OFF THE RESERVATION:

In a new twist, Indian tribes are moving to open more casinos far from home

McClatchy NewspapersJuly 5, 2012 

— After buying a new chunk of land 50 miles north of San Francisco, the Federated Indians of Graton Rancheria just broke ground on a new, Las Vegas-style casino. It will be the largest in the Bay Area, with 3,000 slot machines, 200 hotel rooms, a spa, bars, restaurants and parking for more than 5,000 cars.

In New York, the Shinnecock Indian Nation is considering Long Island as a site on which to build the Big Apple’s first tribal casino.

And in Washington state, the Spokane Tribe of Indians wants a new 13-story casino and hotel next to the Fairchild Air Force Base, prompting fears that the city will become “Spo-Vegas.”

The plans are extraordinary for one reason: In all three cases, the tribes want to build their palaces on new land that’s not part of their original reservations.

The expansions are the latest twist in the nation’s Indian casino wars, and they mark a major shift for the tribes, which already run 385 casinos and bingo halls in 29 states.

Since the U.S. Supreme Court cleared the way for large-scale Indian gambling 25 years ago, tribes have been forced to keep the majority of their casinos on reservation land held in trust by the federal government, usually in remote regions far from public view.

But now, thanks in part to the Obama administration, Indian tribes across the country are ready to bust out, bringing gambling to the same land that was taken from them so long ago, when the U.S. government executed its bloody campaign to relocate Indians to a patchwork of lands across the country and eventually to reservations.

In Oklahoma, the Kialegee Tribal Town went so far as to propose a casino half a continent away, on the coast of Georgia, on land that it said it once occupied, raising the specter of tribes going across state lines to pursue new gambling ventures.

Tribes are seeking to cash in on a loosening of the rules, announced in June 2011, when the Bureau of Indian Affairs junked a Bush-era requirement that a casino had to be within easy driving distance from a tribe’s reservation.

The decision by Larry Echo Hawk, who at the time was head of the bureau and is an enrolled member of the Pawnee Nation of Oklahoma, marked a clear win for the tribes, which have become big players in Washington’s power-and-money politics. In recent years, they’ve steered 70 percent of their political contributions toward the Democratic Party and President Barack Obama.

Casino opponents now fear that the tribes, with their sovereign status, will have far too much authority to do as they please on their new land, especially as they press for even less federal control. And from coast to coast, the tribes are finding plenty of resistance as they angle to get closer to big cities, busy freeways, military bases, even popular national parks.

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In the small desert town of Joshua Tree, Calif., Victoria Fuller said she worries what might happen if the Twenty-Nine Palms Band of Mission Indians is allowed to open a new off-reservation casino near the entrance to the popular Joshua Tree National Park.

“They could do anything they want,” said Fuller, the president of the Joshua Tree Community Association and a leading opponent of the plan. “They could put a 20-story building with spotlights on it, and we would have no say.”

The new push by the tribes is aimed at reviving a $28 billion-a-year industry hit hard by the recession. After growing at a brisk 14 percent annual rate from 1995 to 2007, gaming revenues have essentially stalled out, increasing by only 1 percent a year.

And it comes as the 240 tribes that run casinos face an onslaught of new competition, from states eager to get a cut of the gaming business with lotteries and new casinos of their own, to poker players who want Congress to legalize online gaming this year. The changes will allow tribes to move into new markets creating competition not only for existing Indian casinos, but also for gambling centers such as Las Vegas and Atlantic City, N.J.

The move already has ignited a debate over how quickly the U.S. will hit a saturation point with casinos. While polls show broad public support for gambling, some say the tribes are ready to push the envelope.

“The tribes are going to try to run the table, which means they’re going to try to move as many casinos off-reservation as quickly as possible,” said John Kindt, a gambling researcher and professor of business and legal policy at the University of Illinois. “It’s just all about the money, and the model is very simple: It’s to get as many slot machines as possible as close to maximum-population areas. . . . They’re going to go everywhere.”

Art Reber, a retired professor from Point Roberts, Wash., and the co-author of “Gambling for Dummies,” said that the market ultimately will determine whether the tribes are overplaying their hands.

“When you start sticking neon signs and huge casinos at the Joshua Tree entrance, it starts to get a little ugly,” Reber said. “If you overbuild, you will hurt yourself, and I’m not sure the tribes are necessarily sensitive to these market issues. There’s a saturation point here that you can’t go beyond.”

The epicenter of the battle is in California, one of six states – along with Washington, Florida, Oklahoma, Arizona and Connecticut – that account for more than two-thirds of all Indian gaming revenue.

The Golden State already has more than 60 Indian casinos, the most in the nation. And when Democratic Sen. Dianne Feinstein of California introduced a bill last year that would make it harder for tribes to buy new land for gaming, she said the state could easily have another 50 casinos in coming years if Congress doesn’t stop them. Feinstein warned that another 67 tribes in the state were already seeking federal recognition, the first step toward getting a casino. And she said “the problem is only going to get worse,” with some tribes vying to open new casinos more than 100 miles from their tribal headquarters.

