Indian gaming a threat to Nevada
May 26, 2002
About two weeks ago my friend Karl Neathammer, an expert on tribal law, told Carson City’s Economic Development Task Force that Indian gaming represents a serious threat to northern Nevada’s economy.
Although we don’t agree on some aspects of Indian gaming, Neathammer and I both urge state, local and regional officials to address the threat of nearby tribal casinos sooner rather than later.
“(Indian gaming) is going to have a tremendous economic impact on us within the next five years,” the tribal judge told the local task force during a highly informative and well-organized presentation. “They’ll do as much as they can as fast as they can, and they’re already recruiting top casino people from Nevada.”
Neathammer’s timely warning was reinforced by the May 20 edition of U.S. News & World Report, which published an investigative report on the rapid expansion of Indian gaming in neighboring California and throughout the country.
According to the weekly newsmagazine, 46 California tribes already have gambling properties that earn roughly $5 billion per year. And a recent report by the respected BearDStearns investment banking firm concluded that by 2004 California’s Indian casinos will siphon $600 million per year from Nevada, which depends heavily on California gamblers.
Mark Macarro, chairman of a small tribe that will operate a multi-million-dollar casino halfway between San Diego and Los Angeles, issued an even more direct warning to Nevada.
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“If some Nevada facilities weren’t forward-thinking enough to anticipate tribes building more sophisticated casinos,” he said, “then economic Darwinism will handle the Nevada sites.” Reno’s Silver Legacy Casino cited the bustling Cache Creek Indian Casino northwest of Sacramento as one reason its gaming revenues declined by more than 10 percent last year. And just wait until Las Vegas-based Station Casinos opens a new Indian casino on I-80 between Sacramento and Reno within the next few months, assuming that the bumbling U.S. Bureau of Indian Affairs approves the 56-acre site near Auburn.
Where Neathammer and I diverge is on the all-important issue of gaming control. Whereas he contends that tribal casinos are “heavily regulated” and “more secure” than Nevada casinos, I believe that Indian gaming is essentially unregulated. That’s why I think the Nevada Gaming Commission should prohibit its licensees from participating in “unsuitable” (Commission terminology) forms of gambling, like Indian and Internet gaming.
This would prevent licensees like Harrah’s and Station Casinos from operating gaming enterprises that compete directly with Nevada casinos. When I worked for the Commission and Gaming Control Board in the mid-1960s, Nevada licensees were prohibited from involvement in out-of-state gambling.
All you need to know about Indian gaming control — an oxymoron in my opinion — is that tribal casinos are supervised by the tribes themselves and the National Indian Gaming Commission, a division of the beleaguered BIA, which has mismanaged or “lost” at least $10 billion worth of Indian trust funds and royalty payments in recent years. The Indian Gaming Commission has fewer than 50 investigators to “control” 200 tribal casinos that gross $12 billion per year across the country. No way!
Additionally, because Indian gaming isn’t subject to the same laws and controls that govern our gaming licensees, the playing field is uneven. Which is why I opposed a plan for a tribal casino south of Carson City three or four years ago.
As the Wall Street Journal put it in a headline earlier this month, “Indian Casinos Win by Avoiding Costly Labor Rules. Sovereignty Helps Shield Them From Unions and Lawsuits.” In other words, the tribes don’t play by the same rules as everyone else in the legal gambling business. “In dealing with their workers … the tribes hold all the cards,” the Journal reported. “They can dismiss pro-union workers, or even those who get sick or injured, without worrying about the National Labor Relations Board.”
Ask Las Vegas casino owners, who are facing a massive strike by their unionized workers, how they feel about that kind of unfair competition.
California’s top gaming regulator, John Hensley, told the Journal that his state’s 47 tribal casinos earned an estimated $5.1 billion last year, exceeding Atlantic City’s total gaming revenue and more than half the amount earned by Nevada’s 401 licensed casinos. And what about taxes?
“The tribes operate tax-free,” Hensley declared. “No property tax, no corporate tax, no sales tax.” And while they report their revenue and earnings to the federal government, the government isn’t required to disclose such data.
So although Indian casinos may pay some federal levies, they manage to avoid many of the state and local taxes that subsidize solutions to the crime and traffic problems they create. To counter this situation, a secretive San Diego-based group is organizing a $2 million petition drive for an initiative that would break the tribes’ monopoly on casino gambling and prohibit “unregulated, uncontrolled gaming in California.” It’s an interesting proposition.
Just last week, The Associated Press revealed that a handful of native Americans in the Sierra Nevada foothills “are fighting for a stake in what could be a second Gold Rush: the right to build casinos. The disagreement has been complicated by allegations of influence-peddling and a dispute over who really belongs to the (Me-Wuk) tribe.”
According to the AP, “Tiny tribes are being courted by gambling companies and investors hoping to use them to break into the lucrative market in California.” You can bet that some of those companies wouldn’t qualify for a Nevada gaming license.
So even if gambling brings some economic benefits to the tribes — and it does — I don’t think Nevada licensees should have anything to do with virtually unregulated Indian casinos. And that’s where Karl Neathammer and I part company.
Guy W. Farmer, a semi-retired journalist and former State Gaming Control Board spokesman, resides in Carson City.
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