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Alabama Empire

Poarch Creek threatened by talk of expanded gambling in Alabama

Alabama Empire

Eddie Tullis, chairman of the Poarch Band of Creek Indians for some 25 years, joked in an interview last year about Alabama’s moral hypocrisy when it comes to gambling. Politicians and Bible-thumpers proselytize against wagering, he said, yet gambling remains widespread.

“You can go to any country club in Alabama on Saturday night and get into a high-stakes poker game,” Tullis said, and money frequently changes hands at NASCAR races and SEC football games.

Bingo is a prominent activity at churches and VFW halls, he noted. And electronic bingo games often targeted by law enforcement officials nevertheless flourish throughout the state.

But Tullis believes resentment flares up when American Indians are running the games.

“You let the tribes operate gambling and people perceive that Indians and money are incompatible,” he said, stirring animosity among non-Indians desiring a piece of the action.

Much anti-Indian sentiment diminished over the last three decades as Poarch Creek, Alabama’s only federally recognized tribe, grew a government gambling industry that today consists of three large casinos with 6,300 electronic bingo machines earning $330 million a year.

Poarch Creek has become a major economic force with gambling and non-casino business enterprises employing 3,000 mostly non-Indian workers in and around the communities of Atmore, Wetumpka and Montgomery, sites of the tribe’s Wind Creek casinos.

And the tribe has become a political player, contributing hundreds of thousands of dollars to local and state elected officials.

“We realized early we need a good relationship with local communities and politicians,” Tullis said.


Budget Stopgap

Those relationships are being put to the test as lawmakers in May introduced a bill calling for a constitutional amendment to legalize a lottery and commercial casinos at four parimutuel dog tracks to help alleviate a looming budget deficit that in a few years could grow to $700 million.

Such a widespread expansion of gambling would have a devastating impact on Poarch Creek casinos, which as government operations generate funds to provide for the health, welfare and education of more than 3,000 adult tribal citizens.

“We believe expanding gaming that way would threaten what we have worked so hard to build and could affect our economic stability,” Poarch Creek Chairwoman Stephanie Bryan says.

The tribe quickly offered $250 million to bail the state out of its immediate fiscal problems, a defensive measure Bryan calls “part of an overall strategy to limit gaming within the state” while protecting Poarch Creek’s casino exclusivity.

“Our strategy now is to make sure that legislators and their constituents understand that the tribe has a history of being a good corporate citizen and good neighbor,” Bryan says.

The legislation also calls for negotiating a tribal-state regulatory compact with Poarch Creek that would allow the tribe to operate casino-style slot machines and table games with a share of the revenue going into the general fund.

But Poarch Creek officials say there is little incentive in a compact if commercial casinos are allowed elsewhere in the state, potentially crippling the tribe’s economy.

It is not clear if the legislative effort will generate enough votes to get a gambling initiative on the September 15 ballot. A number of legislators spoke out against the measure and Governor Robert Bentley, who is proposing a $541 million tax increase on cigarette products and car sales and rentals, calls the draft bill “one of the worst pieces of legislation I’ve ever seen.”

Putting a constitutional amendment on the ballot would require approval by 60 percent of the legislature. And it’s questionable a gambling ballot initiative would survive Bible-Belt scrutiny. An Alabama lottery initiative in 1999 was defeated by 54 percent of the voters.

Expansion Gains Momentum

Even if lawmakers are not successful in getting expanded gambling in Alabama in the current legislative session, Poarch Creek tribal leaders believe the latest move to legalize commercial and lottery gambling won’t be the last.

Tribes in several of the 28 states with Indian casinos are being pressured by lawmakers who are looking at commercial gambling as a means of generating needed tax revenues. The neighboring Florida Seminoles, fearful of ongoing efforts to legalize resort casinos as a tool for generating taxes and tourism, are urging legislators to instead renegotiate the tribe’s expiring tribal-state compact.

Poarch Creek has had a tenuous relationship with Montgomery lawmakers, the religious right and anti-gambling moralists since the tribe opened a high-stakes bingo parlor in 1984.

As Tullis told GGB, many Alabamans view with suspicious envy Poarch Creek casinos—which according to tribal figures generate $600 million a year in gross gaming revenues—and wonder why they can’t share in the wealth.

Meanwhile, Attorney General Luther Strange has been waging a campaign to outlaw electronic bingo machines on tribal lands, an effort thus far rebuffed by the courts and National Indian Gaming Commission, which has opined that the devices are, indeed, legal.

The current push to expand gambling in Alabama is all the more alarming to the tribe because it appears to be bipartisan, sponsored by Republican Senate Pro Tem Del Marsh and supported by a number of colleagues along with House Democrats.

