Gaming Per Caps Are Marital Property Under State Law, Part I

Thread: Indian Gaming in the News

Last week, the Minnesota Court of Appeals ruled in Zander v. Zander that per capita distribution of gaming profits to tribal members counts as income (rather than the equivalent of a gift or inheritance), and thus is subject to division as marital property in divorce cases. This is true even if one spouse is not a tribal member.

The case involved per capita payments made by the Shakopee Mdewakanton Sioux Community, which operates the highly profitable Mystic Lake Casino near the Twin Cities of Minneapolis-St. Paul in Minnesota. The wife, who was a tribal member, received $84,000 each month in per capita payments. Her husband was "voluntarily unemployed." When they divorced, the husband sought his "fair share" of the payments.

Minnesota law presumes that all property and income obtained by either spouse during the marriage is marital property; the exception is gifts or inheritances, which belong to one spouse and are not divided in the event of a divorce.

The wife's attorney argued that as a tribal member, the per capita payments were made according to her "birthright as a member of the Mdewakanton Sioux, a sovereign nation." Tribal law supported this argument, as the Mdewakanton Sioux Tribal Domestic Relations Code specifically provides that per capita payments are not marital property. Yet the Minnesota court refused to abide by tribal law, saying that it applied only in tribal court. The tribal government was not party to the divorce proceeding in state court.

What broader issues does the case raise? We’ll discuss that next time.

Jamestown S'Klallam Chair Touts Tribal Gaming Benefits in Washington State

Thread: Indian Gaming in the News

In an August 15 editorial in the Seattle Post-Intelligencer, W. Ron Allen, Chair of the Jamestown S'Klallam Tribe and President of the Washington Indian Gaming Association, lauded the positive economic impacts of tribal gaming in the state.

Allen's information comes from a study conducted by Jonathan Taylor, an economist with expertise in the socioeconomic impacts of Indian gaming. Taylor's study uses economic multipliers to measure tribal gaming's secondary economic effects. Multipliers capture the idea that beyond its direct effects (i.e., consumer gaming and nongaming expenditures, such as spending on food and entertainment), tribal casinos also generate indirect or induced effects as each dollar spent at the casino ripples through the state's economy. And even if the tribe itself is not taxed, the direct and indirect effects can generate state and local tax dollars. In Washington, for example, Taylor estimates that tribal enterprises annually yield some $141 million in state and local taxes.

What’s So Different About Indian Gaming, Anyway?

Thread: Gambling and Risk-Taking Conference

Let’s return to our presentations at the Tahoe conference on gambling and risk-taking back in May. We promised in an earlier post in this thread to let you know which of the three main perceived vices discussed at the conference -- problem and pathological gambling, excessive or ill-informed government regulation, and Indian gaming –- was not like the others.

For many conference participants, the idea that commercial gaming required the Nevada model of regulation – enough to prevent organized crime but not enough to strangle profits – seemed to be taken at face value. As long as government created economic opportunity and then stayed out of the way, all was right with the world. But when we talked about Indian gaming, the mood was less sanguine.

A number of questions arose, even from gaming’s proponents: Why should tribes be able to use tribal sovereignty to their advantage? Isn’t it dangerous to assume that tribal sovereignty allows tribes to make collective decisions without Congress’s say-so? What about gaming’s negative impacts on local governments near a reservation? How do we know tribes use the money the right way? Shouldn’t we be wary of undue tribal political power?

Given such a mixed reaction, here’s the $64,000 question: What’s so different about Indian gaming? Check back soon and we’ll tell you.

Should the Federal Government Foreclose Tribal-Local Partnerships?

Thread: Proposed IGRA Amendments

In several prior postings, we’ve discussed recent congressional efforts to curtail the spread of “off-reservation” casinos. One key implication of Sen. McCain’s and Rep. Pombo’s proposed reforms is their potential impact on intergovernmental relations among tribes and localities.

Critics of off-reservation gaming seem to assume that “reservation shopping” means that tribes seeking to open a casino are foisting themselves on unwilling communities. But frequently, localities see the economic development and job creation opportunities that flow from proposed casino and resort developments and seek creative ways to partner with tribes. Now, rarely do such partnerships result in the construction of actual casinos – as we’ve mentioned in other posts, despite the hoopla, only three off-reservation casinos have been opened under the “best-interests” exception to the Indian Gaming Regulatory Act’s prohibition on gaming on newly acquired lands. However, when they do, the negotiations that lead to such casinos can generate what tribes and localities consider a win-win.

Take the case of the Forest County Potawatomi Community in Wisconsin, which operates one of the three off-reservation casinos negotiated under IGRA’s best-interests exception. In mid-August, the tribe transferred $4.2 million to both the city and county of Milwaukee, having shared nearly $55 million with them since 2000. These payments are roughly twice what the tribe would owe if the casino property were subject to local property taxes. The tribe employs nearly 2,000 people in Milwaukee, three-quarters of whom live in the county and pay income taxes, purchase local goods and services, etc.

