How Native Americans Use the Gaming Industry to Revitalize Their Communities

From the lecture series: Native Peoples of North America

By Daniel M. Cobb, Ph.D., The University of North Carolina at Chapel Hill

Since the late 1970s, Native Americans have successfully used the gaming industry to revitalize their communities and economies. However, state governments often engage them in a tug-of-war over gambling licenses and profit-sharing. In such tense negotiations, does anyone come out on top?

Gambling table in luxury casino
(Image: Nejron Photo/Shutterstock)

In September 2004, the National Museum of the American Indian celebrated its official opening on the National Mall in Washington, D.C. Its location, facing the United States Capitol, speaks powerfully to the survival of Native nations through more than 500 years of colonial encounter.

  (Image: Jon
The National Museum of the American Indian opened in September 2004. (Image: Jon Bilous/Shutterstock)

So do the exhibitions within its walls. Visitors learn about the diversity, persistence, and integrity of indigenous people in both the past and the present. One outstanding exhibit devoted to treaties, entitled Nation to Nation, locates sovereignty at the very heart of the story of indigenous survival.

Tribal nations haven’t settled for survival alone. Indeed, since the late 1970s, they’ve inaugurated an era of recovery and revitalization—one that has tested the limits of individual rights and tribal sovereignty.

This is a transcript from the video series Native Peoples of North America. Watch it now, Wondrium.

Among the critical topics of contemporary struggle like repatriation, religious freedom, federal recognition, self-government, jurisdiction, and resource development, let’s begin with one of the most important but misunderstood elements of the Native renaissance—gaming.

Economic Development Through Gaming

Gaming has been the single most successful means of promoting economic development in reservation communities since it took off in the late 1980s. Before gaming, economic development strategies were largely dictated by the federal government, geared more toward enriching non-Native individuals and corporations than tribal people, and were often exploitative of Native rights and resources.

Poverty and unemployment were, and in many places still are, rampant. Historically, tribal governments typically could not afford to provide services to their citizens. Because of this, reservations were dependent on a transfer economy, meaning they relied on funds coming from the federal government or other public assistance programs, rather than generating revenue from private or tribally-owned enterprises.

The Florida Seminole brought gaming to the fore when they opened a high-stakes bingo operation on their Hollywood Reservation between Fort Lauderdale and Miami in 1979. By the mid-1980s, 120 other tribes had followed suit.

State governments reacted defensively. Florida and California, for instance, insisted on the right of states to regulate tribal gaming, and their actions sent the matter to the Supreme Court. The concept of tribal sovereignty emerged victorious in California v. Cabazon Band of Mission Indians in 1987. In a 6–3 decision, the justices found that if tribal gaming were going to be regulated, only the federal government could do it. Congress then promptly set out to do exactly that with the passage of the Indian Gaming Regulatory Act the following year.

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Indian Gaming Regulatory Act

The Indian Gaming Regulatory Act of 1988 defines three classes of gaming. Class I includes traditional social and ceremonial games that were to be regulated, if at all, exclusively by tribal governmentsOne example is the Peach Stone game, which the Iroquois play in the context of seasonal ceremonies. Six peach pits, each with one side blackened, are placed in a bowl with a flat bottom. Players from each team then take turns hitting it against a bench. Players bet on how many blackened ones will be face-up, with the winning side taking all.

According to the Iroquois, the game originated from their creation story and reenacts the contests between the Good Twin and the Evil Twin. “Games of chance are considered to be sacred, played only in honor of the Creator,” explain the Iroquois. “The message you send back to the Creator is that you are grateful for what you have and willing to share it with others.”

Bingo balls and cards
Accoridng to the Indian Gaming Regulatory Act, games of chance such as Bingo is known as Class II and Class III gaming. (Image: cigdem/Shutterstock)

Other games of chance—such as bingo, cards, and high-stakes gambling, as in casinos—constitute what is known is known as Class II and Class III gaming. The Indian Gaming Regulatory Act requires tribes engaging in Class II or III gaming to adopt ordinances subject to federal approval. The act also established the National Indian Gaming Commission to serve in a regulatory capacity.

Learn More: Reasserting Rights and Tribal Sovereignty

Supreme Court Limits Tribal Sovereignty

The legislation, then, recognized the right of tribal governments to engage in gaming on trust land as an exercise of tribal sovereignty, while simultaneously limiting it. But the limits didn’t end with the classification system. In a major concession to state governments, the Indian Gaming Regulatory Act required that tribes involved in Class III gaming enter into compacts with states.

States, of course, are not allowed to tax tribes. That would be a violation of tribal sovereignty. But by requiring compacts, which inevitably include some component of revenue sharing, the legislation essentially allows for taxation by another name.

