Poarch Band and Attorney General make an interesting team in Alabama

Ongoing efforts by the Poarch Band of Creek Indians of Alabama to wrest a gambling compact from Governor Robert Bentley and the state legislature do not appear to have much support, despite the tribe’s offer to help resolve a looming budget deficit.

“We don’t see gaming being a huge issue this year,” Robbie McGhee, tribal councilman and government relations advisor, says of the current legislative session.

But the odds may improve in 2018, and the impetus for change could come from Alabama’s top law enforcement officer—a man who has spent several years waging an expensive, albeit futile, legal battle to shutter the tribe’s three casinos.

Republican Attorney General Luther Strange, whose legal war against the band ended with a 2015 federal court ruling, is already being touted as the party’s gubernatorial candidate in 2018.

Sources contend the Poarch Band has agreed to contribute millions of dollars to the effort.

“It’s definitely a more amenable relationship,” McGhee says.

The Poarch Band is an anomaly in the nation’s $28.5 billion Indian casino industry in that it has thrived despite lacking a tribal-state regulatory agreement, which would allow the band to operate what regulators classify as Class III, casino-style slot machines and table games such as blackjack, roulette and baccarat.

Instead, Alabama’s only federally recognized tribe owns three casino resorts equipped with 6,000 Class II, bingo-style devices which, under federal law, do not require tribal-state compacts and are not subject to state regulations.

There are 425 Indian casinos in 28 states, but only 12 states are limited to Class II machines.

The devices are not as lucrative as Class III machines, but recent technological improvements—and being in a non-competitive environment such as Alabama—mean they can be wildly profitable.

Stepping Up in Class

The Poarch Band has certainly been successful with Class II gambling. The tribe in December opened a $65 million hotel and restaurant expansion to its Wind Creek Montgomery casino.

That project followed the unveiling earlier in 2015 of a $246 million hotel and casino expansion to the band’s Wind Creek Wetumpka facility.

The band operates a third hotel-casino in Atmore.

“We’re making money hand-over-fist,” says Eddie Tullis, a tribal chairman for some 27 years who now serves as the band’s treasurer.

Tribal governments do not normally disclose the profitability of their business enterprises. But the Poarch Band prior to the recent expansion projects was reportedly generating well in excess of $600 million a year.

Nevertheless, Poarch Creek would welcome a compact that would guarantee Class III gaming and future statewide exclusivity to operate casinos. Legislators have threatened to legalize slot machines at three parimutuel greyhound tracks—two of which currently offer live racing—creating competition for the tribal casinos.

The band also would like to appease customers seeking table games and Las Vegas-style slot machines. But efforts to negotiate a compact have been rebuffed by Governor Robert Bentley.

Bentley is not an anti-gambling zealot, as was the case with his predecessor, Bob Riley. But Bentley doesn’t regard Poarch Creek’s willingness to share casino revenues as a long-term solution to alleviate a budget deficit approaching $500 million.

The band has offered a $250 million up-front payment and an annual share of casino revenues to help with state finances.

“Alabama has problems our tribe wants to help fix, once and for all,” says tribal Chairwoman Stephanie Bryan. “We know what it’s like not to have enough when you need it,” she says of the tribe’s impoverished history prior to launching a high-stakes bingo hall in 1983.

Bentley is not impressed with the offer.

“Gambling is not going to solve this problem,” he said in an April speech. “It does not create enough money.”

Bentley advocates raising cigarette and automobile sales tax from 2 percent to 3 percent, a move he says would generate some $541 million a year.

“The way I have designed it, this would solve the problem for years to come,” he says.

Bentley may be averse to gambling as a means of balancing the budget, but legislators have in the past two years been floating bills to legalize lotteries and slot machines at the state’s three dog tracks. They have also discussed entering into a tribal-state compact with Poarch Creek.

None of the legislation has succeeded.

There are two gambling bills pending this session in the Senate Committee on Tourism and Marketing, one mentioning a tribal-state compact with the Poarch Band. But neither is expected to generate the needed support for a floor vote.

“People don’t mind gambling. They pack the casinos,” says a tribal member who requested anonymity. “But legislators use the fact this is the Bible Belt as an excuse to be moralistic about the issue.”

Republican Senate President Pro Tem Del Marsh introduced a gambling bill last year, which called for a lottery and commercial casinos while suggesting the government negotiate a compact with Poarch Creek. But the band would not view a bill with no statewide monopoly for the tribe as an attractive opportunity.

“At this point, the legislature is more comfortable with a lottery,” says Will Caliss, Marsh’s communications director. “I don’t know that it translates to a majority of members. But at this point they’re more comfortable with a lottery as opposed to Class III gaming.

“Senator Marsh feels that giving a monopoly to Poarch Creek would be a mistake. If you open up gaming to the tracks, the economic impact would be much greater with the job creation, in part through the development of hotels that would accompany the gambling.”

Change With Strange

When Bentley and Strange took office in 2000, state lawmakers were trying to come to grips not only with tribal casinos, but an unregulated commercial bingo machine industry centered at VictoryLand, a Macon County casino and dog track.

The track casino, operated by politically influential entrepreneur Milton McGregor, was shut down in a 2013 raid in which state agents seized 1,615 slot machines and $263,105 in cash.

