Multiplying Indian Casinos Draw Critics' Fire

State officials, private competitors protest, but tribes welcome gaming income and jobs

THE big players in Las Vegas barely noticed when the Seminole tribe of Florida first held bingo games on Indian land in 1979. But Indian tribes, which are not regulated by state law and do not pay state taxes, have found phenomenal success in the gambling business during the past few years.

With success, the stakes have risen. State officials and private competitors want to extend some of the same regulations and taxes to native Americans that apply off the reservations. Even tycoon Donald Trump, a major figure on the Atlantic City, N.J., gambling scene, has filed a lawsuit demanding government control over Indian gaming.

Jana McKeag is caught in the middle. As associate commissioner of the National Indian Gaming Commission in Washington and a member of the Cherokee nation, Ms. McKeag argues with Indians about slot machines and with the government about native American rights. She is both a United States government official - the highest-ranking native American woman serving in the executive branch - and a staunch supporter of the more than 160 Indian tribes that have set up gaming operations in the US. It's not always ea sy playing both roles.

"I get accused by Indians for being too hard on them," McKeag says. "And then legislators say, `Oh, you're an Indian, you're going to vote their way.' We are regulators. Our job is to uphold the law. We tell Indians, you follow the rules and you'll be fine. We give them credibility to do business."

But if some opponents have their way, the 1988 Indian Gaming Regulatory Act - which established the commission and allows tribes to operate any sort of gambling operation that is legal within the state - will be amended. Four bills are pending in the House of Representatives: Three would give states greater control over Indian gambling, and one would strip states of all power over the tribes.

The National Governors Association (NGA) wants to clarify the states' roles under the act and to deal with "a flood of litigation" that has surrounded it. Some states don't want certain games in their area, NGA spokeswoman Rae Bond says. "The governors feel that casinos have the capacity to change the entire character of a state," Ms. Bond says.

Arda Nazerian, a spokeswoman for New York Gov. Mario Cuomo (D), says the governor thinks there are more productive ways Indians can create jobs and improve economic development than to promote gambling.

With annual revenues from gambling on reservations reaching $6 billion, the financial implications of new regulations are huge. Tribal leaders say money from gambling has turned Indians' lives around. Revenues are usually funneled into Indian communities for health care, infrastructure, and college trust funds for children.

Gaming also has brought jobs to reservations. "It's not just having a paycheck," McKeag says of Indians' employment in the gambling industry; "it's having that sense of self-worth."

But not all tribes have instant success. As in any business, there are problems. "A lot of tribes are so anxious to get into gaming that they need to look more closely at the deal that is offered to them," McKeag says. She comments that some non-Indian management contractors approach tribes thinking they are naive. The commission performs background checks on these contractors.

Some members of organized crime also have noticed the Indians' success. In two known incidents, mob members have tried to infiltrate reservations. In cases such as these, the Federal Bureau of Investigation has jurisdiction to investigate.

Treasury Secretary Lloyd Bentsen said in a June 22 letter read at a congressional hearing that his department would back legislation requiring tighter control over the casinos. Mr. Bentsen's main concern expressed in the letter was that the casino accounts be closely monitored to prevent possible money laundering by drug dealers or organized crime.

McKeag says the Oneida and Seminole tribes are especially "good business tribes" because they use money wisely. She advocates that Indians invest gambling revenues in community and long-term business, rather than pay each tribe member a dividend. Tribes have used gambling profits to start such diversified businesses as convention and conference sites, entertainment centers, and pasta factories. For the first time, many tribes are a good credit risk.

"Tribes always had problems getting money," McKeag says. "Now they are inundated with [offers from] people wanting to lend money."

Business education is becoming a part of Indians' gambling plans. A tribe in Minnesota has developed a training program for other tribes to teach about marketing and casino security. And some colleges attended by Indians offer courses in gaming.

McKeag, like most people, never thought Indian-run gambling would get as big as it has. But she explains that the phenomenon resulted from "a large number of successes" and "a lot of Indians and non-Indians who are trying to hit the opportunity curve while it's still hot."

McKeag acknowledges that some people, including older members of tribes, think gambling on reservations is morally wrong. She counters, however: "How moral is it to have our indigenous people have the lowest education rate and the highest mortality rate [in the nation]? Why shouldn't they have the same opportunities?"

Some critics of Indian-run gambling also worry that it will add compulsive gambling to other social ills, like alcoholism, that are problems in native American communities. Rick Hill, chairman of the National Indian Gaming Commission, says that some tribes, such as the Oneida nation in Wisconsin, offer counseling programs to deal with tribe members' problems, including compulsive gambling.

Success has brought competitive tensions. In May, Mr. Trump challenged the gaming law, saying that the federal government is giving special treatment to Indians. Trump called for states to regulate and tax Indian gaming.

Indian businesses have also been attacked for having an unfair advantage in selling cigarettes and gas tax-free. According to New York tax commissioner James Wetzler, the state loses $20 million to $25 million a year from Indian sales of petroleum to non-Indians.

But McKeag says she thinks Indians have a right to be economically successful. "Gambling is a huge industry in this country. And tribes have struggled so long to make money," she says.

McKeag says that overseeing Indian affairs is difficult because no two tribes are the same. But she realizes that her strict regulations keep native Americans in gambling, which also means in schools, in jobs, and in health care. It's for that reason, she says, "I just want to make it work."

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