Hitting the Jackpot or Breaking the Bank?
A Stakeholder Analysis of Gaming Expansion
By William J. Roeder and Aimee L. Franklin [primary contact]
Department of Political Science
University of Oklahoma
455 W. Lindsey DAHT 205
Norman, OK 73019-2001
405/325-5216
Author information:
William Roeder, currently works as the Chief, Development and instruction for United States Air Force stationed at Mountain Home, Idaho. He is currently the Academic Director at Park University, Mountain Home Air Force Base Idaho. He received his Masters of Public Administration from the University of Oklahoma. He can be contacted at William.roeder@park.edu.
Aimee L. Franklin is a Sam K. Viersen, Jr. Presidential Professor and theDirector of Programs in Public Administration in the Political ScienceDepartment of the University of Oklahoma. Her teaching and research interestsinvestigate how to improve strategic public management. She can be reached atalfranklin@ou.edu.
Abstract
Native American tribal gaming started in the 1970’s when anumber of Tribes established bingo parlors to raise revenues. Today, tribalgaming has grown into casinos that mimic the best of Las Vegas. Also growing isthe number of stakeholders active in this policy arena. This paper traces keyevents and primary stakeholders to analyze the types of wins and lossesexperienced by each in gaming expansion and to answer the question posed in thetitle. We conclude that there have been wins and losses in five categories:financial, social, legal, regulatory, and political. By far the most wins werefinancial, but it is difficult to determine if these wins compensate for thefinancial and non-monetary losses.
Relations between Indian Tribes and governments in the United States have,historically, been complicated and controversial. The sovereign status ofNative American tribal governments means that the treatment of tribal members,their lands, funds and interests is different from that of other U.S. citizensand these differences are becoming more pronounced over time (Light and Rand,2005). Tribal members have the power to self-govern form a government, todecide their own membership, to regulate property, to maintain law and order,to regulate commerce, and so on. The Supreme Court has repeatedly affirmed thesovereign status of Tribes, including “the power of regulating theirinternal and social relations" (New Mexico v. Mescalero Apache Tribe) and theauthority “to make their own substantive law in internal matters and toenforce that law in their own forums" (Santa Clara Pueblo v. Martinez). This iswhat gives tribal government the right to engage in gaming and economicdevelopment activity on tribal lands (California v. Cabazon Band of Indians)although this was weakened somewhat by the Supreme Court decision (SeminoleTribe of Florida v. Florida) upholding states’ immunity from suitscharging them with failing to negotiate compacts in good faith.
The introduction of gaming activities challenged Tribes who did not haveexperience operating these types of ventures. It also presented challenges interms of the distribution of gaming revenues. Based on legal interpretations oftheir sovereign status, tribal activities do not typically fall under federal,state, or local government purview, even though they may occur within thegeographic jurisdiction of these governments. This special status of tribalactivities created a challenge for intergovernmental relations when Indiangaming facilities were established. Other stakeholders beyond governmentorganizations became active in this policy area including businesses,investors, and citizens residing on or near tribal lands. The challenges facedby all these different stakeholders have grown in magnitude alongside theexpansion in gaming activities since the early 1970’s.
To better understand how gaming expansion changed the lives of tribal andnon-tribal stakeholders, suggest an analytic framework for understanding theever expanding relationships between active stakeholders in this policy arena.The second section describes key events in tribal gaming by identifyingstakeholders and the nature of their relationships and transactions . The thirdsection analyzes the financial, social, legal, regulatory, and politicalmotives of stakeholder as their interactions become increasingly complex. Inthe concluding section we suggest that, overall, gaming expansion has had morewins than losses, especially in the financial category. Different from priorwork that tends to limit analysis to primarily the economic, or legal, orsocietal effects of gaming, this paper simultaneously considers five differenttypes of wins and losses to urge a more comprehensive understanding of thisimportant phenomenon. Thus, our purpose is to organize the stakeholders andtheir interests to frame the issue for exploring future research directions andto encourage thoughtful policymaking that addresses issues in all fivecategories.
Active Stakeholders in the Gaming Issue
Different policy actors, whether they become involved as individuals orrepresentatives of a group, are stakeholders. Commonly defined as anyindividual or group that can impact or is impacted by government activities,stakeholder involvement is desired to assure that government actions representthe will of the governed. The federal government has been the so-called“guardian” of Indian country since the signing of the U.S.Constitution. Over time they have become more involved in overseeing theactivities of nations operating within the United States, especially asdifferent forms of commercial gaming were introduced. As Tribes startedcompacting with state governments, another group of stakeholders wasintroduced. As we shall see in the next section, there has been a dramaticincrease in the number of stakeholders active in this issue as each seeks toprotect their rights, their property, and even their livelihoods.
Over time, as events unfolded and more stakeholders become activelyinvolved, there was a give and take process necessary during negotiations tofoster exchanges based on the varying preferences of the participants(Williamson 1975). Initially, many exchanges involved the transfer of moneybetween stakeholders. Later, as money available for exchange became scarce,tangible and intangible benefits were traded to ensure that each stakeholdercame out of the negotiation a “winner.” Even though individualstakeholders may not have “won” as much as they would have likedfrom one specific transaction (in economic terms, they do not fully maximizetheir preferences), each stakeholder reasoned that small winnings now wouldlead to continued wins in the future. Then, as they continued to work withothers, the nature of the exchanges moved from primarily monetary tonon-monetary, intangible benefits (Stevens 1993) such as the right to open a casino or to change the operating policies of existing gaming establishments.
To manage the multitude of stakeholders and their interests and the types ofexchanges represented in the events related to gaming expansion, we divide thetype of potential wins and losses motivating stakeholders into five categories:financial - referring to the exchange of tangible assets such as money fromgaming, or future transfers through revenue sharing, or the long-term impactson business transactions based on today’s policy decisions; social -referring to exchanges designed to improve or preserve the well-being ofaffected parties such as tribal members or the general population; legal -referring to actions involving the courts to challenge policy implementation;regulatory - referring to efforts to use government intervention to control orregulate individual or organizational behavior; and political - referring totransactions designed to directly influence official policy actors so thatcertain stakeholder interests are maximized in the policy process.
Using these categories, gaming expansion can be analyzed to determine whateach stakeholder won and lost in individual events. It is important to notethat these categories are not intended to be mutually exclusive nor exhaustive,but merely illustrative of an analytical format that can be used as a heuristicto examine the evolution of gaming activities the impacts, positive andnegative, associated with individual events as well as cumulative outcomes overtime. Then, the entire history of wins and losses are considered to find outwhether, the various stakeholders are hitting the jackpot or breaking the bankcomparatively.
The Evolution of Tribal Gaming
Indian Tribes have a strong tradition of using oral history to interpret andunderstand current situations and plan future actions. Of course, the choicesfor what parts of a tale to relate are made by the storyteller based onsubjective memory, interpretation, and purpose. In this tradition, we trace keyevents thought to be particularly relevant to this analysis of stakeholders ingaming expansion. Other events, perhaps, should be included, but acomprehensive recounting of history is not necessary to adequately serve ourpurpose. Before presenting the key events and related stakeholders, theremainder of this section provides background on the circumstances fosteringthe introduction of tribal gaming.