In many ways, the move marks the coming of age for Indian gaming, which started small with bingo halls in Florida in the late 1970s but then exploded in a way that few envisioned. But experts say it’s just common business sense for tribes to try to go to places where they can woo more gamblers.

“Just like real estate, it’s all location, location, location,” said Barry Brandon, the former chief of staff for the National Indian Gaming Commission and now a New York-based consultant who works with tribes. An enrolled member of the Muscogee Nation and the former senior president of the Seneca Gaming Corp., he helped the Seneca Nation of Indians open an off-reservation casino in downtown Buffalo, N.Y., which now is being expanded and which tribal officials tout as a national model for urban settings.

The 1988 law passed by Congress has always allowed off-reservation casinos. But they’re extremely rare, with only a handful approved by the federal government.

Backers say that dropping the “commutable distance standard” adopted by the Bush administration will lead to more off-reservation casinos and help tribes create more jobs. That, they say, is just as President Ronald Reagan and Congress envisioned when they passed the law allowing tribes to get into the big leagues of gambling.

But even some tribal officials are leery, worried that off-reservation casinos stray far from the original intent of the law, which they say clearly was aimed at keeping the casinos on reservation land.

“I think Indian gaming had good intentions – it was intended to help tribes, but there are ways that I think it can be used to get away from what its intentions were. . . . We’ve been worried about off-reservation gaming,” said Chris Mercier, a tribal council member for the Confederated Tribes of Grand Ronde in Oregon. The tribe has gone to court to try to block its neighboring tribe, the once landless Cowlitz Indian Tribe of Washington state, from opening a casino on a 152-acre site it bought near La Center, Wash.

Because it still takes years to plow through the bureaucracy to actually open a casino, it’s far too soon to know whether the tribes will experience large-scale success in moving beyond their borders.

But the early signs are telling.

In California, gambling opponents say the new approach already has resulted in a flood of new applications for tribes to acquire more property. Casino opponents who are tracking the tribes’ activities said that at least 137 applications from California are pending with the Bureau of Indian Affairs, which must sign off on the land transfers before casinos can be built. The bureau would not disclose how many applications it has received in other states or across the country and has yet to respond to a formal request for the data, filed in May by McClatchy under the federal Freedom of Information Act.

Cheryl Schmit, founder and director of Stand Up For California, a statewide organization that has been leading the fight against more casinos, called the rule change a mistake and said, if allowed to stand, it could result in casinos opening “on every off-ramp.”

The tribes already have the largest land trust in the nation, at more than 56 million acres. And when the Bureau of Indian Affairs pitched its $2.5 billion budget request to Congress in February, Echo Hawk, who resigned in April to accept a position with the Mormon church, boasted that it had processed 697 applications from 2009 to 2011, acquiring more than 157,000 acres of new trust land for the tribes and individual members.

Nedra Darling, a spokeswoman for the BIA, said the amount of land held by the Indians actually represents a sharp decline from the 130 million acres they had in 1887. And she said the bulk of the land applications approved for tribes in the past few years have been for agriculture, infrastructure, housing and other projects, with only seven of 781 for gaming purposes, she said.

Schmit told a House subcommittee last year that tribes can easily change their minds and use their new land for gaming once it is placed into trust, even if they don’t make that clear in their initial applications.

She said that if the tribes’ new requests for land in California are approved, more than 15,000 acres will be transferred from local jurisdictions and put into federally protected trust land.

“Some of these are just land grabs by wealthy tribes,” Schmit said, lamenting that the tribes are making their push to expand with little attention from either the press or the public. “It’s huge, but everybody’s kind of been numbed by all the gambling,” she said. “It’s here, but nobody really sees the expansion of it.”

With the financial stakes so high, the push to expand has ignited growing warfare among the tribes, which are quick to feud over everything from the placement of new casinos to whether smaller tribes that lack casinos will be allowed to enter the fray.

“Tribes are acting more like states now,” said Kathryn Rand, co-director and a founder of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota.

She said that there already has been one big change caused by Indian gaming: Tribes can now spend millions on Capitol Hill and in statehouses across the nation to try to get their way. While the tribes did nothing illegal, their money fueled the Jack Abramoff scandal, one of the biggest to hit the nation’s capital in the past decade, in which the super-lobbyist known as “Casino Jack” represented tribes with gambling interests and ended up in prison.

Since 1990, the Indian gaming industry has made political contributions of nearly $58 million, with 70 percent of the money going to Democrats, according to the Center for Responsive Politics. And the tribes also have been spending heavily on lobbying, more than $20 million in 2011 alone.

“The thing that makes that remarkable is that 20 years ago it wouldn’t have occurred to anyone that tribes would ever have enough money to have that kind of political influence,” Rand said.

Schmit and other opponents say the relaxed rules on off-reservation casinos are merely a payoff to the tribes, which have made the president their top recipient of campaign cash in the last two years. Obama was a favorite for the tribes even as a senator from Illinois: Among all senators who have served since 1990, he ranks fourth in contributions, with $259,000, trailing only Democratic Sens. Maria Cantwell and Patty Murray of casino-rich Washington state and Hawaii Democratic Sen. Daniel Inouye. In 2011 and 2012, Obama has received $140,500 from Indian gaming interests, more than any other presidential candidate or member of Congress, according to the Center for Responsive Politics, a nonpartisan research group.

