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Heart of the City

Tribal casinos developing an 'urban' flare

Heart of the City

An American Indian casino may soon be appearing at a city near you, generating jobs and economic development and, many now believe, without causing the crime, social ills and environmental damage predicted by anti-gambling groups.

“When Indian gaming was on the ballot the argument was whether the casinos would be a negative impact, creating more problems than they solve,” Michael Lombardi, gaming commissioner for the Augustine Band of Cahuilla Indians, says of a 1999 California ballot initiative giving tribes exclusivity to operate casinos.

“We’ve moved way beyond that. It’s generally recognized in California that Indian gaming has been an over-the-top success,” Lombardi says, generating $7 billion in annual revenue, employing 55,000 people and creating a ripple of economic growth in surrounding communities.

“Tribal casinos are well-run. There is no organized crime. Casinos haven’t depredated the environment. There’s been a huge shift in the sentiment of most communities that Indian casinos contribute to the welfare of towns and cities.”

Going Downtown

Indeed, an anticipated expansion of the American Indian casino industry in California and elsewhere has a decided urban feel.

Until lately, the spread of Indian casinos to 28 states has for the most part been a rural phenomenon.

There are a number of suburban tribal casinos in Southern California and Arizona, near San Diego and Phoenix, and along the Interstate 5 “casino strip” through Washington state. San Diego County leads the nation with 10 Indian casinos. And Duluth, Minnesota, and Milwaukee, Wisconsin, are two of a select few communities with tribal casinos within their municipal borders.

But most of the 440 tribal casinos are a good driving distance from their customers, with neon signs on often-small operations (180 of the casinos have fewer than 500 machines) lighting up an otherwise bucolic landscape.

The Indian gambling landscape may gradually change, however, as the $26.5 billion tribal casino market matures and becomes more competitive.

Casino development on existing reservations has ground to a crawl. But after eight years of anti-Indian policies under the Bush Administration, the U.S. Department of the Interior is bestowing federal recognition on Indian groups, restoring terminated tribes and granting land claims to tribes that, for various reasons, have lost reservation land. Many of these new tribes are contemplating casinos.

The Indian Gaming Regulatory Act of 1988—begrudgingly adopted by Congress when the U.S. Supreme Court acknowledged the inherent right of tribes to engage in gambling on Indian lands—largely limits casinos to reservations established when the act was passed.

But there are exceptions in the act for newly recognized or restored tribes that satisfy Interior’s “two-part determination,” which means approval by the state governor and a determination that a project is not detrimental to nearby tribal and non-Indian communities.

As a result, a few Indian tribes are emerging near urban areas, largely in California, which has nearly a third (115) of the federally recognized tribes in the lower 48 states. Several newly recognized tribes, backed by moneyed investors, are hoping to build casinos, often at the urging of county and municipal officials seeking jobs and economic development.

“The need to generate jobs is becoming a very important issue,” Lewis & Roca tribal attorney Steve Hart told GamblingCompliance.com. “Clearly, people in local communities and the states are looking at development of tribal casinos as very real job-creators. Because we’ve been in a recession for so long, that has become really important.”

Off Rez On Point

Interior is also easing Bush-era prohibitions on existing tribes seeking off-reservation casinos, though the agency has not approved anything more than 36 miles away.

“I think you have a political and economic environment that will see growth” in California, Station Casinos Chief Development Officer Scott Nielson says, in part because of a willingness by Governor Jerry Brown to work with indigenous communities.

Station, which until 2010 managed the lucrative Thunder Valley Casino Resort near Sacramento, has investor/management agreements with two California tribes and one in Michigan.

Legislators last May ratified California’s 70th tribal-state compact, which, if approved by Interior, will allow the Federated Indians of Graton Rancheria to build a casino in Rohnert Park, 50 miles from San Francisco. The Habematolel Pomo Indians of Upper Lake in June opened its 349-machine Running Creek Casino.

