More from Florida: A "game rigged" against the state?

A few posts ago, we mentioned an op-ed in Florida as an example of the perception that revenue-sharing agreements are how states tax Indian gaming. Despite IGRA's prohibition against state taxation of Indian gaming operations, this perception is widespread and apparently influential.

This editorial in the Ocala Star Banner takes a similar stance, criticizing the U.S. Interior Department for "order[ing] the state to the negotiating table -- if it wants to collect any future taxes off the Indian casinos, that is." The editorial also characterizes current revenue-sharing provisions as a bad deal for states across the U.S., suggesting that tribes should be paying states in the neighborhood of 50% of their gaming revenues: "no state in the country collects more than 25 percent taxes on any Indian gambling operations."

If revenue-sharing is a tax, of course, then the state need not give up anything at the bargaining table, an additional twist in this wrong-headed perspective. As for what the Seminole Tribe should get in exchange for any revenue sharing at all, the editorial concludes that the governor "should hold out for a reasonable return and under no circumstances relinquish the exclusivity of the Class III gaming to the Indian casinos."

With the media representing a perspective that seemingly is wholly ignorant of IGRA and tribal sovereignty – that is, of the law – is it any wonder that public opinion often follows suit?

Read the editorial here.

Steve’s Quoted in the San Bernardino Sun Re. the San Manuel Band

When it comes to economic diversification stemming from gaming revenue, the San Manuel Band of Mission Indians is leading the way. Tribal officials from the San Manuel Band, the Viejas Band of Kumeyaay Indians in San Diego County and the Oneida Nation of Wisconsin have formed Three Fires LLC and are about to kick of the grand opening of their Marriott Residence Inn in Sacramento. Marriott also partnered with these tribes and the Potawatomi in Wisconsin to open a hotel in Washington, D.C., located near the National Museum of the American Indian.

Steve is quoted on the San Manuel Band in the August 26 edition of the San Bernardino (CA) Sun. Although the article in part is focused on the political implications of the tribe opening a hotel near the state’s capital, Steve further contextualizes the politics of the issue thusly:

"'At one level it just makes good business sense. No one suggests that you should put all your eggs in one basket,' said Steven Light, a political scientist and co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota. 'It also makes good political sense because there is no guarantee that the status quo as far as federal and state policy and regulation will remain the same in regard to Indian gaming.'

He said the San Manuel partnership with the three tribes in opening a Marriott in Washington was a pioneering effort in that the tribes secured a visible and reputable corporate partner in Marriott.

'If a tribe can convince a corporate partner to come on board in any venture, especially off the reservation, the tribe has almost instant credibility with investors and local officials,' Light said."

It’s easy to underestimate how significant gaming revenue is in getting financial institutions and commercial investors to partner with tribes on enterprises that otherwise would be left on the drawing board. Several tribes in California are meeting tremendous success in that regard; however, there are lesser ventures operated by those at the other end of the spectrum of success sprinkled throughout the U.S.

Read the article here.

Haves vs. Have-Nots

With so much at stake in the current political environment and so many different interests to represent, the most prominent tribal organization in California may be showing signs of an intertribal divide between “haves” and “have-nots.” (We discuss the haves vs. have-nots idea at length in our book, Indian Gaming and Tribal Sovereignty: The Casino Compromise.)

The California Nations Indian Gaming Association (CNIGA), a lobbying and advocacy organization—in other words, a tribal special interest group—decided early on that membership would not be limited to gaming tribes. Now CNIGA’s membership is split, numerically, between its gaming (35) and nongaming (30) members. According to a recent article in the San Diego Tribune, it turns out there also may be a growing divide in terms of organizational perceptions and representation, as well.

Much of the organization’s budget comes from dues paid by wealthier gaming tribes, while nongaming tribes have been accused by some of dominating CNIGA’s meetings and perhaps, its political agenda. Should some of the heavy hitters, including the Agua Caliente near Palm Springs, the Pechanga near Temecula, or the Morongo of eastern Riverside County, decide to bolt CNIGA, its political efficacy may be undercut. Conversely, should CNIGA decide to change its internal rules to marginalize nongaming tribes, they too might leave.

Such fissures are not uncommon in member-based interest groups, but few have as much at stake—or as limited alternative options in terms of maintaining political clout—as do the tribes in California.

Read more here.

Tax the Tribes?

The Rincon Indian Band is resisting California's efforts to condition expanded slots on higher payments to the state. A lawyer for the tribe says that the state's demands are effectively a tax on the tribe's casino. IGRA explicitly prohibits states from imposing any tax or fee on tribes, and further provides that "any demand by the State for direct taxation of the tribe" is evidence that the state is negotiating in bad faith.

So how is it that tribal-state revenue sharing provisions have been included in a number of Class III compacts for casino-style gaming? This is an issue we addressed in an article we wrote with economist Alan P. Meister, "Spreading the Wealth: Indian Gaming and Revenue Sharing Agreements," 80 North Dakota Law Review 657 (2004). Loosely speaking, here’s how it goes:

The U.S. Secretary of the Interior has interpreted IGRA to mean that if the state gives up something of sufficient value in exchange for a share of the tribe's casino revenue, then it won't be a tax. Usually this means some additional measure of market exclusivity in casino-style gaming, such as the right to operate slot machines when they're otherwise illegal to non-Indian gaming operations under state law. Although generally accepted in practice, this approach has not been widely tested in federal court.

