Revenue sharing for economic diversity

On July 31, the Norwich (Conn.) Bulletin reported that the Mohegan Tribe was "pursuing an economic partnership" with another Indian tribe. The Bulletin said that it was "unclear whether the financial partnership would center on gaming or other economic developments." No potential partners were disclosed. The Mohegans opened their Mohegan Sun casino in 1996 and recently finished an ambitious expansion project, adding a second casino, a hotel and other amenities.

Indian country should welcome this development. Tribes like the Mohegans, who have enjoyed considerable and unpredicted financial success with their casino, have a great deal, in terms of both practical experience and financial backing, to offer to tribes just getting their feet wet in gaming or other business enterprises. And as important as seed-money is in embarking on a business venture, an experienced mentor can provide invaluable insight and advice.

Since IGRA's passage in 1988 occurred so recently, gaming tribes looking to expand their business holdings have tended to remain in gaming or its ancillary businesses. In brief years since the advent of large-scale Indian gaming, that has become the one single business model that has consistently (or at least more often than not) worked as a viable tribal business. Understandably, tribes want to stick with something that works. Adding second and third casinos, building hotels and golf courses and placing retail shopping and dining in their operations are all logical and worthy additions to a casino-based business plan.

As the new positive cash flow begins to improve the educational, health care and other social and cultural needs of tribal members, leaders are faced with the challenge of properly investing gaming proceeds so that they will continue to benefit future generations as well. But what happens if the economy tanks and people have no discretionary money to spend at casinos? How will tribes whose finances depend solely on a casino survive a cash-flow crunch?

Stockbrokers, at least those worth their salt, will tell their client investors to diversify their holdings to guarantee a steady return. "Don't put all your eggs in one basket," as the saying goes. This advice translates well to tribes that have enjoyed some success in gaming and now seek to make the fruits of their labor work for them.

Indeed, branching out, diversifying away from gaming simply makes sense. Anti-casino backlash in Connecticut, California and elsewhere has given the BIA's federal recognition process considerable visibility, prompting calls for reform. Tribes receiving recognition are ever more likely to face legal challenges. Racetrack owners, bingo halls, card rooms and commercial casinos in many gaming states are clawing for pieces of these potentially lucrative slot-machine pies. For tribes with remote reservations, gaming and casinos are not always going to be a viable business alternative. Besides, gaming and resorts do well when the economy as a whole is on the upswing. With today's precarious economic outlook, the threat of recession may cut discretionary spending for gaming and vacations.

Distribution of business holdings away from gaming is a good idea, but how is it achieved?

The Mohegans' interest in economic partnership is a great example that other "haves" can follow. But how about going a step further? Why not gather a consortium of tribes to form a native business-lending bank (NBLB) for native business ventures? Backers could fund the bank as they are able and willing while providing mentoring services and receiving a fair return on their investment. Borrowers would of course enjoy financing for their ventures with the added benefit of a consultation resource.

Although several federal agencies, including the Small Business Administration, Fannie Mae and Freddie Mac have admirably made expanded efforts to offer business and home loans to Native communities, their programs have gone underused. Perhaps our proposed NBLB, as a native-owned institution, could provide greater assurance to native borrowers distrustful of non-Indian banks. And collateral, often a sticking point with non-Indian lenders, could possibly be handled through inter-tribal loan guarantees.

What kind of business entities would the NBLB support?

"Traditional" Indian businesses such as gas/convenience stores and smoke shops are never a bad idea, as their products will always be in demand by customers across the board. But why stop there?

An area in which Indian country can potentially make a huge economic splash is in the energy sector. Wind and solar-energy farms, collections of windmills and solar panels, respectively, that generate electricity are environmentally friendly industries that fit well with native values and beliefs. Both involve resources abundant on some reservations, particularly in the Western and Midwestern U.S. Continually high oil and gasoline prices, and a desire for reduced dependence upon Middle Eastern oil, make these renewable, "clean" energy sources that much more attractive.

Canadian First Nations have land holdings that may contain vast oil or natural gas reserves, as do their cousins across the border in Alaska. Hydroelectric power, generated from Canada's north-flowing rivers, is another natural resource a business-minded tribe might capitalize upon. Many western reservation lands in both the U.S. and Canada are rich in valuable minerals as well. Of course, environmental concerns will rightly dictate caution when embarking on such ventures. Perhaps tribes can lead the way in implementing new technologies and methods to minimize the environmental impact of mining and energy extraction.

Tourism, a cyclical industry similar in some ways to gaming, has been lately touted to be a viable source of income on reservations, as more non-Natives look for an "authentic" Indian experience.

The professional sports market has yet to be tapped by Indian entrepreneurs, either as team or facility owners. The possibilities are indeed endless. Indian people have shown great resiliency in protecting their customs and culture; imagination, creativity and hard work will certainly bear economic fruit in the long run.

Over the last 15 years, tribal economics have changed, generally for the better and in some cases quite radically. Gaming revenues have contributed favorably to the cash flow of many tribes, allowing them to improve the general welfare of their people in ways unimaginable just two or three decades ago. As Indian gaming continues to expand, a greater number of tribes will be able to create for themselves the prospect of prosperity.

Better economic opportunity means greater responsibility. Tribes helping each other, either on an individual basis as the Mohegans seek to do, or on a larger collective basis, as our proposed NBLB would do, are welcome developments in an Indian country needful of sustained and meaningful economic growth.