Column: Politicians' Addiction to Indian Gambling Profits

Recently, I was on the "Factor" with Bill O'Reilly himself. The topic was Native American casinos. Bill had his position--tribal gambling was "out of control." I agreed.

The notion of "out of control" appears "in spades" in recall campaigns ongoing in California. A governor unabashedly panders to tribes offering quid pro quos that tribes will select members of a casino commission. The lt. governor governor-wannabe has hands out for money, and tribes willingly oblige.

I had hoped to make several points, but alas, we know Bill. I could hardly squeeze words in edgewise. Perhaps I can recite here what I wished to say on the "Factor."

Since the passage of the Indian Gaming Regulatory Act of 1988 (IGRA), tribal casinos have grown rapidly. Initially states steadfastly opposed giving permission for the casinos. They sought to hide behind IGRA. The law provided that tribes could offer casino games if such games were "located in a state that permits such gaming for any purpose by any person, organization, or entity...." Games were regulated by compact agreements made between tribes and states. Federal courts resolved disputes if agreements could to be made.

In most disputes which found states stonewalling negotiation, federal courts favored tribes. That was until 1996. Then the Supreme Court ruled in Seminole v. State of Florida that the Eleventh Amendment precluded suits by tribes against states.

This slowed down tribes wishing to start casinos in some states without compacts as of 1996, but by now--2003--the world of Native American gambling has been tossed on its head. Now states eagerly promote the casinos. The sea change reversal began in 1993 with Governor Lowell Weicker of Connecticut.

Of course, Weicker was the noble United States Senator who during the 1973 Watergate Hearings proclaimed to Attorney General John Mitchell, "Isn't there anything you hold in Awe!" I suppose Mitchell was supposed to say "The Grand Canyon" or "Mother Teresa," but instead sat stunned by the moral majesty of Solon. Weicker was later elected governor of his state (after losing his senate seat to Joe Lieberman).

His book, Maverick, chronicles heroic accomplishments "for the people," but it totally neglects any reference to his "deal" with the Pequot tribe.

The Mashantucket Pequots became a federally recognized tribe in the 1980s as the result of the work of "chief" Skip Hayward. Skip was a 1/32 Pequot by "blood quantum." When Hayward read IGRA he reasoned that his "federal" tribe could offer casino games because Connecticut charities were permitted to have blackjack, roulette, and other table games (but not slot machines) at fundraisers. The moralist stonewalled the tribe. Weicker had said he disliked gambling and that he "wouldn't take his dog to Atlantic City." He maintained that the "permitted" provision of IGRA didn't "mean" charity games. The tribe sued Weicker and the federal court read IGRA as written. Weicker had to allow the tribe to have casino table games (but not slot machines which were not permitted in Connecticut). A compact agreement was sent to the secretary of the interior where it was signed and finalized. The Pequot casino is called "Foxwoods."

A couple of years later the moralist had an epiphany. Connecticut had a deficit of "biblical" proportions, $113 million. Foxwood's manager called Weicker. Manna from heaven. Weicker was told the tribe would give Connecticut $100 million a year, with an immediate annual payment, if Weicker would allow Foxwoods slot machines. The state would get 25 percent of the slot revenues or $100 million, whichever was greater--if the state agreed that no others in the state could have slot machines. Weicker's morality collapsed. He agreed, and the tribe threw in an extra $13 million to make things "fair and balanced." The deal was not sent to the secretary of interior. It was considered "just an amendment" to the original agreement.(1)

An unholy alliance began with the Weicker-Pequot deal, and it became a model for other "unholy alliances." Now gambling entrepreneurs, tribes, governors and legislators work together: states receiving forbidden money, tribes gambling.

The Weicker-Pequot deal violated IGRA two ways. First, slot machines were NOT permitted for any (other) person in Connecticut. Moreover, the "deal" solidified that fact by mandating Foxwood's monopoly on machine gambling.

Second, IGRA mandates that states not tax tribal gambling. Agreements may include assessments for costs of regulation incurred by states, but "nothing in (IGRA) shall be interpreted as conferring upon a State or any of its subdivisions authority to impose any tax, fee, charge, or other assessment upon an Indian tribe." Connecticut's $113 million "cut" was not for regulation. Nevada has 300 casinos and regulation costs $30 million a year.

