Obama and the Gaming Tribes
by Scott Van Voorhis
April 1, 2010
Is the honeymoon over?...
Tribal leaders were effusive when they met with President Obama at a special White House summit back in November. It was the kind of magnanimous gesture his predecessor, whose policies were widely disliked and distrusted in Indian Country, never bothered to make.
“I know what it means to feel ignored and forgotten, and what it means to struggle. So you will not be forgotten as long as I’m in this White House,” the president said to a standing ovation from hundreds of tribal leaders from across the country.
Yet, behind the scenes, there was mounting frustration among some of those leaders and their supporters over the president’s approach to tribal casinos.
“It’s been a wild disappointment so far,” says one Washington lobbyist specializing in tribal gaming issues.
While Indian gaming has emerged over the past two decades both as a crucial economic development engine for tribes and a multibillion-dollar industry in its own right, the sector’s future growth has been hampered by Bush-era regulatory restrictions that have halted at least a dozen major off-reservation casino plans and a controversial U.S. Supreme Court decision that has made it difficult for the federal government to take land into trust for tribes for economic development purposes, including gaming.
Despite the president’s warm rapport with tribal leaders, the administration has taken a go-slow approach to Indian gaming, dashing hopes for a swift and decisive reversal of the policies of its predecessor. In a telling sign, the president, in meeting with tribal leaders last fall, made no mention of lifting restrictions on Indian gaming in a sweeping speech that covered everything from economic development to health care. Nor is it likely there will be a clear-cut reversal, say tribal officials, lobbyists and industry observers, with the Obama administration inclined to modify but not totally discard restrictions on the growth of Indian casinos. The caution is partly a recognition of how politically controversial many of these casino decisions can be, with tribes seeking to open casinos miles away from their traditional territories derided as “reservation shopping” by critics.
“On the heels of eight years of the Bush administration there is some frustration and some disappointment that some of these things have not been fixed,” says Kathryn Rand, co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota and dean of the university’s law school.
But, she adds, “It is still a political hot potato. The presidential election did not change the controversy over Indian gaming.”
If the Obama administration is wary of getting embroiled in battles over controversial new Indian casinos, it may have good reason. While the battle over health care reform has been heated, the unpredictable, bipartisan feuding over tribal gaming is in a league of its own.
The industry has mushroomed over the past few decades into a $26 billion-plus business. But its enemies hail from both parties, including some of the administration’s closest allies in Congress. Republican Sen. John McCain of Arizona has crusaded for years against perceived abuses related to the growth of Indian gaming. And prominent Democrats like Senate Majority Leader Harry Reid of Nevada and Sen. Dianne Feinstein of California have strong objections of their own.
Reid, of course, hails from the capital of the commercial casino industry while Feinstein comes from a state where off-reservation casino plans have stirred a fierce backlash. In a pre-emptive strike against any move by the administration to loosen restrictions on off-reservation gambling, Reid, Feinstein and two other Western senators went directly to Interior Secretary Ken Salazar last fall: “As you know, we strongly opposed taking off-reservation lands into trust for gaming purposes,” wrote Reid, Feinstein and their colleagues. The letter hints at a legislative push should the Interior Department and the Bureau of Indian Affairs lift the current restrictions on off-reservation gaming. “Please advise us as to your solution and whether legislation is necessary to affect policies supporting these principles,” it says.
In addition, while not stated in the letter, Feinstein also has the additional clout of chairing the committee that sets the BIA’s budget. For his part, Salazar is in an awkward position, with wider political ambitions of his own at stake, having recently toyed with the idea of running for governor of Colorado.
OFF-RESERVATION GAMING: "Potent political football'
During the Bush administration, the Abramoff scandal plunged the Bureau of Indian Affairs into controversy again after it became publicly known that ties existed between the disgraced tribal gaming lobbyist and top bureau officials.
“It’s very hard for people who have other ambitions to wade in,” notes one lobbyist who focuses on tribal gaming for a top Washington firm. “It has been so controversial over the years, and the political stakes have been so high. They don’t want their careers ruined over some tribal casino somewhere.”
There is also the risk of angering one of the administration’s most reliable allies, organized labor.
While unions have a major presence in commercial casinos, they are just starting to establish a bridgehead in the Indian gaming sector. Tribal casino operators have not exactly welcomed them with open arms. The National Indian Gaming Association, the federal lobbying arm of tribal gaming, has lobbied hard for an amendment to the union-championed Employee Free Choice Act that would exclude tribal casinos. NIGA argues that EFCA violates the sovereignty of individual tribes if they have to comply with the proposed rules, which make it easier for employees to form unions.
“The casino industry, many blue Democrats, most Republicans and above all the unions are against expanded Native American gambling,” says the Rev. Richard McGowan, an economist and gaming industry expert at Boston College. “It is a pretty potent political football for [Obama] to deal with. No matter what he decides he has to mend fences one way or another.”