Meanwhile, Interior recently agreed to place gaming land in trust for the North Fork Mono Indians in Madera County, Enterprise Rancheria of Maidu Indians in Yuba County and Ione Band of Miwok in Amador County. The Cloverdale Rancheria Pomo Indians in Sonoma County in April resubmitted a casino land/trust application.

The Manzanita Band of Diegueno Indians is looking to build a hotel-casino in Calexico, on the Mexico border, and the Los Coyotes Indians of San Diego County want to build a casino more than 100 miles away in the desert community of Barstow.

The Karuke Tribe of Happy Camp in April received federal approval to operate a casino. And the newly restored Tejon Tribe is pondering a casino near Bakersfield.

Elsewhere, the newly recognized Wampanoag Tribe of Massachusetts plans to build a $500 million gambling resort on 146 acres of trust land in Taunton, a project supported by city officials. The Shinnecock Indian Nation, recognized in 2010, is exploring off-reservation casino opportunities in Belmont Park and Nassau County, Long Island.

The Sault Ste. Marie Tribe of Chippewa Indians is attempting to build a $245 million casino in Lansing, Michigan. The project is supported by the city but opposed by Attorney General Bill Schuette, who claims the casino violates federal law and the tribal-state gambling compact.

The Tohono O’odham Indian Nation hopes to build a casino adjacent to the Phoenix suburb of Glendale on property obtained through a federal land claim for acreage lost because of a dam project on the tribe’s sprawling southern Arizona reservation.

The Glendale project faces opposition from state and city officials angered at Interior’s decision to approve the land claim. Nearby tribes contend Tohono O’odham is encroaching on their ancestral land and violating a promise made in a 2002 ballot initiative that there would be no new casinos in the Phoenix area.

The U.S. House passed a bill to halt the Glendale project, but the legislation is not expected to get through the Senate.

 
Opponents Are Persistent

The urban casino trend, hastened by a tribal-friendly Interior under President Obama, has sparked the ire of anti-gambling groups in California and Arizona.

Opponents to “reservation shopping” are often being nullified, however, by the need for jobs and the realization that casinos, although morally distasteful to some, are not creating the crime, environmental destruction and social depravity predicted by gambling naysayers.

“Anti-gambling organizations seem to have lost whatever punch they had,” says Bill Eadington, professor of gambling studies at the University of Nevada, Reno. “You get communities that want casinos” for jobs and economic development, he says, “and their argument goes away.”

U.S. Senator Dianne Feinstein is a staunch opponent of urban gambling, particularly Indian casinos, and most certainly in her San Francisco congressional district.

Unfortunately for Feinstein, the gambling ship has already sailed.

San Francisco had casinos decades before Las Vegas. And California had the nation’s sixth-largest gaming industry before the first compacted tribal casino opened for business in 2000, its lottery, card clubs and racetracks generating well over $2 billion a year.

Should the senator wish to purchase a lottery ticket, says Capitol Hill lobbyist and Blackfeet Indian Tom Rodgers, Feinstein need only walk 0.4 miles from her San Francisco home at 2460 Lyon St. to the nearest lottery outlet, Wilking Wine and Liquor at 3273 Sacramento St.

If she cared to play poker, Rodgers says, the Lucky Chances Casino card room at 1700 Hillside Boulevard in Colma is a short, 7.8-mile drive.

If she had a hankering to play the horses, Rodgers suggests Feinstein visit Golden Gate Fields at 1100 East Shore Frontage Road in Berkeley, 9.6 miles from her home.

And, of course, bingo-style slot machines can be found at the San Pablo Lytton Indian Casino, 21.2 miles from the Feinstein household.

An associate of the senator who requested anonymity said Feinstein is averse to all gambling, not just tribal operations.

“She is pretty opposed to gambling in general,” the person says. “The expansion of gambling in California has come from Indian casinos. So that’s where she’s been most vocal.”

