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Montana: The last, worst place for Indian gaming

MISSOULA, Mont. - A truck stop and tax-free cigarette emporium called Joe's Smoke Ring is the closet Indian casino to Missoula, one of Montana's largest cities. In almost any other state, this would be a sure-fire recipe for financial success.

But the most remarkable thing about Joe's Smoke Ring it is how quiet it is on a Wednesday afternoon, even though it sits barely 20 minutes from a major population center. Four locals sit at the bar and trade jokes. More than half of the 19 slot machines are sitting idle and few who live outside the scenic Flathead Indian Reservation bother to stop in at Joe's.

The reason: most of Montana's bars already offer gambling in the form of live poker, slot machines and keno. And tribes here have had little success getting state government to the bargaining table to acquire many gaming options that aren't already offered around most street corners in this state. Missoula, a city of 57,000, has more than 30 casinos, turning what should have been Joe's prime real estate into a gaming backwater.

"It's a real bitter issue," said Jamie Rice, the manager of Joe's small gaming operation. "You hear an earful up here about it."

Tribal Executive Secretary Joe Dupuis summarizes that earful with a blunt statement: "Tribes are going nowhere with gaming here," he said. "IGRA (the Indian Gaming Regulatory Act of 1988) turned out not to be beneficial to tribes in Montana at all."

The quiet afternoon at Joe's Smoke Ring is a vivid illustration of the special challenges faced by Montana's six gaming tribes, who must cope with a triple handicap: a wide and dispersed customer base, overwhelming competition in the cities and a governor who earns medium to low marks for her willingness to change things.

Montana also offers an example of the shrinking gaming revenues for tribal government when a state legalizes gambling across-the-board. The near-monopoly advantage enjoyed by tribes in places like Arizona, Connecticut and Oregon becomes a non-factor when the rest of the state begins to look like Montana, which resembles Vegas in some places.

"It's everywhere, in every town, in all the truck stops," said Pat Smith, an attorney and an enrolled member of the Fort Peck Tribes of northeastern Montana." He ought to know: his downtown Missoula law office sits barely 30 yards from the Press Box bar, which features as many slot machines as Joe's Smoke Ring.

Smith continued: "Almost all of Montana's tribes are out in the boondocks, and gaming is all about location, location, location."

Indian gaming in Montana faced long odds from the starting line. The state's modern flirtation with legal gambling began nearly two decades before IGRA became law in 1988. Video poker and other gaming devices have been legal in Montana's bars ever since the state amended its constitution in 1972. But the business really took off in the 1980s after the legislature allowed bars to have up to 20 machines on the premises.

The Flathead Indian Reservation casinos enjoy one important competitive advantage. The tribes' compact, negotiated two years ago under the provisions of IGRA, allows them to pay a maximum slot payout of $1,500, nearly double that of other casinos.

But according to Tribal Executive Treasurer Vern Clairmont, "It isn't enough to attract people to come a long distance." Efforts to secure live blackjack games, illegal elsewhere in Montana, have failed.

According to Tribal Vice Chair Jami Hawk-Hamel, there's another irony. A huge portion of her tribe's gaming revenue comes from profit-sharing agreements with private operators.

The arrangement at Joe's Smoke Ring is typical. Although it sits upon reservation land, it is owned by a non-tribal member, who gives the tribe 58 percent of the profits in exchange for the lease on the slot machines.

The government does operate its own luxury casino on tourist-heavy Flathead Lake - the 112-room KwaTaqNuk Resort - but according to Hawk-Hamel, the competition from non-Indians and the non-government operators on the reservation cuts into potential profits.

"That's not what Indian gaming was supposed to be all about," said Hawk-Hamel, who helps lead the Flathead Tribes, a confederation of Salish, Pend d'Oreilles and Kootenai people, known locally as the Salish-Kootenai.

As a result of the myriad competitive factors, gaming revenues are only a small part of the Salish-Kootenai Tribes' annual $24 million budget, providing only 7 percent of the total income. The rest comes from more traditional sources such as land leases and timber sales.

The Flathead Tribes' compact expires in three years, which may provide an opportunity to negotiate better terms. But observers aren't betting on it. Former Montana Gov. Marc Racicot, who is now the chairman of the Republican National Committee, had a strong anti-gambling stance, and current Gov. Judy Martz disappointed many tribes this legislative session by cutting reservations completely out of the state's economic development plan. Aides in her office did not return repeated phone calls from Indian Country Today to discuss her stance on gambling.

"Because Martz views gaming in a hostile way, they're not interested in giving us any new opportunities," Dupuis said. The Montana Tavern Owner's Association, one of the state's more powerful lobbying interests (and sometimes called "The New Anaconda," in reference to the now-defunct mining powerhouse that ran Montana's statehouse earlier in the century) has also reportedly advocated against more liberal Indian casino compacts.

There has been some talk of bypassing the governor and the legislature by running a tribal initiative to allow bigger payoffs, more table games and other enticements not available to the tavern owners. "If the tribes went directly to the public, the public loves gaming and if they know they'll be doing something about the outrageous poverty on the reservations, it would be a pretty compelling argument," said Smith.

But sponsoring an initiative - with all the attendant polling, consulting, signature-gathering and advertising fees - would be expensive. Political observers put the cost at $3 million. The Salish-Kootenai tribal council is currently exploring options and may be approaching other Montana tribes to help build solidarity for an initiative, Dupuis said. Another idea is moving the tribal casino toward a "Class II gaming operation," which means more electronic bingo machines, which aren't regulated by the state and do not require a compact agreement. But this may also mean shutting down all the Class III slot machines on the reservation, which is a sticky political issue within the tribe because many of the non-government private operators are enrolled members of the tribe.

For now, however, the Salish-Kootenai and the five other gaming tribes in Montana are living with their compacts in one of the toughest states in the U.S. for Indian casinos - a state with one of the highest per capita concentration of gaming machines in the nation.