The advent of Indian casinos has been attributed to a search for ways toease the desperate economic and living conditions of Native Americans. Tribeshave a history of engaging in a variety of economic development activities,such as gas stations, smoke shops, energy sales, agriculture, and forestry.These activities often struggled since reservations were not well suited forbusiness activities and tribal members often did not have the ability to securethe commercial financing required to start a business (Comptroller General,CED78-50, 1978). In 1974, Congress enacted the Indian Financing Act tostimulate economic development on Indian reservations by making federal fundingavailable to start and expand business enterprises. As noted in a 1978Comptroller General Report, federal support did not have the intended resultswith net decreases in the number of businesses and Indian employment as well asprohibitions on loan eligibility for about 300,000 Indians. The reportedrecommended consolidation of the federal programs managing Indian economicdevelopment (p. iv).
The rates of poverty and unemployment among American Indians are the highestof any ethnic group in the U. S., whereas per capita income, education, homeownership, and similar indicators of socio-economic conditions are among thelowest. In 2005, the 3-year average number of American Indians and AlaskanNatives (AIAN) in poverty was 20.9% compared to a nationwide average of 9.6%(U.S. Census 2006 – 2008 American Community Survey). Unemployment amongmale tribal members in 2000 was 34% versus a US average of 29% (Census 2006).On average, AIAN families earn 72.9% the income of all households. Just over71% of American Indians have a high school education, while only 11 percenthave a bachelor’s degree or higher. This compares with nationwide figuresof 80% and 24%, respectively (Census 2006). There are approximately 90,000Indian families who are homeless or under housed, nearly one in five Indianhomes on the reservation are classified as severely overcrowded and one out ofevery five Indian homes lacks adequate plumbing facilities (National GamingImpact Study Commission Report 1999). As these statistics indicate, lowsocioeconomic status is an every day reality, pervading all aspects of Indianlife.
Native American gaming started in the 1970’s, when a number of Tribesestablished bingo parlors to raise revenues. Beginning with bingo parlors,tribal gaming operations rapidly expanded to operate in nearly every statetoday. By 2007, the National Indian Gaming Commission (NIGC) reported 382Indian gaming operations generated $27.0B in revenues. These casinos accountedfor over 20% of all gaming revenue (tribal and commercial) and provided morethan 670,000 jobs nationwide of which 20-80% of the jobholders were Indiansdepending on the facility (NIGA 2008).
Event and Stakeholder Analysis
Active stakeholders in the first event, the introduction of tribal gaming,were Tribes and the federal government. Tribes were financial winners since thebingo parlors generated revenues used for social welfare programs for tribalmembers. The federal government won when more Tribes elected to pursue federalrecognition and won regulatory control over tribal gaming through the enactmentof IGRA. Tribes had a regulatory loss since gaming was now under federalpurview. Table 1 shows this event (Event 1), the stakeholders, and what theywon and lost, respectively, as the first round of activity in the 30+ yearexpansion of Indian gaming.
| Key Event | Stakeholders | Wins | sLosses | |
| | Tribes Federal Govt | F- $ for social welfare programs L- Enforces acknowledgement process R- Regulatory control over gaming R- Regulatory control over gaming R- Regulatory control over gaming | R- Regulatory control over gaming | |
| 2. State gaming diversification | Tribes Charities State Govt | L- Sovereign status upheld F- $ from gaming F- $ from lotteries | L- Cannot stop tribal gaming | |
| 3. Federal gaming law passed | Tribes Federal | P- Confirmation of sovereignty R- Regulate use of gaming revenues R- Use of revenues is mandated | R- Use of revenues is mandated | |
| 4. States begin compacting | Tribes State Govt Non-gaming IG's | F- $ from gaming F- $ from gaming S- Some reductions in proposed gaming | F- $ paid to state S- Moral preferences | |
| 5. Indian casino and enterprise growth Tribes | Tribes State Govt Local Govts Competing bus's | F- $ from gaming, $ from concessions | P- Surrounding merchant goodwill F- $ from Indian tax treatment F- $ from Indian tax treatment F- $ from concessions | |
| 6. Tribes authorize per capita payments | Tribes Members | S- Social capital in development activities F- $ from gaming payments | | |
| 7. States expand commercial gaming | Tribes State Govt Comm'l gaming Non-gaming IG's | F- $ from gaming/lottery for social pgms F- $ from gaming | F- $ going to gaming competitors S- Moral preferences | |
| 8. Compacting provisions change in response to state fiscal crises | Tribes State Govt Local Govts Addiction IG's | F- $ from gaming expansion F- $ from gaming expansion F- $ from impact fees F- $ from gambling treatment funds F- $ paid to state and local govt | F- $ paid to state and local govt | |
| 9. Tribes seek consultants and investors | Tribes Consultants Investors Federal Govt | F- $ from enhanced mgmt and expansion F- $ from consulting F- $ from investing | F- % of gaming revenues F- Opportunity costs R- May lose oversight of casinos | |
| 10. States (re)negotiate compacts | Tribes State Govt | F-$ from gaming R- rights, and/or regulatory authority < F- $ from gaming R- Uniform compacts | F- % of gaming revenues if joint compacts are less lucrative | |
| 11. Tribes voluntarily give back to community | Tribes Local Govts Charities | P- Enhanced public opinion F- $ for infrastructure / capital acquisition F- $ for social programs | F- $ given to recipients | |
| 12. Cities and counties become partners | Tribes State Govt Local Govts | L, F- Property rights, expansion privileges F- $ from gaming | F- $ from gaming revenues F- % of gaming revenues L- Right to oppose casino placement 13. States create racinos | |
| 13. States create racinos | Tribes State Govt Racing Industry | F- $ from increased gaming authorzn’s F- $ from enhanced or stabilized revenues F- $ from increased attendance | F- $ going to gaming competitors | |
| 14. Tribes increase political activism | Tribal IG's Politicians Politicians Non-gaming IG's | P- Greater likelihood preferences adopted F- for campaigns | F- $ for campaigns P- Support of competing groups S- Moral preferences | |
| 15. Tribes seek capital in the market | Tribes Investors | F- $ from investors F- $ from return on investment | F- Opportunity costs | |
| 16. Heritage land ownership challenges | Tribes State Govt Local Govts Land owners | F- Rights to casino expansion F- $ from new casinos and $ from future expansion [both St/Loc] L- Clear title to property | L- Future property rights F- Legal costs P– Public Opinion L, F, P- Right to oppose future casinos, legal & public opinion costs F- Legal costs | |
| 17. Inter-tribal negotiations | Gaming & Non-gaming tribes Non-gaming tribes | F-$ from additional casinos, slot machines F- $ from gaming revenues | L, F- Right for future casinos | |
| 18. Entrepreneurial activity expansion | Tribes Land developers Competing bus's | F- $ from related businesses F- $ from development profit F- $ from monopoly retail activities F- $ from monopoly concessions | F- $ from monopoly concessions F- Opportunity costs F- $ from Indian businesses | |
| 19. Interstate and intergovernmental issues | Tribes State Govt Competing bus's | F- $ from rights to future expansion F- $ from new compacts | P- Support from IG opponents P- Right to oppose future expansion F- $ drawn off by gaming expansion F- $ drawn off by gaming expansion Tribes/ Members | |
Event 2: State Gaming Diversification. In the mid-1980’s, many statesbegan authorizing state-operated lotteries and charitable gaming, such as pulltabs and casino nights for small non-monetary prizes, at private clubs. Atroughly the same time, states began to seek regulatory power over tribal gamingestablishments within their jurisdiction. Currently there are 28 states thathave Indian gaming and these operations are covered by 249 State-Tribalcompacts (NIGA, 2008). Tribes challenged this action since federal law heldthat states must allow Tribes to have the same level of gaming activities asthe state allows. So, if a state allowed a lottery or charitable gaming, Tribescould have gaming at an equivalent level without having to compact (anagreement governing casino operations, regulations, and distribution ofrevenues or collection of taxes or other fees) with that state (NIGC 2002). Thedebate over a state’s right to be involved in the tribal gaming issuesimmered until 1987, when the U. S. Supreme Court confirmed the authority oftribal governments to establish gaming operations independent of stateregulation, if the state in question permitted some form of gaming (Californiav Cabazon Band of Mission Indians). In this event, Tribes won legally sincetheir sovereign status was upheld. The courts neither won nor lost from thisevent. Charities and the state received financial benefits from monetaryrevenues generated from gaming diversification. The state also suffered a losssince their legal challenge to oppose or regulate Indian gaming was quashed.