Legal efforts to reopen the facility are pending before the state Supreme Court, complicated by a Bentley executive order in January delegating gambling enforcement to local jurisdictions.

McGregor’s track casino has a lot of supporters, including Macon County Sheriff Andre Brunson.

“Enough is enough. We’ve been putting up with this for far too long, and we’re tired of being mistreated here in Macon County,” Brunson told the Associated Press.

“The people in this county voted for electronic bingo. It’s legal here. We are suffering without that casino being open, with so many people in this county out of work.

“We are going to stand our ground here in Macon. I have every intention of protecting the rights and wellbeing of this county’s citizens. I’m not threatening anybody when I say this, but whatever we have to do, that’s what we’ll do.”

Meanwhile, Strange’s efforts to close the Poarch Creek casinos apparently ended last year, when the 11th Circuit Court of Appeals upheld a 2014 lower court ruling that the band enjoyed sovereign immunity from lawsuits.

“While I do not agree with the appeals court’s decision, it provides certainty and guidance to state officials where there was none before,” Strange said in a statement.

Strange in the wake of the ruling is claiming “no harm, no foul” with the Poarch Band. He contends he has no bias against gambling or tribal governments.

In assuming office, Strange said Bentley dissolved a governor’s task force on illegal gambling and dropped the issue in his lap.

“When I came into office there was a lot of strife and turmoil around that issue,” he said in an interview last year.

Strange said he had an obligation as the state’s chief law enforcement officer to press the matter with the federal courts.

“Let everybody litigate their case and we’ll all live by the court’s decision and move on,” he said.

“If the courts say they have the right to do that,” Strange said of Poarch Creek, “that’s the final determination of the issue.”

The band is apparently willing to accept Strange’s explanation that he harbors no bias against gambling or the tribe.

“I think when it comes to the 11th Circuit he was just bringing finality to the issue,” McGhee says of the potential candidate.

Florida-Bound

The band has a plethora of investments and non-gaming economic development ventures, including motels, travel plazas, agricultural and cattle operations and a technology firm.

Poarch Creek gaming operations extend beyond the three Alabama casinos to northern Florida, where it operates a poker room and equestrian center in Gretna and a greyhound track and poker room in Pensacola.

The band has been seeking a compact with Governor Rick Scott to install slot machines at the two locations, but talks are on hold pending court rulings and tribal-state compact negotiations with the Seminole Tribe of Florida.

FloridaPolitics.com reported that Bryan offered to forgo Class III gambling in Florida if the band was allowed to install Class II machines at the Gretna facility in exchange for $1 billion over five years.

The website said Bryan in a 2014 letter to Scott also agreed to surrender four of eight parimutuel permits the band controls along Interstate 10. She also promised to build a $200 million facility and acquire 30 nearby acres for parking.

“We believe that our proposal provides an approach to address multiple gaming-related concerns that affect the state,” FloridaPolitics quotes the letter as saying.

“Provided that suitable consideration can be agreed to, the expansion of Class III gaming will not occur, and in fact our proposal to ‘give up’ four of our permits reflects a reduction of gaming.”

McGhee declined to comment.

Poarch Creek has also explored casino acquisitions along the Gulf Coast, particularly in Biloxi, Mississippi.

“The tribe is always looking at opportunities that would benefit our economic base and our members,” McGhee says of the tribe’s 3,055 citizens.

A tribal-state compact and Class III gambling would likely increase casino profits. But a compact also would require the band to pay a share of the revenues to the state, along with license and regulatory fees.

Table games would be a welcome amenity to the Poarch Creek casinos, but they are also labor-intensive and would likely not generate the revenue per square foot of slot machines. Table games normally generate less than 10 percent of a tribal casino’s revenue.

“As far as table games, I’m sure there’s a market for those,” says a Poarch Creek official who requested anonymity. “But it’s not a market that is going to generate significant upside for us.”

“It’s not that important. We have a successful model with Class II gaming,” McGhee says of Class III gaming. “Of course, if we could bring something like that to entertain our guests, that would be nice. But it’s not necessary.”

Moving Cautiously

The notion of a tribal-state compact has been broached with a number of recent governors, McGhee says. But it has been done cautiously.

“If the governor ever wants to reach out, we’re more than welcome to talk with him,” McGhee says. “But it’s not absolutely necessary. We’re happy with the status quo.”

It appears legislators may be more comfortable cutting a deal with the Poarch Band than allowing commercial ventures at dog tracks and other locations in the state.

“I think there’s more support for a compact,” McGhee says. “I think the legislature understands now. When that Circuit Court decision game down, the legislature just thought, ‘The tribe is already here. It’s legal. How can we work with them?’”

While the band would not greatly benefit from Class III gambling, a compact would guarantee long-term casino exclusivity.

There was a time when speculation about a tribal-state compact also included the possibility of a fourth Wind Creek casino in the lucrative Birmingham market.

But McGhee downplays that chatter.

“We’re not talking about expanded gambling,” he says. “We’re not saying the talk of a fourth site won’t come up again. But now is not the time. Let’s give it a break.

“The concern we have is protecting what we have,” McGhee says. “If additional gaming does come to the state, we think there’s a better way to do it than just putting it at the tracks.”

Author: Dave Palermo

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.