In the scramble to pay for education and other services, many states and American Indian tribes are fighting head-to-head battles over gaming, and Congress is poised to step into the fray.
The Senate Committee on Indian Affairs and the House Committee on Resources’ Subcommittee on Native American and Insular Affairs held a joint hearing on the issue last month, and several proposals to amend the Indian Gaming Regulatory Act are pending.
Many tribes argue that the real issue is economic competition, while state officials maintain that it is a question of the states’ right to control activities within their borders. But it is clear that each side has an interest in protecting its share of the gaming pie.
For tribes, opening casinos on previously impoverished reservations has helped build schools, create jobs, and reverse decades of dependence on federal welfare programs. It has become, many say, the new buffalo--a single resource that can meet most of a tribe’s needs. About 122 of the nation’s more than 500 federally recognized tribes run gaming businesses in a total of 23 states. (See Education Week, 12/7/94.)
For states, lotteries and riverboat casinos have become an attractive alternative to raising taxes --and the ire of voters.
Lotteries are the biggest source of gaming revenue for most states, with much of the profits funneled into public schools. According to the National Conference of State Legislatures, 36 states have lotteries that generated $9 billion in profits in fiscal 1993. On average, states glean only 3 percent of their revenue from lotteries.
“It seems obvious that states would be feeling proprietary about maintaining their market share,” said David S. Honeywell, a school-finance expert at the University of Florida. “When states are operating at such a tight margin, even if a small percentage of revenue comes from lotteries or other gambling, it’s revenue that if lost, has significant impact.”
A Fight for Control
The primary issue is who can regulate the tribal operations and to what degree. Tribes are considered sovereign nations and as such generally deal with the federal government, not with states.
When the gaming act was passed in 1988, under pressure from states, tribes viewed it as an infringement on that sovereignty that they grudgingly accepted in order to maintain gaming.
The law requires tribes and states to negotiate compacts allowing high-stakes, casino-style gaming on reservations. If a state refuses to negotiate or the tribe believes the state has failed to negotiate in good faith, the tribe can sue in federal court.
The language is hazy enough to allow for different interpretations. It says high-stakes gaming is lawful on Indian lands that are “located in a state that permits such gaming for any purpose by any person, organization, or entity.”
Many tribes have argued that if any gaming is allowed anywhere in a state--even, for example, “Las Vegas night” activities run by charity groups--the state must negotiate for casino games.
States argue that the federal statute allows tribes to run only games expressly authorized by state law. For example, under this interpretation the existence of a state lottery means that tribes there can run lotteries, but not that they can run casinos.
Both tribes and states can point to federal court decisions in their favor. And the only U.S. Supreme Court ruling on the issue came in 1987, the year before the gaming act was passed. That ruling held that state and county laws could not be applied to Indian gaming without Congressional consent.
The High Court has accepted its first case relating to the 1988 law, which it is to hear next year. It originated in Florida, where the state has refused to negotiate with tribes. But that case may focus only on whether a tribe can sue a state. Some states have argued that such suits are barred by the 11th Amendment to the U.S. Constitution, which generally provides state immunity from lawsuits.
Scaling Back?
Congress may not resolve the central question, either.
One of the two leading bills, S 487--sponsored by Sen. John McCain, R-Ariz., and Sen. Daniel K. Inouye, D-Hawaii, the leaders of the Senate Committee on Indian Affairs--would only set minimal federal standards for gaming operations, give a federal commission more power to enforce those rules, and authorize the Secretary of the Interior to negotiate gaming compacts when a state refused to.
Many tribes support the bill, largely because they fear the alternative: a bill that would ban any new high-stakes Indian gaming for two years, unless a state approved it. HR 1512 is sponsored by Rep. Gerald B.H. Solomon, R-N.Y., and Rep. Robert G. Torricelli, D-N.J.
In general, this bill would grant states more leverage in regulating Indian gaming. It would limit tribes to only those games that the state expressly allows, which the authors argue would end what they call an unfair advantage over commercial gaming.
Other pending bills would authorize studies of Indian gaming.
Mr. Solomon, the chairman of the powerful House Rules Committee, opposes commercial gaming. But critics say Mr. Torricelli’s aims are more self-serving. Atlantic City casinos generate some $600 million a year in revenue for New Jersey, leading some to dub the bill “the Donald Trump protection act,” after the well-known entrepreneur who has a large stake in the city’s gaming industry.
But the industry is not united on the issue.
“Some people don’t want Indian gaming because they feel it’s competitive with them,” but others have contracted to managing tribes’ casinos or sold them equipment, said Frank J. Fahrenkopf Jr., the president and chief executive officer of the American Gaming Association.
‘Our Livelihood’
William Gollnick, the legislative director for the Oneida tribe, which is located near Green Bay, Wis., said that any limits on gaming would be disastrous. Most of the tribe’s $90 million annual budget comes from its casinos--money that helped the Oneida open a $12 million K-8 school last year.
“This is our livelihood,” Mr. Gollnick said.
A recent proposal by the Coeur d’Alene tribe in Idaho to start a national Indian lottery has ratcheted state-tribal tensions a notch higher, as a number of states with their own lotteries have issued legal threats.
But many observers say the gaming struggle is just the latest incident in a long history of tension between many states and tribes.
“It comes down to turf battles and profit, pure and simple,” said Paul Moorehead, the director of government affairs for the National Congress of American Indians. “Gaming is only the most recent example of this.”