Event 3: Federal laws establish the ground rules. As tribal gamingactivities grew, the National Indian Gaming Association (NIGA), a non-profittrade association, was formed to advance the lives of Indian people,economically, socially and politically (NIGA, 2004). At roughly the same time,in 1988, Congress conducted a series of public hearings on tribal gaming,culminating in the passage of the Indian Gaming Regulatory Act (IGRA) [PublicLaw 100-497]. The Act created the NIGC as the regulator and investigator oftribal gaming, described acceptable use of revenues from gaming, and defineddifferent classes of gaming operations. According to the IGRA, revenues fromtribal gaming could only be used to: 1) fund tribal government operations orprograms, 2) provide for the general welfare of the Indian Tribes and itsmembers, 3) promote tribal economic development, 4) donate to charitableorganizations, or 5) fund a portion of the operations of local governmentagencies. In addition, part 3 allowed Tribes to distribute a portion of netrevenues directly to their members as a per-capita payment. Under the IGRA,there were three different classes of gaming operations:
Class I Operations: consist of traditional tribal games and social games forprizes of nominal value, all of which are subject solely to tribalregulation;
Class II Operations: consist of bingo, instant bingo, lotto, punch cards,and similar games and card games legal anywhere in the state and not playedagainst the house. A Tribe may conduct or license and regulate Class II gamingif it occurs in a "state that permits such gaming for any purpose by anyperson" and is not prohibited by federal law;
Class III Operations: consist of all other games, including electronicfacsimiles of games of chance, card games played against the house, casinogames, pari-mutuel racing, and jai alai. Class III games may be conducted orlicensed by a Tribe in a state that permits such gaming for any purpose or anyperson, subject to a state-tribal compact.
These classes become important in later events as negotiations shifted froma question of whether or not Indian gaming should be allowed to determinationsof the level of gaming and the types of games that were operated.
Tribes and the federal government were the two primary stakeholders in Event3. Tribes won confirmation of their sovereign status and the right to opengaming establishments (in line with the Cabazon decision), but lost freedomfrom regulation since the IGRA prescribed the distribution of gaming revenues.This federally mandated allocation scheme may have differed from tribalpreferences. The federal government (as a proxy for the citizenry’spreferences) posted a win since they now regulated revenue distribution,indirectly practicing social engineering.
Event 4: States begin compacting with Tribes. The late 1980’s broughta flurry of negotiations between Tribes and state governments as Indian gamingexpanded and Tribes sought to operate casinos at a class level higher than thatalready existing in the state. The primary compact provisions concerned theestablishment of state-level regulatory activities and payment of a portion ofIndian gaming revenues to the states, normally to the general fund (GamblingMagazine 2003b). In 2003, 48 states had some form of gaming, Tribal ornon-Tribal,. In 29 states, the respective state government regulated gamingoperations (NIGA 2004). Tribes with state compacts had to follow federalguidelines, but, in exchange for certain enhanced privileges such as Class IIIgaming, they agreed to make transfer payments to the state and sometimes tocity and county governments. In 2000, gaming taxes added $26.8 billion to statecoffers from an estimated $61.4 billion in spending (National Conference ofState Legislatures – NCSL 2002).
The movement to state-level compacting was not universal; some states suchas Oklahoma actively resisted gambling expansion, based on moral opposition andFlorida was successful in the Supreme Court case upholding state immunity(Seminole Tribe v. Florida). If a Tribe alleged that a state did not respond toa request to negotiate, or negotiated in bad faith, appeals were made to U.S.District Courts, and ultimately, to the Secretary of the Interior. In thesecases, the burden was on the state to prove it acted in good faith. In thisevent, States were joined by interest groups representing those that opposegaming – both Indian and commercial. Each of these stakeholders wonsomething. Tribes and states were financial winners in terms of increasingrevenues from gaming. Gaming opponents claimed a victory in the states wherepolitical pressure resulted in the defeat of gaming expansion bills, but theyalso lost politically since their preferences were not maximized. Tribes lostfinancially, since by compacting, they agreed to revenue sharing.
Event 5: Indian Casino and Enterprise Growth. Of the 562 federallyrecognized Tribes, 68 % had gaming operations in 2007(NIGA 2008). Sinceenactment of the IGRA, tribal gaming went from revenues of almost $8.5 billionin 1998 to over $27.0 billion in 2007 (NIGC 2008). This change represented adoubling of revenue in four years. This revenue received special tax treatment,since Indian gaming operations do not pay federal or state taxes on theirgaming profits (US GAO, GAO/GGD-97-91). Native American-owned land, even whenwithin city limits, is not subject to any property tax assessment if the landis held in trust. Further, any profits from Indian-owned business ventures areexcluded from most forms of taxes representing another source of revenueforegone. For example, most of the larger casinos had gasoline stations or atobacco store located nearby (Gambling Magazine 2003d). States argued that asignificant source of revenue was being lost.
