The TIME Magazine cover story “Look Who’s Cashing in at Indian Casinos” presents a competent picture of some alleged negatives of the industry, such as the big returns that accrued to some of its early investors, but like other entries in the genre, it remains remarkably silent on the economic impact of a business enterprise that grew from nowhere in the last decade.
Yet a number of econometric studies by well respected research groups have uniformly shown dramatic benefits, not only for the relative handful of hugely profitable casinos but also for the Class II bingo hall and pull-tab facilities and not only for the gaming tribes but for their neighbors. Here are some of the results.
The tribal positives
The success stories range from the largest tribal gaming resorts, such as Foxwoods and Mohegan Sun in southeastern Connecticut, to the far more numerous run-of-the-mill bingo halls. Not all gaming tribes are rolling in money. Only 22 tribal casinos account for 56 percent of the nearly $12.7 billion in total Indian gaming revenues. But many of the smaller bingo halls have brought in at least a trickle of badly needed tribal revenue, creating jobs where none existed before.
The Agua Caliente Band of Cahuilla Indians in Palm Springs, Calif. took a census of its 344 enrolled members in 1995, the year it started its casino. According to its chairman, Richard M. Milanovich, a full half of the tribe’s families reported incomes at or below the federal poverty level. Almost 65 percent lived in structurally deficient buildings, and 27 percent were technically homeless, sharing shelter with their extended families. With gaming, “we have begun to address these needs,” says Milanovich. The new revenues have helped establish health insurance and housing assistance payments, day care, retirement benefits and a college tuition plan.
Jacob Lonetree, president of the Ho-Chunk Nation in Wisconsin, reported that in the year before it started gaming, its government was $3 million in debt and unemployment was rampant among its 5,800 members. Jackson County, seat of the tribal government for the scattered Ho-Chunk holdings, led the state in unemployment, with a jobless rate of 23 percent. “Today, all this has changed,” said Lonetree. The Ho-Chunk Nation is now the largest employer in three Wisconsin counties.
For tribes like the Agua Caliente and the Ho-Chunk, casinos have meant economic upturn. The rags-to-riches gaming story has been told and retold in surveys by the consulting firm Economics Resource Group (now Lexecon) of Cambridge, Mass. However, the Cambridge consultants conceded in a 1998 report to the National Gambling Impact Study Commission that the baseline for American Indians had been so low that any economic stirring would have made a difference.
In 1989, before the Indian Gaming Regulatory Act of 1988 (IGRA) set off a wave of gaming compacts, per capita income on the reservations was $4,478, less than one-third the U.S. average. More than half the population lived at or below the poverty lines, compared with 13.1 percent nationally, and nearly 19 percent of the households received public assistance, against 7.5 percent nationwide. Housing was abysmal; 17 percent of homes lacked complete plumbing, nearly 17 times the national rate. Education too was dismal; little more than 54 percent had made it through high school, and less than four percent were college graduates.
Deaths from alcoholism, tuberculosis and diabetes were three or more times the national rate. Alcohol-related deaths among youth were nearly 18 times and the suicide rate between the ages of 15 and 24 was nearly three times that of the country at large.
Census data have not yet been published that might show the impact of casinos, and the researchers warn against expecting any quick turnaround in deep-seated social ills. Yet one measure, the average unemployment rate, shows a dramatic impact. The consultants surveyed 214 tribes in 1989 and found that average joblessness was 38 percent. By 1995, tribes that had opened casinos brought this rate down by 13 percent, with no statistical change for non-casino tribes. In the case of the Oneida of Wisconsin, unemployment fell from 22 percent in 1989 to four percent by 1995. Among the Ho-Chunk, the jobless rate fell from 19 percent to six percent.
Tribal cultural revival is far less easily measured, but money for tribal services is written into the terms of IGRA. The 1988 law sets aside five broad categories to which gaming profits must be devoted. Under the fifth?the general welfare of the tribe and its members?casinos are financing reacquisition of land and preservation of history and tradition through the building of museums, cultural centers and language programs. Remaining profits can be distributed to tribal members in taxable per capita payments. Only 47 of the more than 200 gaming tribes distribute “per caps,” for the most part in sums of less than $10,000.
According to the Cambridge survey, cultural and education budgeting receives from six to 11 percent of revenues.
The spillover effect
Statistics show that Indian casinos have benefited their neighbors, too. From Arizona to Minnesota, regional studies show that the benefits for non-Indians have far outweighed the costs. In Arizona, the state economy gains more than $128 million a year from Indian gaming. The impact of the Mashantucket Pequot’s Foxwoods Casino on the state of Connecticut is the most obvious illustration. The University of Connecticut keeps an ongoing computer model of the state’s economy at its Connecticut Center for Economic Analysis and has tracked Foxwoods’ effect.
In 1992, when Foxwoods opened, southeastern Connecticut’s economic future, formerly centered on the defense industry, appeared dim. A 1993 projection estimated that in five years the region would lose 32,000 jobs and hit an unemployment rate of 25 percent. But by 1998 jobs were way up, a turnaround caused almost entirely by Indian casinos. The UConn economists concluded that the Mashantuckets had produced a turnaround of more than 41,000 jobs, adding $1.2 billion a year to the real gross state product in that period.
A national study by the research group in Cambridge, Mass., found a trove of data in surveys conducted for the National Gambling Impact Study Commission. The data was originally meant to show what happened when casinos of any kind opened within 50 miles of communities of 10,000 or more; the time frame was 1980 to 1997. But the Cambridge team was able to compare the impact of non-Indian and Indian casinos.
The original study focused on 40 communities near a casino; of these, 16 neighbored a tribal casino. When the Cambridge team plugged the social statistics into the new formula, some showed little change, but others had more significant effects. The new Indian casino brought “a discernible three percent increase in total income ($485 per capita) and a five percent increase in net earnings ($549 per capita)” to the non-Indian neighbors. In addition, welfare payments dropped by 32 percent.
The reason for the boost, suggest the researchers, is that the poorest reservations sit in the middle of economically depressed regions. Of the 20 poorest large tribes in the country, 17 opened casinos in the ’90s. As a result, eight of the 10 poorest counties in the country now contain an Indian casino or abut a county that has one. Many of these gaming tribes have reported dramatic reversals in their unemployment rates, some even becoming the largest employers in their regions. When the tribes had even modest success, the neighbors did too.
