For two decades American Indians have complained that states have been extorting unreasonable if not illegal revenue sharing agreements from tribal governments in exchange for the right to operate casinos.
Tribal leaders claim revenue sharing called for in the agreements, referred to as “compacts” under the Indian Gaming Regulatory Act of 1988, violate the intent if not the letter of the act, which prohibits taxation of tribal governments.
Indigenous Americans got a measure of satisfaction in an April 20 decision by a three-judge panel of the 9th Circuit Court of Appeals in San Francisco which ruled California Gov. Arnold Schwarzenegger negotiated in bad faith by demanding an illegal taxin tribal-state compact negotiations with the Rincon Band of Luiseño Indians, a small but prosperous tribe near San Diego.
“We applaud this decision because it confirms one of the basic foundations of the relationship between American Indian tribes and states, that Indian tribes are sovereign governments, which, like other governments, cannot be taxed,” Rincon Chairman Bo Mazzetti said.
The ruling also was a respite from what tribes believe is a backlash against Indian gambling and a growing public perception of tribes not as sovereign governments and culturally rich first Americans, but wealthy purveyors of casinos.
Legal experts believe the 2-1 ruling, should it be upheld on appeal to a full panel of 9th Circuit judges and the US Supreme Court, will not influence compacts in the other 27 states with tribal casinos. They contend it will only impact California compactswith some 61 tribes.
But tribal leaders found comfort in the harsh language of the court’s ruling, not to mention newspaper headlines which claimed Schwarzenegger “broke the law” and “strong-armed” tribes into paying onerous revenue sharing payments in exchange for the right to increase their volume of slot machines.
“We are mindful that many states, and especially California, are currently writhing in the financial maw created by the clash of certain mandatory state expenditures at a time when state revenues have plummeted from historic levels,” wrote 9th Circuit Judge Milan Smith Jr.
“However, we are also keenly aware of our nation’s too-frequent breach of its trust obligations to Native Americans when some of its politically and economically powerful citizens and states have lusted after what little the Native Americans have possessed.”
Three other California tribes previously won lower court rulings against Schwarzenegger, who has been renegotiating compacts initially agreed to in 1999, seeking to funnel ten to 15 percent of tribal casino winnings into the state general fund in an effort to alleviate a burgeoning budget deficit.
“It is one thing to ask the tribes to contribute funds so the state is not left bearing the costs for gaming-related expenses,” Smith wrote, “it is quite another to ask the tribes to help fix the state’s budget crisis.”
Tribal government gambling is generating jobs and economic development not only on Indian lands, but throughout the 28 states with casinos.
Tribal casinos have created 285,000 jobs and in 2009 generated $11bn in federal, state and local taxes, according to the National Indian Gaming Association, a trade association and lobby for the tribes.
More than 80 percent of the jobs are held by non-Indians.
But eight of those states are also cutting themselves in for up to 25 percent of tribal gambling winnings in exchange for the exclusive right to operate casinos.
Florida lawmakers last week approved a 20-year deal with the Seminole that in the first five years will generate $1.3bn for state coffers.
States that don’t have revenue-sharing deals with tribes want them. Others are seeking new agreements with casino tribes that offer richer payouts. Meanwhile, several states are moving to legalise their own slot machines in an effort to generate government revenue, initiatives that threaten to erode tribal casino income.
Tribes generally pay states for the economic impacts of government casinos, including regulatory costs, although tribal governments are the primary regulator.
IGRA requires that states seeking a share of tribal gambling revenues must provide tribes with a “substantial economic benefit” in operating casinos, largely through promised exclusivity. Without economic benefit, revenue sharing can be construed as a tax.
Indigenous Americans view the push for revenue sharing dollars as part of a growing perception of American Indians as little more than wealthy purveyors of a gambling industry that in 2008 generated $26.8bn.
“Our people are beginning to be identified as ‘casino Indians’ and not as the people of the land or of the salmon,” said Nisqually elder Billy Frank Jr.
“Casinos help economically but they are not who we are. We are our languages, we are our culture, we are our natural resources, we are our spirituality and we are our prayers.”
What tribal leaders termed “the myth of the rich Indian” is precisely that: a myth.
Seventy percent of tribal gambling revenue is generated by less than 20 percent of the casinos, many of which are operated by small tribal communities in metropolitan areas, according to the National Indian Gaming Commission, the regulatory agency which audits the facilities.
Most of the 440 tribal casinos owned by some 226 tribes are marginal operations on often remote reservations, most of which remain locked in cyclical poverty.
What economic and social progress has been achieved in Indian Country is credited not solely to casino gambling, but rather a federal government policy of tribal self-determination established with the administration of President Nixon in 1970.
The policy has enabled tribes to take control of government programmes previously managed by the US Department of Interior. Tribal leaders view the protection and preservation of sovereignty as being far more crucial to the future of Native America than gambling.
Tribal leaders fear a false perception of American Indians as wealthy casino operators could result in congressional actions and federal court rulings eroding tribal sovereignty and stripping tribes of the ability to govern their own lands.
Federal courts have recently struck down Native sovereignty in rulings on political campaign disclosure laws and union attempts to organize tribal workers. Congress has lashed out at efforts by tribes to establish casinos off existing reservations.
Anti-Indian sentiment stoked by growing tribal political clout and the exposure and prosecution of former Capitol Hill lobbyist Jack Abramoff has led to the formation of such anti-sovereignty hate groups as Stand Up California and One Nation United.
Observers fear an anti-sovereignty movement could prove devastating to tribes using casino revenues to strengthen their governments, rebuild their communities and recapture cultures and traditions nearly decimated by decades of poverty, despair and failed policies of federal paternalism.
“It’s an extremely dangerous misperception,” said Tracy Stanhoff, former chair of the Prairie Band Potawatomi of Kansas. “It’s a threat to our status as sovereign nations and our treaty agreements.”