This event caused more losses than wins when viewed from the perspective ofall stakeholders. Tribes won financially as casinos and related concessions andbusiness enterprises grew, but they potentially lost the goodwill of state andlocal governments since tax assessments were limited and tribal-localrelationships could be strained. Tribes may have also lost the goodwill oflocal businesses since they were now direct competitors. Financially, state andlocal governments and competing businesses lost sales and potential taxrevenues because of the exempt tax treatment granted to Indian enterprises.
Event 6: Tribes expand social programs and authorize per capita payments.Tribal gaming brought financial and social enhancements to 65% of the 341Tribes in the lower 48 states (NIGA 2004). Many Tribes used gaming revenues forinfrastructure and program development on tribal lands (Hill 1996). Forinstance, the Oneida Tribe of Indians of Wisconsin used over 40% of the gamingrevenues for police, health, and social services (Oneida Tribe 2004). ThePrairie Island Indian Community built better homes, constructed a communitycenter and an administration building, developed a waste water treatmentfacility and built safer roads with gaming revenues (American Indian PolicyCenter 2002). In 1993, 25% of Tribes operating casinos had a per capita revenueallocation plan, although payouts to individual members varied widely (NIGA2004). The Potawatomi Tribe in Kansas, gave around $2,000 to each of its 5,000members in 2001. Other Tribes have made their members millionaires (Time 2002).However, the frequency, duration and amount of per capita payments has variedwidely, often in parallel with changes in gaming revenues (www.indianz.com9/26/2005). From an analytical perspective, in Event 6 both Tribes and theirmembers received social and financial benefits.
Event 7: States expand commercial gaming. In the 1990’s, many statesenacted bills allowing higher levels of commercial gaming in an attempt to addto state coffers. The National Conference of State Legislatures (NCSL 2004b)reported on studies indicating an increasing tolerance of gaming as anacceptable form of entertainment when the question was presented as a choicebetween gambling expansion and tax increases. The bulk of commercial gamingrevenues came from casinos in Nevada and New Jersey (roughly 55%). Theremainder was generated from activities such as state lotteries (around 40%),race tracks, riverboats and cruise ships. Many times gaming revenues wereearmarked, with education and environmental programs being the most commonrecipients (NCSL 2004).
In this event, there were clear winners and losers and no stakeholderexperienced both wins and losses. States and the commercial gaming industry wonfinancially as gaming revenues increased. Tribes lost potential revenuesbecause of increased competition. Gaming opponents lost politically sincegambling, which they rejected on moral grounds, was expanded.
Event 8: Compacting provisions change in response to fiscal crises. Recenteconomic downturns in the late 1990’s prompted at least 23 states toconsider bills to expand gaming operations or increase gaming taxes (NCSL,2003). States such as New York, facing a $9 billion budget deficit, scrambledto balance their state’s budget. One solution was to allow Tribes tobuild more casinos in exchange for a $1billion payment to the state over threeyears. This type of financial agreement was not limited to New York. Illinoisreceived $350 million from the sale of the state’s 10th casino license(Council of State Governments 2004) and other have states benefited as well.
Compacts negotiated in this event often included other provisions. Manycreated funds to be used for the cost of regulatory activities (NCSL 2004) orfor compulsive gambling treatment programs (American Gaming Association 2004)in exchange for no compact ending dates. Other provisions included impact feesto be paid to local governments to offset revenues lost from sales and propertytax exclusions (The San Diego Union Tribune 2003).
Innovative compact provisions ensured that every stakeholder had financialwins. Tribes lost some gaming revenues to state and, also, local governments;but it was assumed that the financial wins from expanded gaming activities werelarger than the revenues shared (or else there would be no reason to havecompacted with the state instead of staying under federal jurisdiction). Statesenlarged their slice of gaming revenues, giving them a financial win. Localgovernments won financially through the impact fees paid to compensate them fortax revenues lost through Indian enterprise activities. Interest groups wonwith the creation of treatment funds.
Event 9: Tribes seek consultants and investors. As Indian casinos expanded,the need for high quality management grew as well (Smith 2001). Many Indianventures were run by non-natives, assisted by tribal members. In theory, thenon-natives were teaching tribal members the skills necessary for daily casinooperations and customer and public relations. There are many federalregulations governing casino management. Important among these are requirementsthat Tribes must file an internal management agreement if their casinos werewholly operated by tribal members. If the Tribe employs outsiders, such asmanagement consultants, then this aspect of regulation was circumvented;however, outside managers are limited in the amount of revenues they can“take” or compensation they can receive and these contracts must bephased out over a 5-7 year period. Of 332 Tribes with gaming, only 31 hadinternal management agreements (Department of the Interior 2001).
Another area where Tribes sought outside assistance or funding was in thefinancing of casino construction. Bringing in outside expertise was not withoutits trade-offs. Time (2002b) reports the case of Lyle Berman, who helped theMille Lacs Band of Ojibwe Indians in Minnesota to build and manage a casino. Inexchange for his financial backing and management expertise, he got 40% of thecasino profits for seven years. Even though it is hard to assess the true costsand benefits of these management contracts since Tribes did not have the samereporting requirements as other businesses , these management contracts wereoften lucrative for the Tribe and for the contracting firm. Lakes Gaming, Inc.,a publicly owned company, earned $54.7 million in management fee income fromtribal consulting in 1999 (Time 2002b).
This event introduced management consultants who won financially. Tribesalso won financially through more cost efficient management of their casinosand access to capital development expertise and monies, which in the long-termwere expected to generate additional revenues. Tribes may have lost apercentage of revenues for a period of time. Investors suffered opportunitycosts since, by providing cash infusions to Tribes, they could not make other,perhaps less risky or more financially lucrative, investments (GamblingMagazine 2003e). In some cases, the federal government lost regulatoryoversight of Tribes with management consultants instead of internal managementagreements.
Event 10:(Re)negotiating compacts. Many Tribes petitioned to change theclass of gaming operations to bring in more customers and to enhance the gamingbase. Table games (Class III) generally, but not always, had higher stakes andare financially quite lucrative for the house (Gambling Magazine, 2003).Whenever a Tribe sought to engage in Class III operations, it had to givenotice to the respective state. Unless the state already allowed Class IIIgaming, the state was required to negotiate a compact in good faith. Otherterms sought by Tribes in these (re)negotiations included monopoly provisionsto prevent the encroachment or expansion of commercial gaming (Indian CountryToday 2004), longer-term or perennial compacts so that they could more easilyobtain financing (Gambling Magazine 2003e), and enhanced independent regulatoryauthority so that the Tribe could set betting limits and hours of operations intheir casinos (Milwaukee Journal Sentinel 2003). In exchange, many times statesrequired all Tribes to agree to a (re)negotiated compact and/or sought tochange compensation levels, moving to a more financially lucrative slidingscale based on gross revenues (Gambling Magazine 2002).
