Wisconsin’s Roller Coaster Ride

Thread: Current Events

Another twist in Wisconsin's roller coaster ride of Indian gaming and state public policy.

On Friday, July 14, the Wisconsin Supreme Court issued a decision in Dairyland Greyhound Park v. Doyle (available in pdf here). The case involved the impact of a 1993 state constitutional amendment prohibiting casino-style gaming on the original tribal-state compacts, which were negotiated in 1992 and allowed tribes to operate slot machines and blackjack tables, and left the door open to more casino games in the future -- all of which were banned in the state by the 1993 amendment. At the time, the 1993 amendment gave the state a huge bargaining advantage -- it was, at the discretion of the state, the "death penalty" for Indian gaming in Wisconsin, and allowed then-Gov. Tommy Thompson to put tribal treaty rights on the table (we wrote an article on Thompson's tactics, "Do 'Fish and Chips' Mix? The Politics of Indian Gaming in Wisconsin," Gaming Law Review vol. 2, p. 129 (1998)).

As the state became more reliant on tribal gaming profits, the tables turned a bit. Now it was in the state's interest, at least its budgetary interest, to have Class III games available to tribes. In a 2004 case, Panzer v. Doyle, the Wisconsin Supreme Court all but undid newly negotiated compacts with expanded casino games and revenue sharing provisions (for $100 million annually from tribes) and suggested that the 1992 compacts may have been invalidated by the 1993 amendment. In Dairyland, though, the court stated:

"We conclude that the 1993 Amendment . . . does not invalidate the Original Compacts . . . . We withdraw any language to the contrary in Panzer v. Doyle . . . . Accordingly, [Indian gaming in Wisconsin] can be expanded to the extent that the State and Tribes negotiate for additional Class III games."

What's the bottom line? Despite Panzer v. Doyle, expect big-time revenue sharing to be back on the table in Wisconsin.

Spin or Doublespeak? You Decide

Thread: Proposed IGRA Amendments

Recent action in Congress provides so much fodder for comment, it's hard to know where to start!

Opposition to Sen. John McCain's proposed IGRA amendments proves the old saw that politics makes strange bedfellows. The reforms are opposed by lawmakers with anti-Indian gaming agendas, who think that the proposed legislation doesn't go far enough in clamping down on "off-reservation" gaming, and also are opposed by lawmakers who are sympathetic to tribal concerns about increased federal and state restrictions on Indian gaming. See "Senators Stall McCain's Bill on Gaming" in the Arizona Republic (July 24).

In the House, Rep. Richard Pombo's bill would go even further than McCain's in prohibiting "off-reservation" gaming by eliminating IGRA's "best interests" exception. See "House Panel Backs Limits on Siting of Tribal Casinos" in the Boston Globe (July 27).

Both McCain and Pombo are unabashed in spinning their proposed reforms as good for tribes. McCain claims that his proposal is reasonable and that some increased federal regulation is necessary to counter the backlash against tribal regulation of Indian gaming, especially after the Jack Abramoff scandal. And Pombo, in near-doublespeak, said that the so-called "reservation shopping" occurring with tribal efforts to open casinos on off-reservation lands under IGRA's current exceptions "has perverted the intent of the law and threatens to undermine tribal sovereignty."

What's frustrating about these soundbites is that it takes much more than a pithy turn of phrase to refute them. We've already set out the "real deal" on "off-reservation" gaming under the "best interests" exception; it's no easy matter for tribes to open casinos on lands outside their reservation under current law -- making it even tougher is part of the backlash against Indian gaming, not part of a long-term solution to serve tribal gaming's policy goals. In a forthcoming law review article ("How Congress Can and Should 'Fix' IGRA," in the Virginia Journal of Social Policy and the Law), we set out overarching "lodestar" policy goals to guide reforms, including in the area of "off-reservation" gaming. And in the current issue of the Gaming Law Review, we correct misperceptions about the so-called “tribal loophole” in federal campaign finance law (in short, there is no such loophole), and critique responses to the Abramoff scandal that focus on tribes and Indian gaming instead of unethical and criminal lobbying practices which were committed by Abramoff and his associates, not tribal governments.

It’s pretty obvious we’ll need to comment more on this in future postings!

Settlements as "Shams"?

Thread: Current Events

Settlements as "shams"? Ohio's Attorney General has criticized the Eastern Shawnee Tribe's efforts to reach a settlement in the tribe's land claim lawsuit in federal court. The Ohio AG said that the tribe is trying to "pull a fast one" on Ohio and the federal court through "sham" settlements. According to the Lima News ("State of Ohio Wants Back in Casino Lawsuit,"), AG Jim Petro said, “What we don’t want to see occur is the court approve a settlement when the settlement is strictly being negotiated for the purpose of going around the whole idea of litigation to determine a tribal land claim.”

Hmmmm . . . isn't that the purpose of settling a case before trial? As for the "fast one," it's no secret that the Tribe is interested in pursuing a casino, should it be successful in obtaining land through the lawsuit. One of IGRA's exceptions to the general prohibition against gaming on newly acquired lands is that a tribe may conduct gaming on land acquired through a land claim settlement.

But even with a settlement of the Tribe's land claim, the land will still have to be taken into trust, and for casino-style or Class III gaming, the Tribe will still have to negotiate a tribal-state compact. And that assumes that Congress doesn't pull the plug on the land claim settlement exception in the meantime . . . . .

. . . . . because Congress sure is thinking about doing something (actually, a number of things) to curtail gaming on newly acquired lands. More on those developments soon.

Add It All Together . . .

Thread: Off-Reservation Gaming

. . . and it’s apparent that the state has a huge amount of control over whether an off-reservation casino will open within its borders.