“Republicans understand how serious the situation is,” Democratic Senator Roger Smitherman told the Montgomery Advertiser. “And there isn’t an appetite for new taxes, either among voters or in the legislature.”

Poarch Creek is not opposed to a lottery. But tribal leaders are miffed state officials would legalize slot machines and table games at the four greyhound tracks, even though the facility in Mobile is owned by the tribe.

Tribal leaders strongly suspect the bill to be the brainchild of Milton McGregor, whose Victoryland greyhound track casino was shuttered in 2014 following a highly publicized raid by an anti-gambling task force.

“I do think this is a Milton McGregor bill,” Robert McGhee, Poarch Creek councilman and director of government affairs, says of the wealthy and politically influential owner of two of Alabama’s four parimutuel tracks.

Poarch Creek On The Defensive

An Auburn University study shows a lottery would generate $330 million a year while slots and table games at the greyhound tracks taxed at 13 percent would generate $65 million annually.

“The numbers are pretty impressive,” Del Marsh says.

McGhee disagrees.

“It’s really not a lot of money,” he says. “You’re going to dramatically change the gaming landscape in Alabama for $65 million? That’s ridiculous.”

The tribal councilman says Alabama could generate more money establishing a lottery and entering into a tribal-state compact that, under the Indian Gaming Regulatory Act, would allow the tribe to offer Class III, casino-style slots and table games.

While McGhee declined to suggest what the revenue share might be in a compact, others put the figure at about 15 percent of the net income, roughly equal to the proposed tax on commercial casinos.

Poarch Creek for nearly two decades has been rebuffed in attempts to negotiate a tribal-state compact. It is stepping up those efforts now that Alabama seems more intent than ever to open up gambling in the state.

Ironically, swapping out Class II bingo machines for Class III, casino-style devices would not greatly impact the bottom line at Poarch Creek casinos. (See related story, page 44.) Operating Class II machines in a non-competitive market has proven as lucrative as Class III devices.

However, a compact would enable Poarch Creek to offer table games—notably blackjack, baccarat, roulette and craps—and, more important, guarantee the tribe long-term statewide exclusivity to operate casino-style gambling.

The tribe would likely negotiate a site for a fourth casino in the potentially lucrative Birmingham market.

A compact could also discourage ongoing litigation by AG Strange and others challenging Poarch Creek’s status as a federally recognized tribe.

A 2009 U.S. Supreme Court decision in Carcieri v. Salazar questioned the status of tribes not “under federal jurisdiction” in 1934. Poarch Creek was recognized in 1984, the same year it opened a high-stakes bingo parlor in Atmore.

“A compact would be the best scenario. It would be beneficial for the tribe and the state moving forward,” McGhee says, ensuring the tribe casino exclusivity, generating a revenue stream for the general fund and only minimally expanding gambling in the state.

If the state were to legalize commercial casinos, McGhee says the tribe could request a compact with the Department of Interior through secretarial procedures, an agreement that would likely not include a revenue share for the state. The tribe had previously avoided going the secretarial procedure route out of fear of Carcieri-related litigation.

Bentley wants to secure a tax increase before discussing a compact with the tribe.

“I have no intention of doing anything with gambling, with negotiations with the Poarch Creek Indians; I have no intention of doing anything until we get $541 million,” he told the Montgomery chamber.

Facing An Insecure Future

Although there may be growing public acceptance of gambling in Alabama, it’s difficult for many to imagine voter approval of a bill to legalize both a lottery and commercial casinos.

Launching a lottery in the conservative state “is not a particularly gutsy move,” wrote Birmingham News columnist Charles Dean. “But combining a lottery with casino-type gambling? We haven’t been there before.”

“I don’t like the lottery and gambling being joined together as a one-size-fits-all,” Senator Paul Bussman told Decatur Daily. “I’d hope that they’d separate them out. Then we may feel a little bit better about letting people vote for a lottery.”

What annoys tribal officials is the lack of a cooperative, government-to-government relationship between Poarch Creek and Alabama officials. They believe the state is not acknowledging the impact Poarch Creek has had on the state and local economy and employment.

It was the intent of IGRA that gambling help tribes create diversified economies and strengthen their governments, McGhee says.

“People don’t want to hear that.”

——————————————————————————————————–

Classless Approach
Poarch Creek ‘not sure’ about switch to Class III Machines

So Hot, Triple Stars, Double Diamond Strike, Quick Hit, Triple Red Hot 7s, Money in the Bank, Wild and Free and Egyptian Goddess may not be among the thousands of slot machines lining the floors of Las Vegas Strip casinos.

