| December
16, 2002
Wheel Of Misfortune Casinos
were supposed to make Indian tribes self-sufficient. So why are the white
backers of Indian gambling raking in millions while many tribes continue
to struggle in poverty?
Imagine, if you will,
Congress passing a bill to make Indian tribes more self-sufficient that
gives billions of dollars to the white backers of Indian businesses [EM]
and nothing to hundreds of thousands of Native Americans living in poverty.
Or a bill that gives hundreds of millions of dollars to one Indian tribe
with a few dozen members [EM] and not a penny to a tribe with hundreds
of thousands of members. Or a bill that allows select Indian tribes to
create businesses that reap millions of dollars in profits and pay no federal
income tax [EM] at the same time that the tribes collect millions in aid
from American taxpayers. Can't imagine Congress passing such a bill? It
did. Here's how it happened [EM] and what it means Maryann Martin presides
over America's smallest tribe. Raised in Los Angeles in an African-American
family, she knew little of her Indian ancestry until 1986, when at age
22 she learned that her mother had been the last surviving member of the
Augustine Band of Cahuilla Mission Indians. In 1991, the Bureau of Indian
Affairs (BIA) certified Martin and her two younger brothers as members
of the tribe. Federal recognition of tribal status opened the door for
Martin and her siblings to qualify for certain types of government aid.
And with it, a far more lucrative lure beckoned: the right to operate casinos
on an Indian reservation. As Indian casinos popped
up like new housing developments across Southern California, Martin moved
a trailer onto the long-abandoned Augustine reservation in Coachella, a
500-acre desert tract then littered with garbage, discarded household appliances
and junk cars, about 25 miles southeast of Palm Springs. There she lived
with her three children and African-American husband William Ray Vance.
In 1994, membership in the tiny tribe dwindled from three adults to one
when Martin's two brothers were killed during separate street shootings
in Banning, Calif. Police said both men were involved in drug deals and
were members of a violent Los Angeles street gang. Subsequently, Martin negotiated
a deal with Paragon Gaming, a Las Vegas company, to develop and manage
a casino. Paragon is headed by Diana Bennett, a gaming executive and daughter
of Vegas veteran and co-founder of the Circus Circus Casino William Bennett.
Martin's Augustine Casino opened last July. With 349 slot machines and
10 gaming tables, it's the fifth and by far the most modest casino in the
Palm Springs area. But it stands to make a lot of non-Indian investors
— and one Indian adult — rich. And get this: Martin still
qualifies for federal aid, in amounts far greater than what many needy
Native Americans could even dream of getting. In 1999 and 2000 alone, government
audit reports show, she pulled in more than $1 million from Washington--$476,000
for housing, $400,000 for tribal government and $146,000 for environmental
programs. It wasn't supposed to be
this way. At the end of the 1980s, in a frenzy of cost cutting and privatization,
Washington perceived gaming on reservations as a cheap way to wean tribes
from government handouts, encourage economic development and promote tribal
self-sufficiency. After policy initiatives by the Reagan Administration
and two U.S. Supreme Court rulings that approved gambling on Indian reservations,
Congress enacted the Indian Gaming Regulatory Act in 1988. It was so riddled
with loopholes, so poorly written, so discriminatory and subject to such
conflicting interpretations that 14 years later, armies of high-priced
lawyers are still debating the definition of a slot machine. Instead of regulating Indian
gambling, the act has created chaos and a system tailor-made for abuse.
It set up a powerless and underfunded watchdog and dispersed oversight
responsibilities among a hopelessly conflicting hierarchy of local, state
and federal agencies. It created a system so skewed — only a few small
tribes and their backers are getting rich — that it has changed the face
of Indian country. Some long-dispersed tribes, aided by new, non-Indian
financial godfathers, are regrouping to benefit from the gaming windfall.
Others are seeking new reservations — some in areas where they never lived,
occasionally even in other states — solely to build a casino. And leaders
of small, newly wealthy tribes now have so much unregulated cash and political
clout that they can ride roughshod over neighboring communities, poorer
tribes and even their own members. The amount of money involved
is staggering. Last year 290 Indian casinos in 28 states pulled in at least
$12.7 billion in revenue. Of that sum, Time estimates, the casinos kept
more than $5 billion as profit. That would place overall Indian gaming
among Fortune magazine's 20 most profitable U.S. corporations, with earnings
exceeding those of J.P. Morgan Chase & Co., Merrill Lynch, American
Express and Lehman Bros. Holdings combined. But who, exactly, is benefiting?
Certainly Indians in a few tribes have prospered. In California, Christmas
came early this year for the 100 members of the Table Mountain Rancheria,
who over Thanksgiving picked up bonus checks of $200,000 each as their
share of the Table Mountain Casino's profits. That was in addition to the
monthly stipend of $15,000 each member receives. But even those amounts
pale beside the fortunes made by the behind-the-scenes investors who bankroll
the gaming palaces. They walk away with up to hundreds of millions of dollars. Meanwhile, the overwhelming
majority of Indians get nothing. Only half of all tribes — which have a
total of 1.8 million members — have casinos. Some large tribes like the
Navajo oppose gambling for religious reasons. Dozens of casinos do little
better than break even because they are too small or located too far from
population centers. The upshot is that a small number of gaming operations
are making most of the money. Last year just 39 casinos generated $8.4
billion. In short, 13% of the casinos accounted for 66% of the take. All
of which helps explain why Indian gaming has failed to raise most Native
Americans out of poverty. What has happened instead is this: A LOSING HAND. Revenue from
gaming is so lopsided that Indian casinos in five states with almost half
the Native American population — Montana, Nevada, North Dakota, Oklahoma
and South Dakota — account for less than 3% of all casino proceeds. On
average, they produce the equivalent of about $400 in revenue per Indian.