IGRA lists purposes for profits from Native gambling. Nothing in the list suggests tribes may spend funds on politics or ballot propositions. IGRA's preamble says gambling is authorized "as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments." Self sufficiency means the tribes keep the gambling money for themselves.

The Connecticut situation changed as a second tribal casino opened. Two casinos now agree to give Connecticut 25 percent of slot revenues. The tribes (Pequots and Mohegans) annually give Connecticut $400 million. Foxwoods is one of the largest campaign contributors in America. Native gaming leads among contributors to the national Democratic Party.

The Connecticut "solution" of illegal games, illegal taxation, and massive political contributions from the tribes to politicians is now being followed in other states.

Governors of the same moral fiber as Weicker have found that they too spent their states into deficits. However, populations of such virtuous states as California, Wisconsin, and New York were repulsed with raising already high taxes.

California embraced the "solution." Tribes invested $75 million into a ballot campaign and voters approved agreements for uncontrolled, unlimited, and untaxed Native casinos. After this (Proposition 5) agreement was found constitutionally defective, a revised agreement (Proposition 1A) was passed. It included illegal taxes, as well as exclusive gambling. Numbers of machines were limited. Governor Davis applauded 1A agreements and he won large political contributions. Reelected, he found his state faced deficits exceeding tens of billions of dollars. Solution: tribes have more machines, tribes pay more taxes.

Wisconsin casinos started in 1992. Tribes won compact agreements with Governor Tommy Thompson for five years. There were no taxes. Casinos were mandated by courts because a law permitted the lottery to offer any games, including casino games.

The voters did not like this. In 1993, by a 59 to 41 percent vote--they passed a new state law: the lottery could have lottery games, but no casino games were permitted. Nonetheless after five years, the tribes won new agreements. The new compacts for now non-permitted games assessed taxes. Governor Thompson traded illegal taxes for prohibited games.

When Thompson joined Bush's cabinet, he was succeeded by Lt. Governor James McCallum who said he would not rewew compacts. Tribal contributions financed the campaign of opponent James Doyle who won election in 2002.

New negotiations began in 2003. Tribes agreed to a massive increase in taxation in exchange for agreements that will last forever. To compound the illegality, new agreements specify exclusive rights to casinos games. Bargaining was done in secret not by representatives of the people, but by a state executive. Quite a turnabout in the state known for Fightin' Bob La Follette and his "Wisconsin Idea" of democracy.

New York's Governor George Pataki doesn't like taxes. But he faced a deficit and he did not want to cut services. The state's constitution prohibited casinos. Slot machines are not permitted. But, what the hell, the state has tribes. Pataki negotiated agreements for Seneca casinos with slot machines in Buffalo and Niagara Falls on "new" Native lands. The tribe agreed to a tax of 25 percent on slot wins.

The legislature had to concur. Initially, in early 2001, votes were not there. That ended on September 11, 2001. By November, the legislature agreed. (New York Times, November 1, 2001, May 13, 2002; Pataki, George. 2001. Press release.[www.state.ny.us, November 1]). In addition to voices of economic reason, the governor and legislators heard voices of political money. The New York Times called the lobbying effort "one of the most expensive lobbying campaigns in the state's history." "Well over two million dollars" was involved. The Seneca's spent $400,000. (New York Times, November 1, 2001). The "Connecticut Solution"
triumphed.

America is about to become an expanse of lands covered with tribal casinos operating illegal games, paying illegal, and making illegal campaign contributions to politicians.

Can this scenario be stopped?

Easily. Enforce federal law!

First, the Bush Administration must end all agreements between tribes and states that allow taxation of tribal casinos.

Second, the Bush Administration must void agreements for games where they are not permitted to non-Natives.

Third, the Bush Administration must ban tribal gaming money for political contributions.

This won't end tribal gambling, as IGRA supports gambling on tribal lands. However, it would change a political formula that promotes illegality and will lead inevitably to corruption.

NOTES

1. See Jeff Benedict, Without Reservation (New York: Harper Collins, 2000); Kim I. Eisler, Revenge of the Pequots (New York: Simon and Schuster, 2001.)