Economic Development
The Pechanga Tribe in California is one of the casino success storiesThe Pechanga Tribe in California is one of the
casino success stories.

Casinos

Indian casinos are actually only a small part of government sponsored and regulated gambling in the U.S. It's estimated that around $70 billion was generated by the gambling industry in the U.S. in 2003. Tribal gambling accounted for 23 percent of that figure.

Also, Indian casinos can operate only in states that have other casinos. Under the Indian Gaming Regulatory Act of 1988, the most lucrative and profitable "Class III" games — casino gambling, slot machines and horse and dog racing — can only be offered if the state has authorized similar games for other groups. In addition, the tribes have to negotiate their own regulations with their home state. Tribes do have the power to offer traditional Indian social games (Class I), like the handgame, at their sole discretion. "Class II" games, like bingo, pull tabs, punch cards can be offered by the tribes and regulated by them and the federal government.

Indian casinos have changed the landscape for some tribes.

Click here to watch a video clip on casinos and sovereignty.

So Indian casinos cannot operate until a state authorizes high stakes gambling for other groups and signs a compact with the tribe.

In 2006, there were 213 tribes that owned 400 gambling operations in over 30 states. Not all of those operations were casinos. Some were bingo halls or had Class II games.

In 2004, tribal gaming operations paid around $5.5 billion in federal taxes. However, because of their sovereign status, they are not required to pay state or local taxes. But, some tribes have volunteered to pay those taxes in recent re-negotiated compacts.

Tribal gaming directly or indirectly created 553,000 jobs in 2004. Admittedly, most of those jobs went to non-Indians, but the tribes say the casinos have made a huge impact on unemployment rates on their reservations.

Not every Indian casino is a financial success. Currently, only 12 percent of the Indian gaming operations generate 65 percent of Indian gaming revenue. Operations in the most populous areas, like California, New York and Florida, are the fastest growing sector of the Indian gaming industry.

There are historic limitations, as well — gambling relies on a large population base to be successful. Casinos need to be near cities. Historically, most reservations were placed in isolated rural places far from the cities.

Because of that historic limitation, there are up to 35 tribes that have applied to build casinos outside of their reservation states. These are very controversial proposals. Opponents charge that gambling companies are "reservation shopping," and there have been proposals in Congress to outlaw off-reservation gambling.

Finally, commercial casinos have more flexibility than tribal ones, and so they can move quickly to exploit a market. The Winnebago tribe had opened a casino on reservation land in Sloan, Iowa, and it was doing a good business. But when Harrah's opened a casino just across the river from Omaha — 75 miles closer to the major market area than Sloan — the revenue at "Winnevegas" dropped 90 percent in one month.

Each year, the number of Indian casinos goes up and down as some tribes get out of the business and others bet on gaming for their economic future.

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