bingo operations within tribal lands. Thus, there was a rapid increase in the number of high-stakes tribal gaming operations across Indian land. The rapid increase became a concern to state and federal law enforcement as well as the gambling industry.

The previously mentioned California v Cabazon Band of Mission Indians case also played a key role in the IGRA's creation.

The IGRA is vital to the Indian community because of how important gaming is to the Indian economy. Indian tribes have traditionally relied on their gaming businesses as a key source of revenue, job opportunities, and a driver of overall economic development.

The IGRA brings forth the important issue of Indian sovereignty. On one hand, officially establishing that gaming on Indian lands is regulated by tribes strengthens Indian sovereignty. However, on the other hand, the required compacts for class III gaming is often seen as a limitation on Indian sovereignty. In certain states, the compacts also require a certain percentage of the earned revenue from the gaming establishments to be shared with the state. For example, Connecticut requires tribes to pay 25% of their slot machine revenues. California, Wisconsin, Michigan, and New Mexico are the other states that require revenue-sharing in the compacts. There have been instances where tribes have foregone the required compacts when opening class III gaming operations.

There were many cases in the years following the passing of the IGRA that questioned the act's constitutionality. Additionally, there have been numerous attempts to amend the IGRA.

• The operation totals seven casinos, a few hotels, multiple restaurants varying in formality and price point, two spas, a golf course, many meeting rooms/halls, a few theaters, and retail stores and outlets. In all, the complex spans almost 9 million square feet. The complex operates with over ten thousand employees and its leadership is filled with Pequot tribal members as well as outsiders. The Pequot gives 25% of all slot machine revenue directly to the treasury of the state of Connecticut, which has resulted in over four billion dollars in payments to the state. The rest of the revenue is spent locally benefitting citizens with services, programs, and support, and also nationally supporting charities and other tribal needs across the country. 

• The Mashantucket Pequot has established a healthy relationship with the state of Connecticut, and have created a mutual respect. Although the state may have had reservations about the incline in traffic, gambling addiction, and crime, the revenue that comes in from the casino cannot far soar above any potential threats that could have arissed. The state allows Pequot police and fire forces to monitor non-tribal, in and out of state Connecticut residents, while at Foxwoods. At its height, Foxwoods attracted people from all over the country, mainly non Connecticut residents, and stayed open twenty four hours a day in order to match the demand. With its location an hour outside of both New York and Boston, visitation to the Foxwoods casino is easily accessible and attractive. 

However, since the pandemic, the Pequot have faced financial challenges, declining demand, and rising competition. Firstly, the Foxwoods, unsurprisingly has significant debt, which they hope to combat with expansion that will hopefully attract more visitors. They have been advised by consultants and experts to keep expanding, but as they do, they continue to go into more debt. Their entire business model revolves around customers showing up day in day out, so the leadership thinks that expanding will continue to attract more customers.  They also run the risk of online sports betting, but are pivoting to capitalize more on sports betting, offering a DraftsKings location on site. In total, Foxwoods Resort and Casino exemplifies the achievements of the Pequot tribe, but also highlights the struggles of operating an enterprise of this scale.

Native American tribes advertise gaming as a positive thing. Gaming has been a staple in tribal life for hundreds of years. However, many tribes have restored to modern marketing methods in order to attract customers.

One popular method is to combine casinos with lodging, making the gaming experience more resort-like as opposed to a one day event. Some casinos have taken this to extremes. For example, the Seminole Hard Rock Hotel and Casino in Hollywood, Florida recently built a huge guitar themed building which also functions as a hotel. This method has added novelty and a sense of uniqueness to an industry that is already monopolized by Native American tribes.

There is a misconception that the average Native American benefits from casino profits. Only seventy two of the two hundred thirty eight tribes that own casinos provide routine payments to their members. In addition, many of these payments are an insignificantly low amount. As a matter of fact there are only five things that tribes are allowed to legally do with their gaming profits which are:

Funding tribal government operations or programs

Tribal governments typically provide multiple very important programs and services. The most notable of these services are social programs, first-responder services, education, workforce development, and energy and land management.

Providing for the general welfare of their members

This is the component which the small payments tribal members might receive would fall under. Though not as large in amount as one might expect, these payments do not fall under gross income and are therefore not taxed.

Promoting tribal economic development

Tribal communities tend have higher rates of unemployment and poverty than nontribal communities. Tribal economic development helps with these shortcomings. They also provide benefits to the tribal standard of living as a whole. The federal government has programs to assist with this development as well.

The Indian Community Economic Enhancement Act of 2020 created a study on Indian economic development. The study examines economic development programs for tribes and calculates fragmentation, overlap, and duplication among these programs.

Donating to charitable organizations

There are many charitable organizations that strive to improve reservation life. A great example of this is The Navajo Water Project. They are a utility alternative that brings hot and cold running water to homes. Many Navajo homes do not have access to clean water or sewer lines. They install Home Water Systems and effective septic systems. They also specialize in skilled job creation and making grants to people who step up to solve the Navajo water crisis.

Helping fund operations of local government agencies

This development is the rarest of the five as tribes are typically in conflict with governments rather than agreeance in order to obtain their well-deserved rights and sovereignty. However, many tribal efforts end up inadvertently end up helping the local communities around the areas that tribal members live in.