With billions of dollars at stake, you might think the Indian gaming industry is more heavily regulated than it actually is.
Originally designed as a way to compensate Indian tribes for their mistreatment at the hands of the U.S. government, it's become something of a shell game. Those who follow Indian gaming issues cheerfully recall anecdotes involving lawyers in limousines showing up at tribal headquarters with offers to help set up casinos and other operations, for a fee of course.
In 1988 the U.S. Congress passed the Indian Gaming Regulatory Act. The purpose of the act was to create a regulatory framework for the establishment of casinos and other gambling establishments on Indian lands. The thinking at the time was that the influx of revenue from such operations would provide sufficient capital to allow tribes to become economically self-sufficient or, at the very least, establish a pool of capital that could be used for investments that would create jobs and alleviate the tremendous poverty on reservations throughout the United States.
In the ensuing years, it was generally left to the discretion of the U.S. Department of the Interior whether a particular tribe can set up a casino and how many they can operate. Unfortunately, the Interior Department's Bureau of Indian Affairs, which has responsibility for Indian gaming, has failed to act in ways that are in the best interests of the U.S. taxpayers and, it would seem, the tribes themselves.
The lack of sufficient federal oversight and accountability may explain why one of the most successful and largest Indian gaming facilities has amassed over $2 billion in debt, come under investigation by the FBI, and become increasingly reliant on federal aid and grants to make ends meet. As the Associated Press recently reported, the economic downturn which has had an adverse effect on casino revenues is pushing some tribes to seek a federal bailout. "Once the envy of Indian Country for its billion-dollar casino empire, the tribe that owns the Foxwoods Resort Casino has been struggling through a financial crisis and pursuing more revenue from an unlikely source: U.S. government grants," the wire service reported in March.
"The money provided annually to the Mashantucket Pequot Tribal Nation through the Interior Department and the Department of Health and Human Services has risen over the last five years to more than $4.5 million," the AP said, citing documents obtained under the Freedom of Information Act. It also reported, citing a former tribal employee as the source that the government had encouraged the use of government grants as a backdoor subsidy to offset what the news wire referred to as "dwindling resource" and that the stewardship of tribal resources by several former leaders of the Mashantucket Pequot tribe has come under the scrutiny of the FBI.
While the amount of federal grant money to the Mashantucket is not exactly staggering - likely in excess of $10 million according to records reviewed by the AP - it should be large enough to attract attention and produce calls for increased oversight by Congress and Department of Interior. Regrettably, they seem focused on other things.
Under the Bush Administration the standards were fairly rigorous, with considerable weight given to the views of state and local officials as to the efficacy of each project. Since then, however the existing rules and procedures were loosened, making them dangerously ambiguous and without enough weight given to state and local concerns. At the same time Washington is providing even less oversight and scrutiny of the actual operations of these facilities.
The Obama Administration's current position may even open the door to a broad expansion of tribal casinos, even on non-tribal lands, without the safeguards and oversight that appear to be so clearly needed.
Wisconsin's Menominee tribe, for example, currently has an application before the BIA that, if approved, would allow it to open an "off-reservation" casino in the city of Kenosha. That application faces questions over the role played by the head of BIA, Assistant Secretary of the Interior Kevin Washburn, in previous unsuccessful attempts to establish operations at the same site.
While some people debate whether or not Washburn a former general counsel to the National Indian Gaming Commission, has an apparent conflict of interest in the case - and one state-based watchdog group, Enough Already Wisconsin, which is opposed to the project says he does - the possibility that tribes may expand their gaming operations to sites not located on the reservation goes on without much needed scrutiny by the federal government. States are limited in their power to regulate tribal operations because, under U.S. law, Indian tribes are sovereign entities, responsible in most instances to the federal government only.
The Congress and the Obama Administration need to get a better hold on emerging problems at large-scale Indian gaming facilities such as the one in Connecticut. Rather than allow Indian gaming operations to continue to expand, it may be time to revisit the issue, to place reasonable limits on tribal gaming activities.
The regulation and oversight of the applications and the operations clearly need to be strengthened to ensure that tribal governments are never allowed turn to taxpayer funded grants to fill in the gap when casino revenues dip below where they are projected to be. The prior mistreatment of Native Americans is something that the government should address. Swapping dependence on government aid for dependence on what are potentially government-backed casino profits is not the answer. That only perpetuates an unhealthy culture of dependency.
Peter Roff is a senior fellow at Frontiers for Freedom, a Washington, D.C.-based public policy organization advocating on behalf of limited government. Folow him on Twitter at @PeterRoff.
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