Most obvious, of course, is the governor’s veto power over the “best interests” exception, explained earlier. The governor can just say no. Period.

Both state and local government influence come into play at other points, too, from beginning to end. State public policy determines whether, and to what extent, Indian gaming will be legal in the first place. The federal land-into-trust process includes state and local input, as well as an appeals process. The federal Interior Secretary is required, under the best-interests exception, to consult with local and state officials. And for casino-style gaming, the state negotiates the terms of a tribal-state compact. (For a detailed discussion of the politics of the tribal-state compact requirement, see our first book, Indian Gaming and Tribal Sovereignty: The Casino Compromise. For a straightforward and thorough discussion of the legal requirements for tribal-state compacting -- arguably separate from the politics, although not in practice -- see our second book, Indian Gaming Law and Policy.)

That’s why, to us, the arguments that states do not have control over off-reservation gaming seem disingenuous. Nevertheless, the specter of off-reservation gaming carries political clout.

Next up in this thread: The “real deal” on Senator John McCain’s proposed legislation on off-reservation casinos –- or why “too much success” is a problem.

Advantage Players and Tribal Casinos

Thread: Gambling and Risk-Taking Conference

Back to the Tahoe conference, where we were interested to see panel discussions –- in the style of an academic conference –- on advantage play. Advantage players insist that they are not cheating, but simply taking advantage of their own skills (like card counting or shuffle tracking in blackjack) or circumstances (like a sloppy dealer). Even if they’re not cheating, a casino can still ask them to leave (i.e., “86” them –- the difference is that they get to keep their winnings if what they’re doing is legal).

At the Tahoe conference, we asked one advantage player if such players target tribal casinos, looking for less experienced dealers or less sophisticated security. The answer, we were told, is no. There is tremendous variation in casino success in the Indian gaming industry, but most tribal casinos are not big grossers. They also primarily are located in remote areas. For these reasons, the tribal casino market most likely isn’t big enough for the player to go to another casino, especially if 86’d. We were told that the most sophisticated or successful advantage players are looking to score big from a well-scheduled trip to the casinos.

In the next post in this thread, we’ll turn to some thoughts on the conference presentations.

More on Kathryn's Media Quote and the "Spectrum of Success"

Thread: Indian Gaming in the News

In our June 24th post, we provided a link to this June 21 article that appeared in the Akron (Ohio) Beacon-Journal in which Kathryn is quoted. Most people tend to assume that the Indian gaming industry is monolithic, undifferentiated – one big success story for all involved (at least, for the tribes). Let’s think more about the “spectrum of success” we mentioned in our last post in this thread. Again, that’s why Kathryn’s quote provides valuable context to the article.

On one end of the spectrum, more than a third of all tribal gaming enterprises earn less than $10 million in annual revenue, just over two percent of the industry’s total revenue, and a quarter of Indian gaming operations earn less than $3 million each year – often just enough to keep the casino open and provide modest funding for tribal government programs. On the other end of the spectrum, only about fifty-five tribal casinos – about one in seven – take in more than two-thirds of all Indian gaming revenue, each earning over $100 million annually.

To understand what this looks like, one merely need compare a rural bingo hall on the Great Plains to a Las Vegas-style casino near a major city, like San Diego or Minneapolis. In our book, Indian Gaming and Tribal Sovereignty: The Casino Compromise, we tell two fascinating stories to illustrate the spectrum’s poles: on one end, the phenomenal profitability of the Pequots’ Foxwoods Resort Casino in Connecticut, and on the other end, the modest-at-best economic success of Plains Tribes’ casinos in North Dakota.

In the Beacon-Journal article, Kathryn also observes that as Indian gaming has expanded, so too has political backlash against it. We’ll take up that important and fascinating topic in future posts.

Fun and Games in Tahoe

Thread: Gambling and Risk-Taking Conference

So, as mentioned in the first post in this thread, could we resist the lure of the blackjack tables at the Tahoe gaming conference? Well, yes and no. We didn’t play at all, but we did shadow a number of tables trying to see how in the world advantage players could possibly “hole card” the dealers (catch a glimpse of the hole card due to sloppy dealing). No luck there, either.

We did meet a couple of notables in the world of professional blackjack. We sat with Semyon Dukach, former notorious MIT Strategic Investments Blackjack Team member and the main character in Busting Vegas: the MIT Whiz Kid Who Brought the Casinos to Their Knees. Although he claimed to be retired from the world of professional gamblers who use “advantage play” or skills techniques to win big, he reportedly picked up a few hundred dollars at the blackjack tables over lunch. Just because he could, we suppose.

Semyon was on a panel with another advantage player, James Grosjean, who wore a disguise throughout the conference. Undue paranoia? Don’t forget we were at a casino. Well-known advantage players often are escorted from casinos – or treated more harshly – once they are identified by security. (The joke was that Semyon not only didn’t wear a disguise, but actually sauntered down to the tables with his nametag on. He’s retired, though, right?)

More to come on advantage play and tribal casinos.

Don’t Forget IGRA’s Other Requirements

Thread: Off-Reservation Gaming

We figure it makes sense to pursue this thread further, given the constant stream of news about off-reservation gaming.

Even if a tribe, against incredible odds in the current political environment, succeeds in getting both the U.S. Interior Secretary and the state governor to approve an off-reservation casino, IGRA’s other requirements still will apply.

The land must qualify as “Indian lands,” explained earlier, which includes the federal process for placing the land in trust.

Further, for casino-style gaming (“Class III”), the tribe will have to negotiate a tribal-state compact with the state.

Next time, we’ll add it all together…