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Let the Games Begin: Extortion in Minnesota

Last month, Minnesota Governor Tim Pawlenty opened a huge can of worms by "send[ing] a message that the status quo needs to change." He was referring of course to the fact that Indian gaming is conducted in Minnesota under tribal-state compacts that have no expiration date and "share" no funds with the state. By allowing the idea to "percolate" as he said at the time, the Republican Pawlenty has convinced others of his ilk to climb onto the "let's take Indian money" bandwagon.

This latest attempt to browbeat Indians is the brainchild of a pair of Republicans, Rep. Jim Knoblach of St. Cloud and Sen. Tom Neuville of Northfield. Legislation they plan to introduce would ban video slot machines on Jan. 1, 2006 unless the gaming tribes agree to renegotiate agreements made in good faith 15 years ago.

"If we're going to have gaming in Minnesota it has to be highly regulated," Neuville was quoted as saying in the March 4 edition of the Minneapolis Star-Tribune. "The lack of regulation has brought into question at least many of the social consequences and other problems with the game."

Neuville's statement makes absolutely no sense. First of all, gaming in general and Indian gaming in particular, is already one of the most tightly regulated industries in the U.S. Furthermore, Indian gaming has repeatedly been given a clean, corruption-free, bill of health by none other that the Justice Department and the General Accounting Office. Nay-sayers around the country often claim otherwise but never offer any specific proof of anything illegal.

Secondly, "regulation" has nothing to do with "social consequences." How, if, or by whom a game is regulated has no bearing whatsoever on an individual gambler's personal choice to play that game. Researchers at Harvard University have determined that problem gamblers comprise a minute portion of the populace and can be treated. Gambling addiction should in no way be dismissed or marginalized, but neither should it be used to cry wolf.

What Neuville and his cohorts are saying is basically this - problem gambling and an alleged lack of regulation are problems that can be fixed if tribes contribute to the state's general fund. Strangely enough, these "problems" have suddenly appeared just as Minnesota, like many other states, is experiencing fiscal shortfalls. The whole thing reeks of extortion.

Apparently, the esteemed senator and many of his fellow Minnesota politicians are among the countless hordes who have never read the Indian Gaming Regulatory Act. Nor do they read this publication or follow the Indian gaming industry with anything more than a passing glance. This shameful attempt to force Indian tribes to "pay to play" makes their ignorance of Indian gaming only too obvious.

Some advice for Minnesotans: Rather than trying to force the tribes in your state into doing something they are not legally bound to do, work with them. Don't threaten them with commercial competition, but instead give them an incentive, something concrete like exclusivity, which the state can guarantee in return for a reasonable slice of the gaming pie. Threatening to take away the only consistently successful means of economic development in Indian country creates animosity and benefits neither the state nor the tribes.

Given the number and variety of gaming-related legislation currently being considered in Minnesota, it may also be wise for lawmakers there to actually develop a coherent strategy to plan for the state's gaming future, rather than simply grabbing at money the law says they're not entitled to.

The bottom line is that if you treat the tribes respectfully and give them a reason to come to the table, you might be surprised by traditional Indian generosity.

New Mexico numbers

On March 1, the New Mexico Gaming Control Board released data recording a decline in Indian gaming revenues during the fourth quarter of 2003. The state's 11 compacted pueblos paid a combined $8.79 million into the state's general fund, which represents a drop from the $10.65 million paid for last year's third quarter, but remains higher that the totals from a year ago.

The pueblos' aggregate net win fell just short of $110.20 million for the three months ended Dec. 31, 2003, compared to $112.52 million for the three months ended Sept. 30, 2003. For the fiscal quarter ended Dec. 31, 2002, the aggregate net win was $97.83 million, while the revenue sharing payment was $ 7.78 million.

Eleven of the state's pueblos signed gaming deals with Albuquerque in 2001. Under the terms of the umbrella compact, each pueblo pays the state 8 percent of their casinos' net win on a quarterly basis. If a pueblo's total annual net win falls short of $12 million, the pueblo pays the state 3 percent on the first $4 million and 8 percent on the rest of that calendar year's net win.

In New Mexico, "net win" is defined as the amount wagered on gaming machines less the amount paid out in prizes less a deduction for regulatory fees." Each pueblo also pays the state $275,000 in regulatory costs, an amount that rises by 3 percent annually.

In return, the pueblos get Class III exclusivity in New Mexico, with the exception of "gaming machines," which the state permits on a limited basis at racetracks and for veterans' and fraternal groups. The compacts expire on June 30, 2015.

According to a March 4 Associated Press report, the net win drop was attributable to four straight quarters of rapid growth at a rate considered "unsustainable." Continued growth is expected going forward, albeit at a much slower pace.

Only three pueblos registered a high enough net win during the recently completed quarter to warrant a full 8 percent payment - Sandia ($30.70 million), Isleta ($22.17 million) and Laguna ($16.22 million).

Multimedia corners Oklahoma

Multimedia Games Inc., a gaming device manufacturer with over 5,000 of its machines already in operation throughout Oklahoma, is looking for an even larger chunk of the market in that state. Now that legislation and legal action have combined to clarify the scope of Class II gaming, the Austin, Texas-based company has invested $50.3 million with several tribes in Oklahoma for the construction of Class II gaming facilities.

The Associated Press reported that while Multimedia refused to disclose the tribes with which it is working, the new deals are likely similar to the company's role in the construction of the Chickasaw Nation's WinStar Casino last year. Under terms of that deal, in return for an undisclosed sum the Chickasaws granted Multimedia 80 percent of the gaming space at the new casino.

The new projects financed by Multimedia include a casino near Miami, Okla. for the Peoria Tribe, and two new casinos at Sand Springs and in North Tulsa for the Osage Nation, according to the AP.