When is an Indian casino an Indian casino? By Ken Adams, CDC Gaming Reports November 21, 2019 at 6:41 pm Indian gaming is not easy to define these days, now that tribes are beginning to move into traditional commercial casino gaming. The legal definition of Indian gaming itself has not changed: Indian gaming is a gaming enterprise authorized by the National Indian Gaming Regulatory Act of 1988 (NIGRA) and conducted under the conditions agreed upon by a tribe and state. In the 31 years since 1988, Indian gaming has grown exponentially. When the act passed, there were a few bingo halls and small casinos scattered across Indian country; today, 28 states have a total of 460 tribal casinos, and Indian gaming annually generates revenue in excess of $30 billion. By comparison, in 2018 the casinos, VLTs and sports betting in traditional commercial casinos in 23 states generated $43 billion. Indian gaming and commercial casino gaming are governed by a different set of laws and regulations, but within each state, the conditions are comparable. The major difference between the two forms of gaming is the ownership. Commercial casinos are owned by corporations or individuals. Tribal casinos are owned by Indian tribes. Commercial casinos pay a state tax based on the gross gaming revenue and distribute their after-tax profits to their individual shareholders and owners, and the individuals pay state and federal taxes on that income. Indian casinos do not pay a state tax as such, although the tribes pay the state and local governments a fee based on the casino revenue. Some tribes distribute a portion of the profits, also, in the form of a per capita payment. In those cases, tribal members pay federal taxes on their income. However, the majority of the profits from Indian gaming go to fund tribal governments and to other tribal businesses. Economic development was a requirement of the enabling legislation. The NIGRA requires the funds to be used to promote tribal economic development and self-sufficiency and for tribal services and benefits. In the early years of Indian gaming, most tribes used the money to help provide basic services; the casinos themselves were a source of employment in areas where unemployment was traditionally very high. That employment, and the other economic activities surrounding the casino and tribal services, represented the extent of the economic development. However, as the tribes accumulated cash, experience and economic vision, that began to change. For example, the Tulalip Tribes of Washington started adding other businesses and eventually developed a retail “city.” The Mohegan and Pequot tribes from Connecticut looked for opportunities with tribes in other states, offering financing, expertise and management services. The Connecticut tribes also began to explore entering the commercial casino market, including most recently in Europe and Asia. Currently, tribes from Alabama, Oklahoma, Connecticut, Florida, Mississippi and North Carolina are either bidding for casinos licenses in other states or have already purchased existing casinos. Tribes have also explored other businesses, including banking, manufacturing, utilities, real estate and ranching. But casino gaming remains a primary target when a tribe wishes to expand its revenue sources and strengthen its economy. The tribe which has pushed the model the farthest is the Seminole Tribe of Florida. The Seminole Tribe was one of the tribes with some form of limited gaming when NIGRA passed. The Seminoles began adding games and amenities and building more updated casinos and new locations. By 2007 the tribe was very sound financially and ready to take the next big step out of Florida, and out of Indian gaming. That year, the tribe purchased Hard Rock International for $965 million. As of July 2018, Hard Rock International had venues in 74 countries, including 185 cafes, 25 hotels, and 12 casinos. Every time there is an opportunity for a new license or a viable casino for sale, the Seminoles are there with the Hard Rock brand, bidding on the opportunity. The Indian gaming landscape has become increasingly confusing for me. I divide my daily report into sections by segment: there is an international section, one for horse racing, national news, the top stories of the day, and Indian gaming. The expansion of Indian tribes outside of the confines of the NIGRA thus presents me with the question, “Is this Indian gaming?” For example, when the Poarch Creek Indians buy the Sands in Bethlehem, Pennsylvania, is that Indian gaming? How about when the Poarch Creek offer the state of Alabama a billion dollars to allow them to offer Class III gaming at their Class II casinos and to add a couple more in key cities in the state – is that Indian gaming? How about the tribes from Oklahoma that want a casino license in Arkansas, or the tribe from Wisconsin that wants a license in Illinois? Are either of those Indian gaming stories? My position on the subject is changing. For most of the 17 years that I have been doing a daily report for CDC Gaming Reports, I have stuck to the law. If a casino operated by an Indian tribe was authorized by the NIGRA and regulated by a tribal-state compact, it was Indian gaming. If the Mohegan tribe bought a casino in Pennsylvania or the Seminole Tribe bought a casino in Atlantic City, it was not Indian gaming. However, the latest round of gaming expansion in Indiana, Illinois, Massachusetts and Arkansas has changed my mind. In each state, there is at least one tribe bidding for a license. Those licenses will be governed by state law and regulations, not the NIGRA and a tribal-state compact. On the other hand, the tribes seeking those opportunities have the wherewithal to do so because of Indian gaming. In the 31 years since the NIGRA passed, tribes have acquired the ability to finance, the expertise to operate, and the confidence to move out of state and compete against the industry’s biggest gaming corporations. In fact, some tribes, like the Seminole, are indeed now among the gaming industry’s biggest players. And that was intent of the act, to allow Indian tribes to conduct casino gaming as a way of becoming financially independent. I can think of very few pieces of federal legislation that have been as successful in meeting the legislative goals as the Indian Gaming Regulatory Act.