Opponents hope that both the courts and Congress ultimately will slow the tribes’ momentum.

Last month, the Supreme Court denied a request by Interior Secretary Ken Salazar to stop a lawsuit filed by a Michigan man who’s out to shut down the off-reservation Gun Lake Casino in southwestern Michigan. The case is significant because, if it ultimately succeeds, it could force the closing of an off-reservation casino long after it opened.

With the high court ruling against Salazar in an 8-1 decision on June 18, Schmit said the justices delivered a strong rebuke.

“The justices didn’t just say no to Secretary of the Interior Salazar’s argument and policy – they said, ‘Hell no!’ . . . The ruling is a game-changer,” said Schmit.

In Congress, both Feinstein and Republican Sen. John McCain of Arizona are pushing bills to clamp down on off-reservation casinos. When she introduced the Tribal Gaming Eligibility Act last year, Feinstein said she wanted to end the practice of “unbridled reservation shopping.” Without congressional action, she warned, “Californians have no power to stop these tribes from opening unwanted casinos in their backyards.”

Feinstein personally intervened in one of the hottest fights in California, lobbying Salazar to kill the plan to open a casino in Joshua Tree. She has emerged as a powerful ally for casino opponents, serving as a veteran member on the appropriations subcommittee that’s in charge of the budget for the Interior Department and the BIA.

Fuller cheered Feinstein’s entry into the fray and said there is no shortage of gambling opportunities in Joshua Tree, with seven casinos already operating within an hour of the city. She said the tribes have created “a real ticking time bomb for communities and states.”

“I don’t think anybody ever envisioned that they would be able to go out and buy land and have casinos everywhere,” she said.

But Steve Gralla, chief financial officer for the Twenty-Nine Palms Band, said a new casino would create at least 100 new jobs. And he defended Obama’s new policy, saying, “It’s good to have options to continue to create economic development.”

The tribe has had its share of headaches. In May, a grand jury indicted its attorney in a land-buying scheme that led to bribery and money-laundering charges involving alleged kickbacks to others involved in construction projects. Gralla said the indictment would not affect the tribe’s casino plans, which are still under review.

“Nothing’s been 100 percent decided, so there’s not much to say, other than we’re still looking at all the different ways to go,” Gralla said.

Tribes are encountering many roadblocks elsewhere, too.

In California, a group called the Stop the Casino 101 Coalition has gone to court to try to block the Graton Rancheria tribe from building its off-reservation casino on a 252-acre site in Rohnert Park in Sonoma County. While Democratic Gov. Jerry Brown in March signed a tribal-state gaming compact allowing the tribe to build the casino, the citizens’ coalition said the federal government erred in allowing the land to be placed in trust for the tribe and that Brown had no right to sign the compact.

In New York, the Shinnecocks’ drive to open a casino has run into a headwind from Democratic Gov. Andrew Cuomo and many state legislators who are pushing to have the state open casinos of its own.

And in Washington state, the Spokane Tribe of Indians’ drive to open a casino in Airway Heights, a suburb of Spokane, has encountered opposition from the military, from the neighboring Kalispel Tribe of Indians and from a group called Citizens Against Casino Expansion.

But even with the new policy change, Brandon, the tribal consultant, said that tribes face a hard fight, noting that “getting land taken into trust off-reservation for gaming is a very, very difficult proposition.” He’s among those who argue that the current system is working and that there’s no need for Congress to get involved. He said the Bush administration “created the chilling effect that just stopped everything dead in its tracks.”

And with the change by the Obama administration, Brandon said, “You’re really kind of seeing the jam in the pipeline is being cleaned out.”

Kindt, the University of Illinois business professor who has testified on gambling issues on Capitol Hill, said that the tribes are expanding their operations with “just the illusion of regulation and the illusion of control,” and that Congress definitely needs to intervene. He said the situation is “like throwing gasoline on the fires of recession,” because gamblers are just transferring assets instead of spending their money to help the economy.

“It’s just out of control,” he said. “And if Congress doesn’t step in quickly, this is going to take our economy further into the quagmire. . . . I wish it would work, but you can’t gamble your way into prosperity.”

With so many new proposals pending, Rand, with the University of North Dakota’s Institute for the Study of Tribal Gaming Law and Policy, said the tribes run the risk of a public backlash as more casinos move into higher-profile locations. But she said that Indian gaming “is expanding not in a vacuum, but in response to a market.”

“Part of the reason – and perhaps the biggest reason – that we’ve seen such a rapid expansion in tribal gaming is because Americans love to gamble, and we have a much higher tolerance for legalized gambling than we did even 20 or 30 years ago,” Rand said.

NEXT: In the second installment of this series, a look at how small tribes are locked out in the casino wars in Washington state, an example of the growing warfare between tribes in the $28 billion-a-year Indian casino industry.

email:rhotakainen(at)mcclatchydc.com

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