This event marked the first time that Tribes negotiated for things notdirectly related to gaming expansion, such as independence from state-levelregulation. Tribes and states won financially with provisions for certain typesof gaming activities thought to be more profitable. States had a regulatory winwhen they forced Tribes to negotiate as a unified actor rather than conductingsequential compacting with each individual Tribe. But, Tribes may have viewedthis as a win as well since there may have been strength in numbers whenpresenting a united front. When unified compacting occurred, some individualTribes may have lost financially.
Event 11: Tribes voluntarily give back to the community. According to theIGRA, tribal governments could donate some of their revenues to charitableorganizations in local communities hosting Indian casinos. Such donations weregiven to maintain and establish good public relations. For example, the OneidaTribe in upstate New York sponsored a Chain of Friendship Grant program intowns surrounding their Turning Stone Casinos. Annually, this grant programgave out $100,000 in scholarships to high school seniors (Oneida Indian NationWebsite 2004). This program won goodwill for tribal operations. Local citizenssaw the Tribe as “giving back” to the community, easing anynegative public opinions about business competition or tax revenues foregone.Similar contributions to local development funds and support of non-profits bytribes through donations and local funding agreements has been evident for anumber of Tribes. For a small financial loss relative to the amount of gamingrevenue that was being earned, Tribes were able to positively sway publicopinion. Local governments and grant recipients had a financial win since themoney was used for community infrastructure (roadways) and capital purchases(fire trucks, water towers) or for individual personal development (education)(Gambling Magazine 2003c).
Event 12: Cities and Counties become compacting partners. Up to this point,state level compacts typically had provisions for revenue sharing only with thestate level of government. Local impact fees may have been included, but therewas no provision for direct revenue sharing with local governments adjacent tocasinos. In this event, cities became part of the compact negotiations, seekingtheir fair share in exchange for the city’s agreement not to contestcasino operations within their jurisdiction (Arizona Daily Star 2004, TheCapital Times 2003). An example is Albuquerque, NM where city officials chargedthat casinos drained an estimated $4 - $7 million annually from the budget(Gambling Magazine 2003).
By this time, the financial impacts of Indian gaming expansion were largewith more than $7.6 billion in federal, state and local taxes and otherrevenues paid out from tribal gaming in 2003 (NIGA 2004). Successfulnegotiations for revenue sharing gave local governments a financial win in thisevent. Tribes got legal and financial wins through casino placement andexpansion agreements. What Tribes lost was a portion of their gaming revenues.States suffered a financial loss as well, since their slice of the pie may havebeen reduced through revenue sharing with local governments. Local governmentslost legally when they affirmed casino operations, abridging their rights toobject to future Indian gaming activities.
Event 13: States authorize racinos. In 2003, lawmakers in at least 13 stateswere considering legislation allowing racinos - a racetrack where people couldplay video games that mimic slot machines (NCSL 2003). Iowa already operatedthese types of establishments, which often included off-track betting (Councilof State Governments 2004). Racinos were intended to bolster lagging attendanceand profits at race-tracks. Authorizations for these establishments wereexchanged with tribal requests to expand casino operations (as in the case ofOklahoma Senate Bill 553 2004). Tribes sought additional casinos, slotsmachines or higher classes of gaming to off-set losses in gaming revenuesexpected by additional competition from the video terminals at the racinos.This event had mostly wins, since each stakeholder – Tribes, stategovernments and the racing industry won financially. Tribes also had afinancial loss, since they now faced greater commercial gaming competition.
Event 14: Tribes increase political activism. Over time, more and moreNative Americans, as individuals and representing tribal affiliations withcommon interests, formed lobbies to protect their interests. In many statelegislatures, Native American Gaming alliances became the single most powerfullobbying group, at times, influencing elections (Gambling Magazine 2003d).Tribal political contributions were predicted to reach $4 million in 2000,dwarfing the $1.5 million donated during the 1996 cycle (Meatto 2000). Much ofthe lobbying came in response to attempts by states to abridge tribalsovereignty by, among other things: challenging sales on Indian lands thatcircumvent state taxation laws, questioning tribal membership, diminishingtribal lands, and removing civil immunity (American Indian Policy Center,2002).
Event 14 was one of the purer examples of quid pro quo exchanges directlybetween tribal interests groups and politicians, with political contributionsused to guarantee greater consideration of tribal preferences on policy issues.Some claimed (Gambling Magazine, 2003e), that the Indians were using the shameof historical actions as leverage in political negotiations. This made it hardfor competing interest groups to effectively oppose tribal politicalparticipation without looking unsympathetic, or at the extreme, like the bigotsof the days of old. For this event: Tribes won politically, politicians wonfinancially, and interest groups lost if tribal activism altered politicaloutcomes away from their social preferences.
Event 15: Tribes seek capital in private markets. As the number of casinosand related tribal businesses expanded in the late 1990’s, so did theneed for financing for capital construction activities. Historically,reservation or tribal lands could not be used as collateral, since they wereheld in trust by the federal government. To finance their activities, Tribesoften depended on long-established banking relationships based on trust andreputation since land guarantees could not be used. As Tribes establishedpatterns of gaming revenues and legal rights to and expectations for futurerevenues, new avenues for financing opened up as market investors become morewilling to assume the risk for “unsecured” lending based onanticipated rewards from gaming revenues. Revenue bonds and other financingmechanisms became more common place. Of course, many speculated that thiscondition was only possible because of the introduction of federal and stateregulatory oversight and of outside professional expertise (described in Events2, 5 and 9, respectively). In this event, both Tribes and investors benefitedfinancially. Investors lost financially as well, due to opportunity costs andthe risk of default.
Event 16: Heritage land ownership challenges. Despite the infusion of cash,Tribes still found themselves handicapped in terms of continuing the rapid paceof gaming expansion. Two areas where Tribes sought assistance, authorizationsfor additional casinos and long-term financing backed by tangible collateral(thus reducing the cost of borrowing), were addressed by resolving the issue ofownership of heritage lands. At the turn of the century, many Tribes around thenation sued or threatened to sue private individuals and local governments toreturn heritage lands to the Tribe as the rightful owners. Since there was nostatute of limitations on Indian land claims, the threat of these cases wasoften enough to guarantee rapid concession to tribal demands. An example ofthis type of land dispute is The Oneida Indian Nation of New York, The OneidaTribe of Indians of Wisconsin, and the Oneida of the Thames v. United States.The Oneida Tribes sued over 20,000 land owners to reclaim original tribal land.Disputing ownership was seen by many as a ploy to “test” legallimits in order to give Tribes leverage for the concessions they sought. Thisstrategy was successful in Kansas City, KS where the Wyandotte Tribe wanted toopen a casino near a small cemetery plot they owned downtown (Carlson, 2003).Backed by a Florida casino investor, a suit was filed and hundreds of privateproperty owners found the titles to their land in limbo and their livelihoodsin jeopardy if Tribes prevailed in their heritage land claim. It was estimatedthat one out of every eight people in Kansas City would have to find a newplace to work. In exchange for dropping the suit, local officials grantedpermission to the Wyandotte Tribe to build a casino near Kansas City.
