Scott Walker’s tribal gaming slow-play is a necessary step

George Landrith President, Frontiers of Freedom
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Affixed to the National Indian Gaming Association headquarters in Washington, D.C., is a banner proclaiming the ability of tribal casinos to generate the revenue necessary for the American Indians living on reservations to improve their standard of living.

The revenues from tribal gaming operations, the NIGA claims on its website, can be used to “advance the lives of Indian peoples economically, socially and politically” and to preserve the general welfare of tribes striving for economic self-sufficiency.

It is unfortunate that the reality of the Indian gaming experience differs so much from what those who believed it would end tribal dependence on the U.S. government hoped it would be. Time and again, the casinos have been a font of corruption among tribal leaders. As gaming revenues have fallen, these same leaders have been forced to look again to the U.S. government for grants to bail them out of their financial obligations.

As the Associated Press reported back in March, the economic downturn is pushing some tribes back towards federal patronage. “Once the envy of Indian Country for its billion-dollar casino empire, the tribe that owns the Foxwoods Resort Casino has been struggling through a financial crisis and pursuing more revenue from an unlikely source: U.S. government grants.”

“The money provided annually to the Mashantucket Pequot Tribal Nation through the Interior Department and the Department of Health and Human Services has risen over the last five years to more than $4.5 million,” the AP said, citing a former tribal employee as the source that the government had encouraged the use of government grants as a backdoor subsidy to offset what was referred to as a “dwindling resource.”

The federal grants involved to do not amount to much, the AP reports, something in the neighborhood of $10 million. Nonetheless the alleged diversion of these grants to cover casino loses, along with the fact that the former tribal treasurer, according to court documents, is charged with stealing $700,000 from the Mashantucket Pequot Tribal Nation and reportedly may accept a plea deal rather than go to trial, is enough to demonstrate the need for greater oversight from Washington.

Unfortunately the Obama Administration seems to have replaced the fairly rigid standards for the approval of new tribal-backed casinos put in place under George W. Bush in favor of a more relaxed approach.

In order to curb the abuses in the casino industry, and to prevent tribes from being driven back into the welcoming but deadly arms of government dependency, it is important to have real metrics — objective standards to determine whether additional operations in the states should be permitted.

Wisconsin Gov. Scott Walker has step into the void created by Washington’s neglect. He has set down three criteria that will determine whether he will approve applications for future tribal casinos, whether they are operating on or, as is increasingly the case, off tribal lands.

Walker’s guidlines are simple. The state’s eleven recognized Indian tribes must come to a consensus that the new operation should be improved, the community where the new gaming establishment is to be located must also approve, and there must be no net increase in gaming — i.e., if one new casino opens, another must close.

These three simple steps will prevent oversaturation of gaming establishments throughout Wisconsin and will require all tribal casino owners and operators to behave in a responsible fashion if they ever hope to be able to expand their operations or move them to potentially more profitable locations.

The bar Walker has set, while higher than anything demanded by the Obama Administration, is high enough that it will prevent almost any bad idea from being allowed to move forward. Right now the state’s casino marketplace is full, according to a 2012 Wisconsin Policy Research Institute report, which also suggests that it may have matured, meaning any new jobs created by new operations in one place will be offset by job losses and falling revenues at one or more of the 24 other tribal-owned casinos in the state.

The gaming industry, like many others in Wisconsin and across the country, is in decline because of anemic economic growth. The current recovery, the slowest of any since the end of World War II, could be easily shocked back into recession by the onset of the new health care law, by another war in the Middle East, of if the Congress and the president fumble over the forthcoming increase in the federal debt ceiling. It is not the most advantageous time to open a new casino. Gov. Walker’s new criteria will keep Wisconsin from going ahead with anything ill-advised.

George Landrith is president of Frontiers for Freedom, a Washington, D.C.-based public policy organization advocating on behalf of limited government.