But the Class II, bingo-style electronic slot machines are wildly popular among gamblers patronizing the Wind Creek casinos in Atmore, Montgomery and Wetumpka, Alabama.

In fact, if the Poarch Band of Creek Indians entered into a tribal-state compact with the state of Alabama enabling the tribe to swap out the machines for Class III, casino-style devices, Wind Creek executives may shake their heads and reply, “No thanks. We’ll stick with what we’ve got.”

“From a machines perspective, I’m not sure there would be any big difference on the casino floor if we got a compact,” says Jay Doris, CEO of Wind Creek Hospitality, the tribal gambling authority. “I’m not sure we would necessarily make the switch.

“Our customers are quite happy with the games we provide.”

The Indian Gaming Regulatory Act requires tribes seeking to operate Class III machines and house-banked table games such as blackjack, roulette and craps to enter into tribal-state regulatory agreements, or compacts.

Because Alabama officials have for decades balked at entering into a compact with Poarch Creek, Wind Creek players have grown accustomed to the electronic bingo games.

Meanwhile, technical advances to bingo machines, which operate off a central server, have made them nearly as fast and entertaining as Class III games, which run off random number generators.

“The manufacturers have developed Class II games that a lot of our players have found to be really appealing,” Doris says. “They are every bit as attractive, or more so, than some of the Class III machines.”

And in Alabama, where Poarch Creek casinos have no competition, the Class II games are just as profitable.

“They are the only game in town,” Randy Carnett, Ortiz Gaming consultant and principal in Pineapple Ventures, Ltd., says of Poarch Creek. “Their win numbers are excellent.”

The 6,300 machines in Wind Creek casinos generate in excess of $600 million a year, according to tribal figures.

“The Poarch Band of Creek Indians has been able to flourish economically in an environment such as the state of Alabama that is not conducive to Class III gaming,” says Robert McGhee, Poarch Creek councilman and director of government affairs.

“A tribal-state compact simply has not been an option.”

At least not until this legislative session, when Alabama officials found themselves faced with a looming $290 million budget deficit that may triple in just a few years.

Some lawmakers are pressing for a ballot initiative to legalize a lottery and commercial casinos. And they are also pursuing compact talks with Poarch Creek, apparently willing to let the tribe operate Class III games in exchange for a share of the revenues.

Poarch Creek would not be receptive to a compact if casinos were permitted at four parimutuel greyhound tracks. But the tribe would welcome a compact that ensures their exclusivity to operate casinos and, perhaps, allows Poarch Creek to open a fourth casino in Birmingham.

Class II On The Upswing

The Poarch Creek experience is similar to tribes in Florida and Oklahoma, where state officials for years rejected attempts to negotiate compacts, forcing indigenous communities to operate Class II games.

Oklahoma’s Class II inventory reached 36,000 devices in 2004, when tribes and Governor Brad Henry finally agreed on a Class III compact later approved by the voters.

“When we got the compact, Class II gaming in Oklahoma was extremely advanced,” says Tracy Burris, former Chickasaw gaming commissioner.

Player loyalty to Class II machines remains strong. Class II devices made up 42 percent of Oklahoma’s 2013 inventory of nearly 70,000 machines, according to economist Alan Meister, author of Casino City’s Indian Gaming Industry Report, and the number continues to grow.

Of the more than 350,000 slot machines in Indian Country, roughly 10 percent are Class II devices. Alabama ranks behind Oklahoma in Class II machines, the possible exception being the uncalculated number of bingo-style devices in California.

A Winning Formula

“We want our players to be engaged,” Doris says, so the strategy is to keep the floor hold at 6 percent. “We give customers a game that is fun to play and we give them more time to play it. Over time they know their gambling budget is going to go much further than anywhere else.”

A Class III compact will allow the tribe to install table games, but tables are less profitable and more labor-intensive than machines.

“You take several banks of machines that are producing quite well and replace them with table games, the economics don’t work,” Doris says.

The tribe will install tables, if the state agrees to a tribal-state compact, if for no other reason than to satisfy customers looking to roll the dice or fan cards across green felt.

“We would definitely take a look at it,” Doris says. “But when you look at our results, it’s not a market that’s going to generate significant upside for us. We know what our niche is. We need to stay focused on that.”

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Dave Palermo is an award-winning metropolitan newspaper reporter. He has written about American Indian governments for more than 20 years, working as an advocate for several tribes and tribal associations. He also has co-authored books on gambling and gambling law. He can be reached at dgpalermo1@gmail.com.

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