Is the Rincon Band right that state revenue-sharing demands can cross the line into illegal state taxation? Consider the language used in a recent op-ed calling for Florida to negotiate "a fair tax" on the Seminole's proposed Class III operations. The writer characterizes revenue-sharing agreements in other states as state taxes, and proposes that since the state is "offering" the tribe Class III games, the state should demand a tax in the ballpark of 50%. In the face of this demand, the writer continues, "if the tribes refuse to negotiate in good faith and seek a better deal [from the Interior Secretary], the state should consider legalizing casinos that compete directly with the tribal facilities. Having a new competitor across the street will damage a tribal casino's fortunes more than any state-mandated tax."

Hmmm. Sounds like an untenable (unlawful?) position no matter how you slice it. Does merely using the correct terminology fix the problem?

Read more on the Rincon Band's stance here. And here's the Florida op-ed piece.

"Indian Mafias"?!?

In a piece titled "Native American Corruption," syndicated columnist David Mittell blames the "virus" of Indian gaming for what he sees as the Cherokee Nation's illegitimate and money-driven decision to expel black Cherokee descendents from its membership rolls. In so doing, Mittell's criticism goes far beyond the complex issues raised by the Cherokee vote, and charges an entire industry -- and some 300 tribes -- as corrupt.

He writes, "Indian-only gaming really amounts to a perfect Mafia for government and casino companies to manipulate and be manipulated by. Each corrupts the other and all are corrupted by the enormous amounts of cash gambling brings in. Indian Mafias can 'rub out' their own, thereby increasing their profits, their control and their reliability to corruptible politicians. It is Havana or Las Vegas, 1955, with a new dress."

In our first book, Indian Gaming and Tribal Sovereignty: The Casino Compromise, we discuss five anti-Indian gaming themes that are pervasive in public discourse on tribal gaming. Mittell's rhetoric feeds two themes we critique in our book: Tribal governments can't be trusted, and tribal sovereignty is simply an unfair advantage. (Mittell also states that in passing IGRA, "Congress gave up all pretense of equality under the law, and propped up tribal sovereignty for purposes of casino gambling.")

As we state in The Casino Compromise, such statements are ill-informed, strident, and one-sided, yet unfortunately they tend to set the tone of public conversation. Perhaps Mr. Mittell should read our book before he writes anything else on Indian gaming....

Read Mittell's column here.

Interesting NIGC Reasoning on the Seneca Nation

A couple of days ago, we posted on NIGC’s recent approval letter for the Seneca Nation to open the Buffalo Creek Casino on newly acquired lands. The NIGC determined that the land in question fell within an exception to IGRA's general prohibition against gaming on newly acquired lands.

Interestingly, the NIGC stated, "In addition to the current exercises of governmental power, by operating and regulating gaming, which is a governmental function under IGRA, the Nation will exercise governmental authority over the lands."

We are confused by this last part, since IGRA's "Indian lands" requirement is best understood as a prerequisite to gaming -- that is, gaming should not be evidence of the exercise of governmental authority that is required to allow gaming on the lands. The question of Indian lands, especially in conjunction with gaming on newly acquired lands, is increasingly important, and considered and consistent legal standards are imperative. One of the reasons that the question is tricky is that the term "Indian lands" is unique to IGRA, and there simply aren't a lot of federal court opinions interpreting the meaning of the term to provide clear guidance to the NIGC.

The NIGC Indian Land Opinion is available here. See also "Opponents Say Indian Casino Illegal" in Newsday.

The Seneca Nation and "Off-Reservation" Gaming in New York

Whaddaya get when you go on vacation? A whole lot of new events related to Indian gaming! Look for a flurry of posts as we try to catch you up!

In July, the NIGC issued an approval letter for the Seneca Nation to open the Buffalo Creek Casino on newly acquired lands. The NIGC determined that the land in question fell within an exception to IGRA's general prohibition against gaming on newly acquired lands.

(The characterization of the casino as "off-reservation" is technically correct, as the land falls outside the boundaries of the current Seneca reservation, but it is important to note that the Seneca acquired the land through the settlement of a land claim. In other words, the Seneca had asserted not only a historical tie to the land, but also had claimed an existing right to the land because it was wrongfully removed from the tribe's reservation. The tribe's claims were settled through the Seneca Nation Land Claims Settlement Act, and the tribe used funds provided through the Act to purchase the land in question. We reserve the term "off-reservation" for casinos that fall under IGRA's "best interests" exception, which does not require any historical ties or legal claims to off-reservation land.)

In addition to finding that the "settlement of a land claim" exception applied, the NIGC also determined that the land in question qualified as "Indian lands" – IGRA requires that both Class II and Class III gaming be conducted on "Indian lands." For lands that aren't part of the tribe's current reservation, in order to qualify as Indian lands, the tribe must have jurisdiction and exercise governmental authority over the land. The NIGC found that the Seneca has asserted that tribal law applies to the land, has fenced the land, and that tribal law enforcement patrols and polices the land.

For more on this, including the NIGC Land Opinion and our own opinions about the NIGC’s findings, check back tomorrow!