Minnesota Governor Tim Pawlenty finally tipped his hand. Since January the
Republican has pressured the state's gaming tribes to renegotiate -
"voluntarily" of course - their compacts to include revenue-sharing
provisions. After recently claiming that the 18 casinos operated by 11 of
Minnesota's tribes are a $10-billion business, a figure he seems to have
pulled out of thin air, the governor has announced his version of the
tribe's "fair share" - $350 million annually.
According the Minneapolis Star-Tribune, Pawlenty informed the tribes in an
Oct. 12 letter that in return for a total annual payment of $350 million,
they would enjoy gaming exclusivity in the state for a "time period to be
agreed upon." He invited tribal leaders to meet with him on Oct. 27 to
contemplate a new arrangement between state and tribal governments to
replace the current compacts, signed in 1989. Those agreements mention
neither revenue sharing nor exclusivity, but do mandate that the tribes pay
$150,000 in regulatory expenses. They have no expiration date and are
supposed to be re-negotiated only if both parties agree to do so.
The Star-Tribune on Oct. 22 reported that Pawlenty's $350-million price tag
exceeds revenue generated by Minnesota's motor vehicle sales tax, and
equates to slightly more than half of the state's projected corporate
income tax payments for 2004. The governor also reportedly sent his chief
of staff on a recent trip to Las Vegas to meet with officials from several
commercial casino operators, including MGM Grand, Mandalay Bay and
Harrah's, to explore their interest in Minnesota.
A look at some data from the National Indian Gaming Commission might help
clarify the gaming revenue picture in the Gopher State. In 2003, NIGC's
Region IV, which includes Minnesota and seven other states, tribal casinos
generated $3.7 billion. In 2002, that number was a little over $3.5 billion
while in 2001, region produced just under $3.3 billion. Nationwide, Indian
gaming in 2003 generated total revenue of $16.7 billion.
Pawlenty, however, has publicly claimed that Minnesota's Indian gaming
industry enjoys annual revenues of at least $10 billion. As reported in
last week's edition (Vol. 24, Iss. 20) of Let the Games Begin, (the
governor says his estimate is derived "from a compilation of data from
state and local government sources, casino industry reports and data from
[investment broker] Bear Stearns." Tribal officials have criticized
Pawlenty's $10 billion figure as way off base and, citing sovereignty,
refuse to open their books for his inspection.
By all accounts the tribal leaders invited to Pawlenty's Oct. 27 meeting
have no plans to attend. John McCarthy, head of the Minnesota Indian Gaming
Association (MIGA), told the Star-Tribune that the governor's letter read
"more like a summons [which is] not very good protocol for
government-to-government relations" and called the $350-million proposal
"laughable." MIGA counts among its members nine of Minnesota's 11 gaming
In an Associated Press report published in the Oct. 23 edition of the Grand
Forks Herald, state Senate Majority Leader Dean Johnson criticized
Pawlenty's attempts to shake down the tribes for money. Citing the
governor's pledge not to increase taxes, Johnson claims Pawlenty has
"backed himself into a corner" and is "walking down a very dangerous path
in his political agenda at the expense of Minnesota and good public
Dan McElroy, Pawlenty's chief of staff, told the AP that the revenue
sharing proposal came about out of concerns for "fairness" and is not meant
to alleviate Minnesota's financial woes.
We say, "Bull!" It is painfully obvious that what Pawlenty seeks is not
"fairness" but rather to balance his state's budget on the backs of Indian
THE KANSAS EXAMPLE
If Gov. Pawlenty needs some help in understanding the proper way to conduct
government-to-government negotiations with tribal governments, he ought to
look to his counterpart in Kansas, Gov. Kathleen Sebelius.
On Oct. 18, Sebelius, a Democrat, agreed to a compact with the Kickapoo and
Sac & Fox tribes that could mean up to $50 million annually in shared
revenue for Topeka. The compact, which still needs approval from the state
Legislature, would cover a not-yet-built casino in Wyandotte County.
According to an Oct. 20 report in the Dodge Globe, the amount paid to the
state is contingent upon limitations placed on further gaming permitted in
Kansas. In order for Topeka to get the full $50 million, it must restrict
the further proliferation of slot machines in the state and oppose any new
Indian casinos within 100 miles of the Wyandotte County location.
Under the Sebelius compact, both tribes could continue to operate their two
existing casinos for an additional seven years and would continue to pay
Kansas 4 percent of gross revenues from those operations. Regarding the new
proposed casino, Kansas would get 14 percent of the first $100 million in
gross revenue and 24 percent of whatever comes in on top of that. Wyandotte
County gets a guaranteed 4.2 percent.
Topeka is allowed no more than 500 state-owned slots or video lottery
terminals within 100 miles of the new casino and no more than 1,500
elsewhere. If such numbers of machines are put in play at a state-run
casino, Topeka gets less in revenue sharing from the tribes. The Globe also
reported that both tribes considered the deal "fair."
This proposed arrangement, while not yet a done deal, reveals that creative
negotiating and mutual respect can produce arrangements under which
everyone can live happily. Are you listening Mr. Pawlenty?