These kinds of partnerships would be significantly hindered if not virtually foreclosed under versions of the proposed congressional reforms. Should the federal government dictate the terms of local politics and public policy under the pretense that it knows better than local officials what is best for the communities involved?

Navajo Moving Closer to Opening Casino

Thread: Indian Gaming in the News

Navajo Nation President Joe Shirley Jr. expects to see the first casino on the Navajo reservation “in short order.” The Navajo Nation is both the largest tribe, with over 250,000 enrolled members, and the largest reservation in the U.S., covering 17.5 million acres. In the mid-1990s, the Nation twice voted down referenda to build a casino.

Opposition to a tribal casino was strongly influenced by Navajo beliefs that gambling is corrupt and destructive. Along with the Hopi, the Navajo Nation's position against gaming was touted by some as an "authentic" Native view of gambling. The shift in the Navajo Nation's position on gaming turned in large part on the hope that gaming may help raise the living standard of a people whose unemployment rate is 44 percent and whose per capita income is just over $6,000. Current plans are for a relatively small-scale temporary casino, with 450 slot machines and 5 table games, with a larger facility in the future.

Virtues and Vices of Gambling

Thread: Gambling and Risk-Taking Conference

As we mentioned in our July 18 posting on the Tahoe gaming conference we attended, there were many opportunities to hear about the virtues or vices of gaming.

On the virtue side, we heard speakers extol the massive investments in new casinos on the Las Vegas Strip (MGM Mirage is spending an astounding $7 billion on the new Project CityCenter development, which promises to further transform the Strip as well as up the ante on Vegas’ future as a global destination), the new frontier of Internet gambling and why it makes little sense for Congress to try to fence it in, and how the casino industry was taking it upon itself to deal with problem or pathological gambling.

The three main vices discussed at the conference seemed to be problem and pathological gambling, excessive or ill-informed government regulation, and Indian gaming. Which of these is not like the others? Tune in to find out.

Compact News from California

Thread: Indian Gaming in the News

On Tuesday, California Governor Arnold Schwarzenegger and the Agua Caliente Band of Cahuilla Indians signed a precedent-setting gaming compact. Under the terms of the compact, the Band will be able to operate 5,000 slot machines and open a third casino. In exchange, the Band will pay as much as $81.9 million annually into the state's General Fund, along with continuing payments to local communities and $2 million each year to California's "tribe-to-tribe" revenue-sharing fund.

Schwarzenegger hailed the compact as "benefiting the state, the tribe, and the local communities."

We expect similar compact terms to crop up not just in California, but in other states with lucrative tribal gaming markets.

Is RIGHT Wrong?

Thread: Proposed IGRA Amendments

This past Wednesday, the House Resources Committee passed H.R. 4893 by 27-9. The bill, introduced by Rep. Richard Pombo (R-Calif.), is called the Restricting Indian Gaming to Homelands of Tribes, or the RIGHT bill.

The RIGHT bill would do away with the "best interests" exception to IGRA's general prohibition against gaming on newly acquired lands.

That exception, which we've explained in some detail in prior postings, allows a tribe to open an off-reservation casino if it is in the best interest of the tribe and not detrimental to surrounding communities. The U.S. Secretary of the Interior has to approve gaming on the land, and the state's governor must concur -- in other words, the governor has veto power over off-reservation casinos under this exception.

Why the "best interests" exception has come under such severe attack is beyond sensible explanation. The exception has resulted in a grand total of three off-reservation casinos since 1988, and the states, through the governor's veto, always have had complete control over off-reservation gaming under the exception -- the governor could just say "no" for any reason or even no reason at all. In fact, what the bill really does is restrict *states'* rights -- under Pombo's proposal, even if a state wanted to partner with a tribe on an off-reservation casino development, it could not.

One of the intentions behind IGRA was to encourage states and tribes to work together; the RIGHT bill goes in the wrong direction.

Should Tribal Casinos Be Exempt from the National Labor Relations Act?

Thread: Current Events

Reiterating an unpopular position, U.S. Rep. J.D. Hayworth, R-Ariz., said that tribal casinos, as government-operated businesses, should be exempt from the National Labor Relations Act (see "Congressman: Tribes Should Be Exempted From Labor Act").

But he's right -- in terms of private versus public status, tribal casinos plainly are more akin to state lotteries than to commercial casinos.

A former colleague of ours, Prof. Wenona Singel, has written a thorough and very useful analysis of the NLRB opinion criticized by Hayworth: "Labor Relations and Tribal Self-Governance," North Dakota Law Review vol. 80, pp. 691-730 (2004).