Even some tribes are not eager to see further expansion if it means competitors popping up in their market territories. The Minnesota Indian Gaming Association wants federal rules that would bar casino-hungry tribes from encroaching on other established Indian gaming venues.
“We are opposed to off-reservation and we have been since we were organized,” says John McCarthy, MIGA’s executive director.
Faced with this dangerous array of political pitfalls, the Obama administration, so far, has chosen, by inaction, to keep the status quo. For tribes that are trying desperately to break into the gaming business, that spells rising frustration and anger. One major concern has been the administration’s reluctance so far to reverse one of the more recent and controversial restrictions on Indian gaming, the so-called commutability rule. The Bush-era rule, issued in 2008, bars tribes from opening new casinos at locations farther than the daily commuting distance from their reservations. Bush’s Interior Department rejected several off-reservation casino proposals on the basis of this rule.
Tribal leaders have argued that the rules, developed behind closed doors, make little sense either historically or during more recent times when many members have traveled the country, if necessary, to look for work.
All told, there are at least 10 major off-reservation casino proposals awaiting a decision by the Obama administration. Tribal leaders are now watching closely to see when and if the administration will come out with a decision on the rules, and what it will be.
Chuck Bunnell, chief of staff for the Mohegan Tribe, is among those who have been left to play a guessing game. The Mohegans, owners of the hugely successful Mohegan Sun casino resort in Connecticut, are backing two Western tribes seeking to build new casinos, one of which involves an off-reservation proposal. Bunnell says he has heard the Interior Department has drafts of a decision on the commutability rule ready to go but notes there has been no official word one way or another.
“It has been radio silence,” he says.
The prolonged internal discussion, however, has some industry experts questioning whether a more modest revision, rather than a dramatic reversal, may be in the works.
“There are strong feelings in both directions on that,” says Judith Shapiro, a Washington-based lawyer and expert on Indian law, and she suggests the Obama Administration may “not be ready to thread the needle on it.”
For her part, Rand says the BIA is unlikely to throw out altogether the distance factor when weighing whether to approve an off-reservation casino. Off-reservation gambling is still highly controversial and its critics are legion, she notes, adding that one likely outcome is the administration and the BIA will agree to look at off-reservation proposals on a case-by-case basis.
“It might be the direction the new administration takes,” she says. “Instead of a bright line maybe it’s a case-by-base determination that takes into account circumstances such as whether there is local support.”
CARCIER: Wither the 'fix'?
But with Carcieri’s first anniversary come and gone, there is still no sign that Congress is ready to pass such a “fix”.
George Skibine, an Osage Indian, a top official at Interior and acting chairman of the National Indian Gaming Commission, the federal body that oversees tribal gaming, says if Congress does not pass a Carcieri fix his department is prepared to try to resolve the situation by issuing new regulations. He notes, however, that such an approach is likely to be challenged in court
Still, the administration’s go-slow approach in some cases may be playing to the advantage of the Indian gaming sector, as with the case of the NIGC. The emergence of Skibine as the commission’s temporary chairman may be one of the administration’s more popular moves so far in Indian Country.
The main federal watchdog for tribal casinos, the NIGC found itself frequently at odds with the Indian gaming sector during the Bush years as it tried to pursue an aggressive regulatory approach. Former Chairman Phil Hogen launched two long and ultimately unsuccessful drives to impose restrictions on the bingo-style gaming machines that are the lifeblood of many tribal gambling operations where house-banked Las Vegas-style slot machines are illegal under state laws. The problem for Hogen was that technology had advanced to the point where there was little to distinguish a non-house-banked bingo machine — “Class II” gaming as defined by federal law — from its “Class III” counterparts, as casino-style slots are defined. Hogen pushed proposals that would have slowed down the play of the Class II machines to establish more of a “bright line” between the two categories. He dropped the plan in the face of vehement tribal opposition. But even after Obama’s election he persisted in trying to push through more minor technical changes to Class II machines, infuriating tribal casino operators. Skibine immediately postponed the new rules after he took charge last fall and began examining some of the beefs tribal leaders have had against the commission. He is now looking at a new policy after consultations with tribal leaders.
But Skibine’s tenure, by law, will have to end by May, and that means a new chairman, one whose policies Skibine says he can’t predict one way or another. And that includes the volatile Class II issue.
“I can’t speak for the next chairman,” Skibine says. “That is an issue he or she will have to look at. Our focus, for me, it is to keep the commission going, to keep the trains running on time.”
Scott Van Voorhis
Scott Van Voorhis is a veteran business and gaming writer who has covered the casino industry extensively in the Northeast and across the United States for GamblingCompliance.com and the Boston Herald.
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