The 5 Cent Empire

Native American tribes parlayed legalized gambling into a $22 billion lifeline. Now states want a piece of the action.

That’s risky business. Historically, Native Americans have not fared well in showdowns with lawmakers. When Indians resisted attempts in the late 19th century to be “assimilated” into American culture, Congress passed the General Allotment Act. The law, also known as the Dawes Act, ultimately stripped tribes of two-thirds of their land, or roughly 90 million acres. You can make a Montana with 90 million acres.

Past Performance as Future Indicator

For now, public sentiment appears to be running against tribes and their gaming operations. In November, residents of Rhode Island overwhelmingly rejected a ballot initiative that would have given the Narragansett band a monopoly on casino gambling in the state.

Fearing a backlash that could lead to even greater revenue sharing — or cost them their gaming monopolies outright — some casino tribes are starting to hedge their bets. A few have begun pouring gambling proceeds into noncasino operations like banks, property, even bottled-water companies (see “Reservations Not Required” at the end of this article). “We need to diversify our revenue sources,” acknowledges Debra Croswell, deputy executive director of the Confederated Tribes of the Umatilla Reservation, which has financed the construction of a new technology park on its reservation near Pendleton, Oregon. She pauses, then adds, “Gaming may not be around forever.”

Based on past performance, that would seem to be a pretty safe bet. If so, consider it one more broken promise, one more accommodation on a long trail of disappointments. “You know, if there is one lesson to be learned from American history,” says attorney Hamilton, “it’s that when Native Americans have something non-Indians want, they take it from them.”

John Goff is technology editor at CFO.

Reservations Not Required

As their casino operations face pressure, some tribes are exploring new business ventures.

Most companies do everything they can to help customers find their places of business. And then there’s the Mohican North Star Casino and Bingo. This Native American house of cards (and slots) is located on County Road A, a backwoods trail that twists through corn and cattle country in north central Wisconsin. Few billboards point the way to the casino, which is owned by the Stockbridge-Munsee Band of Mohican Indians. Take a wrong turn at the junction of Road A and Road U and you end up driving into and out of Gresham, a detour that will cost you at least six seconds.

Most Indian-owned casinos, in fact, sit on remote reservation lands in places like Kamiah, Idaho (Nez Perce); Lame Deer, Montana (Northern Cheyenne); and Mescalero, New Mexico (Apache). Rural casinos do scant business compared with better-located rivals. Indeed, 40 percent of tribal casinos account for barely 2 percent of total Native American gaming revenues.

Not surprisingly, a number of tribes are keen to set up gambling operations nearer to town. The strategy, known derisively as “reservation shopping,” has met with stiff resistance from state and federal officials. In July, a bill was introduced in Congress by Rep. Richard Pombo (R-Calif.) that would all but kill the practice.

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