As gaming grows, many tribes get left behind

Tucked into a peaceful corner of Connecticut, Foxwoods Resort and Casino offers far more than gambling. It boasts Chanel and Ralph Lauren boutiques, among other shops; a 36-hole golf course; headline acts like the Brian Setzer Orchestra and Clint Black; and even a business conference room. Now, potential competition from three proposed casinos in next door Massachusetts is pushing the Indian-run casino to upgrade its facilities even more. On the docket for 2008: a new gambling operation on tribal land in partnership with MGM Grand, based in Las Vegas.

But the success of megacasinos such as Foxwoods paints a deceptive picture of Indian gambling. As they become more like commercial entities – Vegas-style tourist destinations that bring in hundreds of millions of dollars in revenue each year – their Lilliputian counterparts in the rest of America are struggling to keep up.

This has caused tensions among some Native Americans. It is also causing more tribes to bet their futures on casino gambling at a time when competition for gamblers' dollars is heating up. Even the largest casinos are not immune.

Gambling "is a cyclical deal; it's boom and bust," says Philip Hogen, chairman of the National Indian Gaming Commission. "All tribes that are doing well in gaming would be well served not to put their eggs only in that basket."

In New England, all eyes are on Massachusetts Gov. Deval Patrick, who is proposing that the state allow three resort casinos to be built by 2012. He claims the casinos would create 20,000 permanent jobs and generate at least $400 million a year in tax revenues. By some estimates, the plan could cost Connecticut's tribal casinos $700 million a year in lost business.

"Both of the tribes in Connecticut have been watching Rhode Island and Massachusetts for about a decade with the expectation that expanded gambling would likely happen in one of those states eventually," says Clyde Barrow, director for the Center for Policy Analysis at the University of Massachusetts at Dartmouth.

By creating resort casinos capable of attracting families, not just gamblers, the Mashantucket Pequot tribe, which runs Foxwoods, and the Mohegan tribe, which runs Mohegan Sun, are trying to attract people from all over the country. They're also beginning to invest in gambling operations outside the state. Among other projects, the Mohegans have invested in Pocono Downs, a horse race track complete with slot machines in Pennsylvania. The Mashantucket Pequot have won one of two gambling licenses in Philadelphia and are discussing development options for a recently acquired property on St. Croix in the US Virgin Islands.

"It's a natural evolution to diversify outside of [a Connecticut casino], so we spread our risk a bit," says John O'Brien, president of Foxwoods.

Such moves are blurring the distinctions that made Indian gambling operations stand apart.

"What we're seeing now is convergence between the commercial gaming industry and the tribal government casino industry," says David Schwartz, director of the Center for Gaming Research at the University of Nevada at Las Vegas.

In the US, about 200 tribes operate approximately 390 casinos, but the difference in income can be immense. In Kansas, Oklahoma, and Texas, at least 28 tribes operate 85 casinos, accounting for 8 percent of the more than $25 billion in total Indian gaming revenue last year. By contrast, Connecticut's two Indian casinos earned nearly that much in slot-machine revenues alone. Overall, just 16 percent of Indian casinos generated over 71 percent of the total tribal gambling revenue in 2006.

Gambling revenue "is not equally divided up over all of Indian country; it's market driven," says Mr. Hogen of the National Indian Gaming Commission. "If you're next to San Diego, or Boston, or Minneapolis, you're going to do a whole lot better than if you're out in the desert or the Badlands."

Most Indian casinos provide only enough revenue for basic services for their tribal members. In southern Arizona, gambling has allowed the Tohono O'odham tribe to buy fire trucks and garbage trucks but not accrue any considerable wealth.

"The flash and the neon of the few that have really succeeded can be very misleading," says Stephen Hart, a lawyer in Phoenix who represents many tribal gaming commissions .

Some native Americans criticize wealthy tribes for not boosting their outreach programs to economically disadvantaged tribes.

"Why aren't they doing something to help some of the poorer tribes?" asks Tim Giago, former editor and publisher of Indian Country Today and a syndicated columnist. "We have some tribes that are so wealthy they don't know what to do with their money, and we have some that are the poorest people in America."

Foxwoods and other successful tribal gambling resorts are starting to provide loans to some tiny operations. For example: The Shakopee Mdewakanton Dakota, with a successful casino near Minneapolis, loaned money to the Oglala Sioux in South Dakota to expand their Prairie Wind Casino to prepare for more competition. The result: The tribe this year converted its gaming area from a circus tent to a brick-and-mortar facility with adjoining hotel.