Land ownership challenges added a new stakeholder – private landowners - who had the potential for big financial losses. However, if state andlocal government intervention was successful in avoiding legal challenges, thenland owners won. Tribes won financially since they got authorization to expandgaming activities. Tribes lost legally since they limited their ability to gainlegal ownership of heritage lands when a land swap was contracted. They mayhave also lost in the arena of public opinion if their actions were viewed asattempting to “hold-up” the city, its residents and businesses.When governments agreed to tribal demands for land swaps, they lostpolitically, socially and legally since there was less control over futuregaming activities. Tribes, states, and cities all lost financially through thelegal costs associated with court cases.
Event 17: Inter-tribal negotiations. Some tribal casinos were profitable,but others were not. As we know, in real estate - location matters. Only aboutthe top 20% of active gaming enterprises were financially prosperous, oftenbecause of the proximity of the casino to major metropolitan areas (GamblingMagazine 2002). In recognition of the disparity in earning potential caused byremote locations, a few Tribes in high-population metropolitan locationsexchanged a portion of the revenues they generated for rights to machineallotments with those Tribes in remote locations. California created a revenuesharing account that provided a large source of income for poorer, non-gamingTribes (Gambling Magazine 2002b). Sharing the revenues with non-gaming Tribesbenefited poorer Tribes financially. There was the potential for futurefinancial loss for the non-gaming Tribes since they gave up the right to opencasinos in their jurisdiction, but this loss was small since the market inthose areas was not viable. If it had been, then the non-gaming Tribe would nothave negotiated with gaming Tribes, preferring to open their own casinos.
Event 18: Entrepreneurial activity expansion. In this event, tribalenterprise diversification continued. Around the nation, casinos were developedas luxury resorts and tourism destinations. The Chickasaw Tribe in Oklahomaplanned two 250 room hotels to complement the doubling of their WinStar casinoon the Texas border near the Dallas-Fort Worth Metroplex (The Norman Transcript2004). To accomplish expansions of this nature, Tribes often formedpartnerships with private land developers (Laub 2001). Related to this, privatebusinesses were getting into the mix by seeking non-competition clauses inother support services such as the rights to a convention and/or concert venue(Time 2002).
Additional Native American business endeavors ranged from the naturalresource and agriculture industries to banking. For example, Tribes entered orincreased the capacity of the lumber business to supply wood products for homeconstruction (Oneida Tribe 2004, Menominee Indian Tribe of Wisconsin). Theyoperated large organic farms using the crops to feed tribal members and sellingany excess crops for a profit. Tribal representatives argue that these businessventures secured the financial future for Native Americans and reduceddependence on government aid (Gambling Magazine 2003e). When structuredcarefully, Indian entrepreneurial activity minimized financial disparitiesand/or ill-will between Tribes and local businesses as described in a11/14/2007 New York Times article on the positive economic outcomes drawn fromrelationships between the Tulalip Indian Reservation and the neighboring citiesand State of Washington. If the proper balance was found, each stakeholderbenefited financially. When agreements could not be reached, only the landdevelopers came out ahead financially with no risk of loss. Since developmentwas likely to occur, the question was just who the developers would contractwith – Indian or non-Indian businesses.
Event 19: Interstate and intergovernmental issues. This final event wasreally a precursor to future concerns and stakeholder involvement. At stakewere rights to land and authorizations for gaming expansion. The question waswhether gaming was allowed solely on tribal lands or if new casinos could belocated on lands where a tribal presence was demonstrated, by the past orcurrent residency of tribal members (Indian Country 2004). There were differentways of treating Tribes that had their own lands from those that just hadmembers in a state but no recognized tribal lands. In addition to landownership disputes increasingly there was talk of land swaps, where Tribestraced their ancestors’ geographical movements and sought the right toopen casinos in states where their ancestors have been but they did notcurrently own any lands. Another emerging issue was the case of Tribes withmembers in multiple states who wished to establish interstate operations. Anexample was the Texas-Louisiana border where existing casinos sought new waysto attract the lucrative population of Texans in the Houston area (The TimesPicayune 2003). To resolve issues such as these required negotiations involvingmultiple state and local governments in addition to guidance from the federalDepartment of the Interior. In this last event, and as it continues to unfold,Tribes and the state governments wanted to assure future financial wins,without losing in the arena of public opinion. If opposition to gamingexpansion solidified or if perceptions of being held hostage to tribal legaland property claims or sweetheart deals arose, then more political losses wererealized by the stakeholders.
Analyzing the Impacts of Key Events in Gaming Expansion
When looking at the key events that occurred during the gaming expansion ofthe last 30 years, we have demonstrated that an increasing number ofstakeholders have become involved over time. Starting with two primarystakeholders, Tribes and the federal government, sovereignty issues were firstconsidered. As new issues arose, the list of stakeholders expanded to includenearly 20 different kinds of stakeholders who actively participated in thispolicy issue. Of course, this list is not complete. Others, such as interestgroups lobbying for the earmarking of gaming revenues to education, highways,environment and so on, have been involved to a greater or lesser extent, butnot included as a primary stakeholders for this analysis. Identification of themost active stakeholders was sufficient to identify the types of wins andlosses realized by each in the key events identified in gaming expansion.
Table 2 organizes the types of wins and losses experienced by thestakeholders in each event as a means to analyze what types of things, i.e.,financial social, legal, regulatory, and political, were being negotiated andexchanged. When reviewing this table, it is important to understand that noattempt is made to determine the relative value of nor to assign weights to thedifferent wins and losses. The purpose of this analysis is not to determine thenet cost or benefit of each event, but rather to identify the range and type ofwins and losses that need to be considered in a more comprehensive analysis.Some of the stakeholders from Table 1 are consolidated in Table 2 to simplifythe presentation. For example, competing businesses, commercial gaming firms,consultants, investors, the racing industry, and land developers are lumpedtogether in the business/investor column since they are all interested inbenefiting financially from market-based transactions. Charities, politiciansand land owners are grouped under individuals/politicians since each is actingfor their own self-interest. For each of the different types of stakeholders,there is one column to describe the Wins (W) and Losses (L) they experience.The codes (F, S, L, R, and P) represent the category of win or loss.