Meanwhile, casinos in California, Connecticut and Florida — states with
only 3% of the Indian population — haul in 44% of all revenue, an average
of $100,000 per Indian. In California, the casino run by the San Manuel
Band of Mission Indians pulls in well over $100 million a year. That's
about $900,000 per member. THE RICH GET RICHER. While
federal recognition entitles tribes to a broad range of government benefits,
there is no means testing. In 2001, aid to Indians amounted to $9.4 billion,
but in many cases more money went to wealthy members of tribes with lucrative
casinos than to destitute Indians. From 1995 to 2001, the Indian Health
Service, the agency responsible for looking after the medical needs of
Native Americans, spent an average of $2,100 a year on each of the 2,800
members of the Seminole tribe in Florida. The Seminoles' multiple casinos
generated $216 million in profits last year, and each tribe member collected
$35,000 in casino dividends. During the same six years, the health service
spent an annual average of just $470 on each of the 52,000 members of the
Muscogee (Creek) Nation in Oklahoma, whose tiny casinos do little more
than break even. BUYING POLITICIANS. Wealthy
Indian gaming tribes suddenly are pouring millions of dollars into political
campaigns at both state and federal levels. They are also influencing gaming
and other policies affecting Native Americans by handing out large sums
to influential lobbying firms. In 2000 alone, tribes spent $9.5 million
on Washington lobbying. Altogether they spend more to influence legislation
than such longtime heavyweights as General Motors, Boeing, AT&T — or
even Enron in its heyday. GAMING TRIBES AS EXCLUSIVE
CLUBS. Tribal leaders are free to set their own whimsical rules for admission,
without regard to Indian heritage. They may exclude rivals, potential whistle-blowers
and other legitimate claimants. The fewer tribe members, the larger the
cut for the rest. Some tribes are booting out members, while others are
limiting membership. Among them: the Pechanga Band of Mission Indians in
Riverside County, Calif., whose new Las Vegas — style gaming palace, the
Pechanga Resort & Casino, is expected to produce well over $100 million
in revenue. GOLD RUSH. Since only a
federally recognized tribe can open a casino, scores of groups — including
long-defunct tribes and extended families — have flocked to the BIA or
Congress seeking certification. Since 1979, as gambling has boomed, the
number of recognized tribes on the U.S. mainland has spiked 23%, to a total
of 337. About 200 additional groups have petitioned the bureau for recognition.
Perhaps the most notorious example of tribal resurrection: the Mashantucket
Pequots of Connecticut, proud owners of the world's largest casino, Foxwoods.
The now billion-dollar tribe had ceased to exist until Congress re-created
it in 1983. The current tribe members had never lived together on a reservation.
Many of them would not even qualify for government assistance as Indians. THE IMPOTENT ENFORCER. Congress
created the National Indian Gaming Commission (NIGC) to be the Federal
Government's principal oversight-and-enforcement agency for Indian gaming
— and then guaranteed that it could do neither. With a budget capped at
$8 million, the agency has 63 employees to monitor the $12.7 billion all-cash
business in more than 300 casinos and small gaming establishments nationwide.
The New Jersey Casino Control Commission, by contrast, has a $59 million
budget and a staff of 720 to monitor 12 casinos in Atlantic City that produce
one-third the revenue. The NIGC has yet to discover a single major case
of corruption — despite numerous complaints from tribe members. THE WHITE MAN WINS AGAIN.
While most Indians continue to live in poverty, many non-Indian investors
are extracting hundreds of millions of dollars — sometimes in violation
of legal limits — from casinos they helped establish, either by taking
advantage of regulatory loopholes or cutting backroom deals. More than
90% of the contracts between tribes and outside gaming-management companies
operate with no oversight. That means investors' identities are often secret,
as are their financial arrangements and their share of the revenue. Whatever
else Congress had in mind when it passed the regulatory act, presumably
the idea was not to line the pockets of a Malaysian gambling magnate, a
South African millionaire or a Minnesota leather-apparel king. FRAUD, CORRUPTION, INTIMIDATION.
The tribes' secrecy about financial affairs — and the complicity of government
oversight agencies — has guaranteed that abuses in Indian country growing
out of the surge in gaming riches go undetected, unreported and unprosecuted.
Tribal leaders sometimes rule with an iron fist. Dissent is crushed. Cronyism
flourishes. Those who question how much the casinos really make, where
the money goes or even tribal operations in general may be banished. Indians
who challenge the system are often intimidated, harassed and threatened
with reprisals or physical harm. They risk the loss of their jobs, homes
and income. Margarite Faras, a member of the San Carlos Apache tribe, which
owns the Apache Gold Casino in San Carlos, Ariz., was ousted from the tribal
council after exposing corruption that led to the imprisonment of a former
tribal leader. For three years, Faras says, those in control mounted nighttime
demonstrations at her home, complete with loudspeakers. They initiated
a boycott of her taco business, telling everyone she used cat meat. They
telephoned her with death threats. Says Faras: "I don't know what else
to say, other than it's been a nightmare."
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