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Indian gaming as an economic engine

In 1988, Congress passed the Indian Gaming Regulatory Act, legitimizing Indian gaming as a lever for tribes to gain a measure of economic self-determination. Although not all tribes have benefited from gaming, the greater-than-anticipated success of many Indian gaming operations and the potential for future payoffs from proposed facilities have led many state governments to seek a greater piece of the pie when negotiating new compacts or re-working existing/expired ones.

When drafting IGRA, Congress did not envision Indian gaming becoming a revenue stream with which states could balance their budgets, although the state of Connecticut has handily balanced its books on the back of an industry it now seeks to limit. Indeed, Title 25, Chapter 29, Section 2701 (4) says that the "principal goal of federal Indian policy is to promote tribal economic development, tribal self-sufficiency and strong tribal government." Nothing in this language or anywhere else in IGRA touts Indian gaming as a means of supporting state governments.

As economic troubles mount in many states, state politicians are beginning to see gaming as somewhat of a panacea. Many politicians seem to forget that the purpose of Indian gaming, according to Title 25, Chapter 29, Section 2702 (2), is "to ensure that the Indian tribe is the primary beneficiary of the gaming operation."

New York, New York

While certainly not the only state guilty of this phenomenon, the State of New York has focused on Indian gaming as an economic engine to not only revive two stagnant regional economies (western New York and the Catskills) but also to pump a percentage of Indian gaming monies into Albany's coffers, currently depleted by years of bureaucratic bungling and governmental gridlock.

Indian gaming in New York is poised at the brink of rapid expansion. The Seneca Nation is working hard to refurbish the Niagara Falls Convention Center where it wants to open a temporary casino by the end of the year. The tribe's rapid push comes even though it has not yet received compact approval from BIA, nor has any land been taken into trust. The project also faces lawsuits challenging the legality of the compact. Other area tribes, the Tonawanda Band of Seneca Indians and the Tuscarora Nation, have sent a memo to Interior Secretary Gale Norton outlining their objections to the compact, its exclusivity clause and the impact of gambling on their traditional beliefs. According to the Oct. 19 edition of the Buffalo News, the tribes were not anxious to take the matter to court but said such a move is "always a last option."

But the fact that the Senecas proceed anyway reveals their confidence in Gov. George Pataki's commitment to expand Indian gaming in the state. The financially strapped state government needs income - that's why the Legislature last October granted Gov. Pataki, a Republican, approval in advance to negotiate compacts for six new casinos. The Senecas got permission to build three gaming facilities in western New York; the other three, in the Catskills, remain up for grabs. Seneca voters barely approved the compact on May 14; Pataki and Seneca President Cyrus Schindler didn't ink it until Aug. 19.

Over the 14-year life of the proposed compact, New York would receive an annual "contribution" of up to 25 percent of slot revenues on a sliding scale by the eighth year of the deal.

Gov. Pataki's office has dropped hints of an Oct. 24 announcement, the day after this article went to press, regarding the St. Regis Mohawk Tribe and a potential casino in Sullivan County.

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Yet elections for tribal president and eight council members on the two Seneca reservations, also scheduled for Nov. 5, could throw a monkey wrench into things. One candidate, Rickey Armstrong promises to open the casinos as soon as possible. The other, current Seneca Treasurer Arnold Cooper, dislikes the current compact and would halt construction to bargain for a deal more advantageous to the tribe. The tribal vote on the compact last May was a cliffhanger; with just over 2,000 of some 4,500 eligible voters casting ballots, the compact passed by a mere 101 votes and was actually defeated on one of the two Seneca reservations. The outcomes of the upcoming tribal elections are too close to call.

So, while gaming is not necessarily at the forefront of New York State politics, it simmers in the background. Pataki's recent signing of the Seneca compact and a pre-election announcement, expected to be a Mohawk compact, might be interpreted as a pitch to upstate voters that he is creating jobs and finding revenue to balance the state budget. His principal challengers, Democrat Carl McCall and the Independence Party's Tom Golisano, have blamed the incumbent for an exodus of jobs from New York and particularly upstate. Pataki, seeking his third term, leads McCall by double digits in most polls, with Golisano a distant third.

Often unmentioned is the expansion of video slot machines to horse racing tracks throughout the state. The state legislature's October mandate for six more Indian casinos also included provisions to install video slots at five harness and three thoroughbred tracks, creating a nascent racino industry. How this will affect current and future casinos is unclear, though some of the horse tracks are located near casino locations, both present and proposed.

On Wisconsin

Wisconsin also has its eyes on Indian gaming revenue. Scott McCallum, that state's incumbent Republican governor, on Oct. 9 announced his willingness to negotiate longer compact terms with the state's 11 gaming tribes to be enacted when the current five-year deals expire between August and September 2004. In return, however, McCallum wants a much larger chunk of casino revenues. Specifically, on Oct. 9 he said he wants $100 million from gaming tribes over the next two-year budget cycle that begins next July.

Under the current compacts, the state has received roughly $24 million per year over the last four years. The government in Madison, however, has projected a $2.8-billion budget deficit for the 2003-2005 fiscal period and needs to create some kind of positive cash flow.

The tribes themselves generally favor longer compacts as they guarantee that a casino will be in business for a longer duration, thus making it easier to secure financing and investment for casino-related projects.

McCallum opposes opening new casinos, but would allow dice games, which are currently prohibited.

Attorney General Jim Doyle, the Democratic nominee for governor, opposes off-reservation gambling, but is receptive to longer compact terms.