Table 2. Analysis of the Stakeholders' Wins andLosses
| | Tribes/ Members | Governments (F = Federal, St = State, L = Local) | Interest Groups | Business/ Investors | Indiv’s + Politicians | Event Total | |
| Event | W | L | F-W | F-L | St-W | St-L | L-W | L-L | W | L | W | L | W | L | W | L | |
| 1 | F | R | L, R | | | | | | | | | | | | F, L, R | R | |
| 2 | L | | | | F | L | | | | | | | F | | L, F, F | L | |
| 3 | P | R | R | | | | | | | | | | | | P, R | R | |
| 4 | F | F | | | F | | | | S | S | | | | | F, F, S | F, S | |
| 5 | F | P | | | | F | | F | | | | F | | | F | P, F, F, F | |
| 6 | S, F | | | | | | | | | | | | | | S, F | | |
| 7 | | F | | | F | | | | | S | F | | | | F, F | F, S | |
| 8 | F | F | | | F | | F | | F | | | | | | F, F, F, F | F | |
| 9 | F | F | | R | | | | | | | F, F | F | | | F, F, F | F, F, R | |
| 10 | F, R | F | | | F, R | | | | | | | | | | F, R, F, R | F | |
| 11 | P | F | | | | | F | | | | | | F | | P, F, F | F | |
| 12 | L, F | F | | | | F | F | L | | | | | | | L, F, F | F, F, L | |
| 13 | F | F | | | F | | | | | | F | | | | F, F, F | F | |
| 14 | P | F | | | | | | | | S | | | F | P | P, F | F, S, P | |
| 15 | F | | | | | | | | | | F | F | | | F, F | F | |
| 16 | F | L, F,P | | | F | L, F,P | F | L, F,P | | | | | L | F | F, F, F, L | L, F,P,L, F, P,L, F, P,F 17 | |
| 17 | F, F | L, F | | | | | | | | | | | | | F, F | L, F | |
| 18 | F | F | | | | | | | | | F, F | F, F | | | F, F, F | F, F, F | |
| 19 | F | P | | | F | P | | | | | | F | | | F, F | P, P, F | |
| | | | | | | | | | | | | | | | | | |
| Total | F=15 S= 1 L= 2 R= 1 P= 3 | F= 12 S = 0 L = 2 R = 2 P = 3 | F = 0 S = 0 L = 1 R = 2 P = 0 | F = 0 S = 0 L = 0 R = 1 P = 0 | F = 8 S = 0 L = 0 R = 1 P = 0 | F = 3 S = 0 L = 2 R = 0 P = 2 | F = 4 S = 0 L = 0 R = 0 P = 0 | F = 2 S = 0 L = 2 R = 0 P = 1 | F = 1 S = 1 L = 0 R = 0 P = 0 | F = 0 S = 3 L = 0 R = 0 P = 0 | F = 7 S = 0 L = 0 R = 0 P = 0 | F = 6 S = 0 L = 0 R = 0 P = 0 | F = 3 S = 0 L = 1 R = 0 P = 0 | F = 1 S = 0 L = 0 R = 0 P = 1 | F = 38 S = 2 L = 4 R = 4 P = 3 | F = 24 (+14) S = 3 (- 1) S = 3 (- 1) L = 6 (- 2) R = 3 (+ 1) P = 7 (- 4) | |
F = Financial, S = Social, L = Legal, R = Regulatory, P =Political
Using Table 2 to look at the specific stakeholders and what happens to themover the course of key events, Tribes were financial winners in 15 out of the19 events (from the Stakeholder Totals row). Tribes certainly sufferedfinancial losses as well, every time they paid out to others. In fact, theyfinancially compensated every stakeholder except the federal government. Inaddition, Tribes (gaming, non-gaming and members alike) posted one social, twolegal, one regulatory, and three political wins. These wins may not have hadthe same short-term appeal of gaming revenues in the bank or revenues used forimproving social services and the lives of their members, but the rights,privileges and changes in public perceptions they gained had far-reachingfuture impacts by establishing precedents for future gaming expansion andentrepreneurial activities.
Tribes experienced some losses beyond the financial payouts to otherstakeholders. By agreeing to state level regulation, they gave up some rights.There have been political losses in terms of the loss of goodwill fromcompeting businesses, interest groups opposed to gaming, and the public whenlegal action was taken or threatened. Tribes had no social losses associatedwith a particular event (however there may be externalities that representsocial losses embedded across events such as per capita payments andpathological gambling) , two legal, two regulatory, and three political lossesidentified in the individual events. Comparing the wins and the losses, Tribescame out ahead in every category except the regulatory category, where theysuffered two early losses in the first two events.
Looking at non-tribal stakeholders, all levels of government except thefederal government and non-profit organizations experienced financial wins fromIndian gaming expansion. None of the governments experienced wins or losses inthe social category, and state and local governments experienced a potentialpolitical loss as interstate gaming issues were worked out in the future.Looking at each level of government, the federal government wins exceed thelosses in the legal and regulatory categories. State governments came out aheadin the financial and regulatory categories, but had more losses than wins inthe legal and political categories. Local governments participated in onlythree categories, with more wins in the financial category and more losses inthe legal and political arenas. These losses may explain why there has been anotable increase in local government activism in recent years.
Interest groups had limited involvement in gaming expansion, with mostactivity in the social category. Here we see more losses than wins. There isonly one event where they won financially, when funds for treatment programswere included in gaming compacts. Interest groups did not have any legal,regulatory or political activity in the events described.
For the business/investor stakeholders there were only financial concerns,with seven wins and six losses. The close number of wins versus losses masksthe magnitude of the financial wins these stakeholders experienced since mostlosses were potential foregone revenues, while financial wins were tangible.They did not experience any social, legal, regulatory or political wins orlosses.
Individuals and politicians came out ahead in the financial and legalcategories, but have a potential political loss if they served the interests ofTribes at the expense of other constituents’ interests. This is notunusual or surprising; for any elected official, cleavages will be present inevery jurisdiction. There are always winners and losers when politicaldecisions are made. In Event 4, Tribes became increasingly politically savvyand devoted significant resources to furthering their politicalinterests/preferences in their own jurisdiction and even into neighboringjurisdictions that may be considering gaming expansion (such as Oklahoma– gaming and Texas – non-gaming); some may claim at the expense ofother public interests.
If we look at the combined effects to all stakeholders, the financial winsstand out as the most significant finding. Certainly there has been an attitudeof sharing the wealth through gaming expansion. In most cases, the paymentswere direct, but for the gaming opponents, indirect wins such as tribalself-sufficiency gains were made over time as reliance on government socialprograms was reduced through gaming employment, infrastructure development,and/or financial payouts to Tribes and their members.
Losses across the five categories are few, but may have had potentiallylarge long-term consequences. Financial losses were, of course, smaller thanfinancial wins (otherwise market motivated transactions would not haveoccurred). Interest groups and citizens who opposed gaming, and the politiciansthat represented them, had social and political losses since their preferenceswere not being maximized. However, it is the nature of public policy issues toebb and flow over time as attitudes and preferences change. Losers in theseevents may be winners in the future. The balance of legal losses to wins ismore troublesome. Many non-tribal stakeholders, such as states, cities andproperty owners, lost in the legal arena, as tribal rights and sovereignty weremostly upheld in the courts. Tribes may have experienced a backlash if theirlegal tactics resulted in a loss of goodwill and local residents boycottedtheir gaming establishments. The same sort of outcome could be expected whencomparing the balance of political wins and losses, if tribal activism wasperceived negatively. Research (Cornell, et al; 1999; Taylor, Krepps, and Wang,1999; National Gambling Impact Study Commission, 1999; Grinols, 2004; Light andRand, 2005) has examined the social costs of gambling pointing to issues such acrime, competition with local business, traffic, loss of real estate and salestax. There are mixed conclusions, but it is safe to conclude that these issuesrepresent some level of social loss embedded in the key events studied.
