Future of Indian gambling is called bright

John Wilen

Wednesday, Feb. 17, 1999 | 11:27 a.m.

Despite the possibility of a harsh judgment by the National Gambling Impact Study Commission, the future of Indian gaming is generally bright, experts say.

And the brightest spot on Indian gaming's horizon is California, where voters passed ballot initiative Proposition 5 last fall, legalizing casino-style gambling on Indian reservations.

"Prop. 5 was quite a dramatic achievement for tribes, and probably for the gaming industry as well," said Jerome Levine, a California lawyer who helped write Proposition 5.

Levine and other experts spoke at January's American Gaming, Lodging & Leisure Summit in Las Vegas.

The initiative was the result of a years-long standoff with the state's former governor, Pete Wilson. Wilson refused to negotiate compacts -- agreements between the state and tribes over the details of gambling -- that would allow casino-style games. As a result, the only gambling approved by the Wilson administration was a hybrid of casino gambling and lotteries. All casino-style house-banked games were deemed illegal by the Wilson administration.

The tribes decided the only way to resolve the issue was to take it to the people, said Levine.

"It came after years of frustrating experiences in California," said Levine. "It was based on compacts that already exist throughout the United States."

The tribes saw Proposition 5, with its emphasis on regulations and control, as reasonable, Levine said.

"The tribes were willing to submit to the kind of regulation ... in Proposition 5," said Levine.

And the initiative was written with clear language, specifically mentioning slots rather than using euphemisms about gambling to confuse people.

"California voters knew exactly what they were getting," said Levine.

Proposition 5 has been challenged by a plethora of groups on a variety of grounds, and Levine conceded it may be a while before those challenges are resolved. But whether it withstands the challenges or not, Proposition 5 provides a starting point for the tribes in negotiations with new California Gov. Gray Davis.

"Prop. 5 is simply a baseline the tribes can avail themselves of," said Levine.

Levine joins other industry observers in expecting Davis to negotiate compacts with tribes that will allow casino-style gambling. If that happens, the battle over Proposition 5 may become moot.

Another bright spot on Indian gaming's horizon is the newly invigorated National Indian Gaming Commission, the federal body charged with regulating the Indian gaming industry. Philip Hogen, vice chairman of the commission, said the panel is taking steps to become more proactive in its regulation of the industry.

Hogen addressed criticism that the commission has failed to actively regulate the industry.

"We have been criticized because in many places we haven't been in many places a lot of the time," said Hogen. "That will change."

Hogen said the commission is opening field offices across the country to let its regulators keep closer tabs on Indian casinos. He also noted the commission has a new chairman -- Montie Deer -- who gives the panel a full staff.

More importantly, said Hogen, the commission has drafted a set of minimum internal control standards for Indian casinos. The regulations, released in early January, give tribes a year to bring their operations up to the minimum standards of operation. Going forward, Indian casinos will be required to submit to an annual independent audit of their operations to ensure they are in compliance with the standards, said Hogen.

The standards should help Indian casinos deflect criticism that they are unregulated, but won't require drastic changes for most operators, Hogen said.

"These standards I don't believe will require sweeping changes," said Hogen.

Jacob Coin, executive director of the National Indian Gaming Association, a trade association of Indian casinos, scoffed at notions the National Indian Gaming Commission is passive in its regulatory stance.

"We at the NIGA have been somewhat perplexed by the view coming out of Las Vegas that the NIGC is kind of a cheerleader for the industry," said Coin. "We have had problems with the NIGC and their authority."

Coin noted that Indian gambling is growing nationwide, but cautioned that the National Gambling Impact Study Commission, scheduled to issue a report on the impact of all types of gambling on society this summer, could have a serious impact on the tribes.

"The report that this body will report to Congress ... will surely have an effect on (Indian gaming)," said Coin.

This month, the chances the Impact Study Commission will take a hard look at tribal gaming operations increased when the NIGC and NIGA refused to release to the commission information about how tribes spend their gaming revenues. The commission is threatening to subpoena the records.

Coin, speaking before this month's developments, called the possibility of federal regulation a "highly fluid" issue.

"For every inch of progress we will have hundreds of influences trying to change the course of Indian gaming," said Coin.

He said the National Council of Legislators from Gaming States is drafting a "model" state-tribe gaming compact that includes a checklist with provisions such as revenue sharing and shared regulatory responsibilities. He warned tribes to watch out for state governments trying to re-negotiate expired compacts with terms more favorable to themselves

"They're going to start pushing for a bigger piece of the pie," said Coin.

Robert Sturges, president of Carnival Hotels & Casinos' gaming division, which manages Indian casinos, agreed with other speakers that Indian gaming is still in a growth mode. Sturges used his time to offer advice for companies looking to work with tribes.

The key to any relationship between a corporation and tribe is respect, said Sturges.

"Respect has to be the core of any successful relationship," said Sturges.

He called upon executives working with tribes to read Dee Brown's 1971 history of Native Americans, Bury My Heart at Wounded Knee, a frank history of the way the United States has treated Indians.

"That should be required reading for any business executive that wants to have a successful business relationship with the Indian community," said Sturges.

Another key to corporate-tribal relationships, said Sturges, is patience.

"They've got a pace of doing business that may not be what you are used to," he said.

Finally, corporations need to demonstrate their commitment to a project.

"We never, ever forget whose project it really is, and at the end of the day, we are invited guests," Sturges said.

Levine said the problem with many companies who deal with tribes is that they forget it is a government they are working with, not another company. Tribal leaders may have different goals, for instance wanting to employ the maximum number of people rather than just make money. Also, tribal leaders are politicians, with different issues and pressures than business executives.

"It's a true government, and unfortunately there is a lot of cynicism around it," said Levine.

Hogen noted that understanding one another's culture is a two-way street. It's important for the tribes, too, to understand who they are dealing with, he said.

"This business about walking in the other guy's moccasins works for both sides," said Hogen.

archive