The Supreme Court further limited tribal sovereignty. It found in Seminole Tribe of Florida v. Florida in 1996 that tribes could not go to federal court when states failed to negotiate these mandated compacts in good faith. This effectively opened the door for states, such as California, to engage in strong-arm tactics at the compact negotiating table to maximize how much revenue would be shared.

In Oklahoma, during the early 2000s, the Seminole Nation had to operate Class III electronic gaming devices without a compact because the state refused to enter into one. This resulted in the temporary closure of their casinos and millions of dollars in fines, before state and tribal leaders could finally agree on a Class III compact in 2005.

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Economic Growth and Employment

Phillip Martin, Chief of the Mississippi Band of Choctaw Indians (1926-2004)
Mississippi Band of Choctaw Indians, guided by the Principal Chief Phillip Martin, became one of the 10 largest private employers in the state of Mississippi by 2010. (Image: NASA/Public domain)

Despite the wrangling, tribal economies experienced explosive growth. The total annual revenue generated by gaming rocketed from $5.4 billion in 1995 to $26.5 billion in 2009—a fivefold increase in less than 15 years. The gains have increased, if more slowly, ever since. Tribal nations have gone to great pains to show the broad benefits of gaming. For instance, the Mississippi Band of Choctaw Indians, guided by the steady hand of their Principal Chief Phillip Martin, became one of the 10 largest private employers in the state of Mississippi by 2010.

The majority of the money goes into infrastructure, social welfare, health, housing, scholarships, and investment in other economic development opportunities.

All across the United States, tribes contributed to the employment of Indians and non-Indians, invested in the infrastructure of surrounding communities, and helped to revitalize depressed economies. The Pequot’s Foxwoods Resort Casino and the Mohegan’s Mohegan Sun helped to revitalize Connecticut’s rust belt economy. The same could be said for depressed rural areas, such as western North Carolina, where the casino owned by the Eastern Band of Cherokee Indians created new jobs and small business opportunities for Native and non-Native people.

It’s important to note as well that the Indian Gaming Regulatory Act limited how tribes can use revenue generated by gaming. Some tribes issue per capita payments to individual members of the tribe. But the majority of the money goes into infrastructure, social welfare, health, housing, scholarships, and investment in other economic development opportunities.

The tiny Miami Tribe of Oklahoma, for instance, used proceeds from its modest casino to fund its innovative Myaamia Project, now known as the Myaamia Center. The Myaamia lost their last native speaker in 1968, and the language was defined as dormant or sleeping. Since its founding in 2001, however, the Myaamia Center has become the cornerstone of tribal efforts to reclaim the language, restore traditional worldview, and realize sovereignty. In addition to organizing youth programs, the center has published print and online Miami language dictionaries. They’ve launched a biennial Myaamiaki conference and created learning resources ranging from a lunar calendar to an ethnobotany project.

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Economic Diversification

Viejas Casino and Turf Club, Alpine, California
Viejas Casino and Turf Club, Alpine, California (Image: Perdelsky/Public domain)

Gaming has also served as a catalyst for economic diversification. In one dramatic example, the Florida Seminole made headlines in 2006, when they paid $965 million to purchase Hard Rock International, which is famous for its hundreds of Hard Rock Cafes around the world. Meanwhile, the Viejas Band of Kumeyaay Indians in California invested proceeds from gaming to open a massive shopping center, a concert promotion and management business, and a bank. They also opened, in partnership with three other tribal nations, a $43 million hotel—in the center of Washington D.C., no less.

Unfortunately, public misperceptions of gaming, the overemphasis on conflict between tribes and states, and the media’s tendency to portray tribes as getting rich quick, mask the reality of the important work gaming revenue does within and beyond tribal communities. It’s important to note, too, that the billions of dollars generated annually by Indian gaming do not get distributed evenly across Indian Country. Nor has the much-needed revenue alleviated the dire state of many reservation economies.

For every successful casino, there have been more that only produce modest results, and, especially in remote areas, plenty of travel casinos have failed. What’s more, some of the most profitable casinos of the past are facing declining revenues, in part due to market saturation.

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Common Questions About the Native American Gaming Industry

Q: Why are Native Americans allowed to have casinos?

Native American-owned casinos operate on land that was designed by the federal government as tribal land and hence, this land is mostly unrestricted by typical state laws.

Q: What was the first Indian casino?

The Seminole tribe started the first Indian casino in Florida in 1979, specializing in high-stakes bingo. As of 2000, more than 150 tribes in reservations across 24 states run a casino or some sort of gaming operation.

Q: How Are Indian casinos taxed?

Native American casinos are exempt from federal taxes. This is because tribal lands are self-governing states.

Q: What is the purpose of the Bureau of Indian Affairs?

The Bureau of Indian Affairs is an administrative body that manages some 55,700,000 acres of land in the land trust given to the Native Americans.

This article was updated on June 10, 2020

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