Reviewing what occurred over the course of all the events, the wins equal orexceed the losses in 15 of the 19 events. In Event #5, there was a rapidexpansion of tribal gaming under federal jurisdiction. In response, state andlocal government and competing businesses entered the policy arena to get apiece of the gaming action and to offset the financial losses they wereexperiencing through revenues lost or foregone. As a result, the number oflosses exceeded the number of wins. Event #14 described the political activismof Tribes as their interests began to coalesce. Where tribal interest groupswere successful in achieving their policy preferences, a social loss wassuffered by groups representing divergent preferences. Event #16 wasproblematic since everyone suffered legal and/or financial losses when theheritage land use issue was taken to the courts for resolution. The inabilityto negotiate a settlement out of court introduced political as well asfinancial losses as stakeholders paid for legal representation. Had the matterbeen kept out of the courts, a better balance between wins and losses may havebeen possible. Certainly financial compensation obtained through court rulingsand out of court settlements may have softened the blow of the land settlementsopposed by local governments and taxpayers. For Event #19, the same scenariowas true. Unless stakeholders found mutually acceptable resolutions out of thecourts, they all suffered losses as the costs of legal representation wereintroduced and the likelihood of sustainable outcomes was diminished. For all19 events, there are more wins than losses posted by the various stakeholders.However, this conclusion is misleading since it is impossible to assess whethera financial win is sufficient to offset to a social or political loss. Nor canwe say whether a regulatory win sufficiently offsets a legal loss. Criticismcan be made that value assumptions inherent in this type of descriptiveanalysis are highly normative and make comparison nearly impossible sincecategorizations are subjectively made.
One limitation of this analysis is that actors have been grouped into broadcategories that are treated equally, when, in reality, these actors are seldommonolithic in terms of their activities and preferences. A good example of thislimitation is the lumping of all tribes under the label of Tribes, when clearlythey are not a unified actor. As most who study in this arena are aware, vastdifferences exist in the degree to which tribal members embrace gamingactivities. The classification of gaming and non-gaming tribes represents theseideological differences as two ends of a continuum for clarity of analysis;however, in reality it is likely that tribes could be placed along the entirecontinuum. A second limitation is that little empirical evidence exists for thenon-financial wins and losses. Financial impacts have been, by far, the moststudied areas to date (Morse and Goss, 2007). There have been studies on theincidence of crime, bankruptcy, and addictions attributed to gaming, but theresults have been mixed or inconclusive because of the inability to separateout commercial gaming activities, and these effects are seldom considered inlight of financial contributions. This study attempts to be more comprehensivein the consideration of a range of outcomes, but it also suffers from the samelack of specificity in monetizing and comparing the different types of wins andlosses. Also, the impacts identified here can not be expected to remain staticin the future, i.e., the analysis is time-bound (and victim to the limitationsof Monday morning quarterbacking and thus not a robust predictor of thefuture). For example, the indirect, long-term financial and social impacts arecritical items not directly considered in this analysis. These effects must beconsidered as the long-term impacts of education funding and enhanced socialprogramming on tribal lands emerge. Other things to measure are the multipliereffects in local communities gained from casino payrolls. On the negative side,measurement of the long-term social effects from gaming addiction is necessary.Grinols (2004) argues that there are criminal behaviors associated withpathological gambling that need to be considered as well. The estimatednational prevalence rate of 0.8% for lifetime pathological gambling mayincrease as true long-term impacts are documented.
As we are reminded by the program and policy evaluation literature (Rossiand Freeman, , an important element in this form of analysis is considerationof the counterfactual. What if the stakeholders in tribal gaming remained justTribes and the federal government, such as was the case in the 1970’s and1980’s? What if there had been no movement to state compacts, whichconcurrently tended to expand commercial gaming, directly benefiting state andlocal government? We can speculate that Tribes may not have had the incentiveto professionalize, since they would essentially have remained a monopoly withfew competitors. Or, there could have been increases in gaming irregularitiesthat lead to enhanced regulation which Tribes generally seek to avoid. In analternate scenario, states may have been more likely to expand commercialgaming, introducing greater direct competition for gaming dollars. It isimportant to determine the elasticity of gambling. Gaming revenues seemed to beon an increasing trajectory, until the 2009 data showed a drop from $236.7B to$26.5B, so there may be a break point. Models in this area can be veryinformative. To do this, there will need to be greater cooperation with tribaland commercial gaming organizations alike to foster transparency in terms ofrevenues, expenses and net profits.
Conclusion
This paper identified wins and losses experienced by different stakeholdersduring 19 key events in gaming expansion over the past few decades. Theinvolvement of stakeholders increased from just the federal government and theTribes to more than 20 active stakeholders in this policy arena. From the 19events, it is clear that the nature of the negotiations changed from primarilyfinancial to both financial and non-monetary concerns. Additionally, eventhough the paper started with a tribal gaming focus, it is clear that theboundaries between tribal gaming and commercial gaming activities are blurring;just as the boundaries between financial, social, legal, regulatory andpolitical activities of the different actors in this policy arena are blurring.Over the course of events, each stakeholder won something, most of the time itwas financial but there have been wins in every other category as well. Ofcourse, the true question is: are these the desired benefits? Or, do the winssufficiently compensate for the losses? Have actors indeed hit the jackpot or,when considering the long-term impacts, are they breaking the bank?
These questions can be answered with future research that documents thedifferent types of wins and losses in the financial, social, legal, regulatoryand political categories. Confirmation of conclusions regarding the differentcategories of wins and losses would be a good place to start and would requirethe efforts of scholars in a variety of disciplines. Financial models can becreated as more longitudinal data becomes available on the monetary andeconomic impacts of gaming establishments. Social impacts can be studiedthrough monitoring of incidence and prevalence rates and the estimation of thesocial costs of gambling addictions. In addition, research into gains insocio-economic indicators of tribal members can help us to better understandthe contribution casino revenues are making to the tribes. The legal issueshave, perhaps, received the most attention as sovereignty claims and propertyrights challenges have been highly visible throughout American history. In theregulatory arena, the provisions in compacts between tribes and the states canbe more closely examined to determine how the level of oversight is changing.The increase of inter-local arrangements through contracting can contribute toliterature on intergovernmental relations and management. Finally, thepolitical arena and actors is shifting. What does this mean for future casinoactivities and other questions specific to the tribes such as economicdevelopment and environmental protection activities? Clearly, more work needsto be done to understand the evolution of gaming and related activities and toenhance the theoretical literature so that it accommodates the special natureof tribal governments operating within a larger government context. Researchsuch as this can contribute invaluable to theory development in this policyarena.
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