Feinstein and a coalition of tribes opposed to encroachment of ancestral lands are credited with pressing Interior to deny Sonoma County land trust applications from the Guidiville and Scotts Valley Rancheria.

Feinstein said she will block legislative attempts to “fix” a 2009 U.S. Supreme Court ruling hindering the ability of tribes to place land in trust, for casinos or otherwise, unless Congress first limits off-reservation gambling.

The loosely organized Aboriginal Lands Coalition is opposed to a number of California casinos and the Tohono O’odham project on the grounds they violate both ancestral lands and a tacit promise made in statewide ballot initiations to limit new casinos. It also doesn’t help that new casinos near urban areas encroach on existing gambling markets.

“If Governor Brown approves this project, a dangerous precedent will be set and it will open the floodgates for tribes throughout California to follow suit,” Cheryl Schmit, executive director of Stand Up for California, says of the North Fork project.

“Madera County residents are not being given a voice in the discussion about the off-reservation casino,” she says. “When Californians approved Indian gaming they did so with the understanding that it would take place only on tribal lands.”

Mary-Ann McGovran, a Mono Indian, disagrees.

“We have over 5,000 individual support forms signed by Madera County residents,” McGovran says. “It’s about jobs to the community, and everybody knows that here in Madera.”

 

Lessons To Be Learned

Some 26 years ago, before IGRA, Duluth city officials assisted the Fond du Lac Band of Lake Superior Chippewa Indians in placing a shuttered downtown Sears Roebuck store in federal trust for a bingo casino.

The urban renewal project was intended to create jobs and generate tourism. It also gave the tribe access to a more lucrative gambling market than on their reservation 20 miles away.

But last May Interior and the National Indian Gaming Commission, reversing a decision the NIGC made when the city-tribal partnership was revised in 1994, voided the lease agreement.

The lease, which gave the city 19 percent of gross revenues from the Fond-du-Luth Casino, violated federal laws that “mandate the tribe retain the sole proprietary interest and responsibility for its gaming activity,” Donald E. Laverdure, Interior’s acting assistant secretary for Indian affairs, said in a May 10 letter to Mayor Don Ness.

The decision meant the band no longer needed to pay Duluth $6 million a year rent for use of a building owned by the tribe on a square block held in trust by the federal government.

The city not only lost a lucrative revenue stream from the casino, but it has no governmental or tax authority over the downtown property, which remains part of the tribe’s reservation.

“I can’t fault the band,” City Attorney Gunner Johnson says. But he’s disturbed at federal officials.

“The Department of Interior signed off on these agreements not just once, but twice,” he complains.

Tribal Chairwoman Karen Diver says the original agreement was reached before passage of IGRA and later erroneously approved by an NIGC still testing its authority.

“Federal law has evolved but the legal position seems to be clear,” Diver says. “Sole proprietary interest must remain in the hands of the tribe. Long-term profit sharing is prohibited.”

Forest County Potawatomi annually pays the city of Milwaukee and Milwaukee County each 1.5 percent of net revenues (roughly $5 million) for the right to operate a city casino on trust land 200 miles from the tribe’s main reservation. Potawatomi Bingo opened in 1991.

“The Potawatomi have a good relationship with Milwaukee officials,” tribal spokesman George Ermert says. “They have worked hard to be good partners with the city and county. Their investments bring a number of benefits to the area.”

 Former NIGC Chairman Phil Hogen warns of the complexities involved with intergovernmental casino agreements subject to federal scrutiny and Capitol Hill politics.

“It’s entirely possible things will work out beautifully, for everybody,” Hogen told GamblingCompliance.com. “It’s also possible complications will arise. Both sides should know what they’re getting into.”

Duluth Mayor Ness, in a March 8 letter to Diver, expressed hope both sides can mend their differences.

“I believe there is always an opportunity to resolve this conflict that has, sadly, become unnecessarily divisive,” Ness said.

 

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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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