[Congressional Record Volume 142, Number 94 (Monday, June 24, 1996)]
[Extensions of Remarks]
[Pages E1152-E1154]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   A BRIEF OVERVIEW OF INDIAN GAMING

                                 ______


                        HON. GERALD B.H. SOLOMON

                              of new york

                    in the house of representatives

                         Monday, June 24, 1996

  Mr. SOLOMON. Mr. Speaker, Indian gaming is one of the most 
misinterpreted issues in the media and on Capitol Hill in recent 
memory. The following document reviews some of the major issues 
currently surrounding Indian gaming and offers an opposing viewpoint to 
the many accepted and pervasive pro-Indian gaming arguments in the 
media and in the public. Much of this material can be used to effect a 
greater awareness of the true nature of Indian gaming.

       There has been explosive growth in Indian Gaming since the 
     passage of the Indian Gaming Regulatory Act (IGRA) in 1988. 
     Since the Act some 200 tribes have set up 237 gaming 
     operations in 29 states. This trend is only increasing as 
     more and more tribes seek permission to open up gaming 
     operations. In arguing their case, the pro-Indian Gaming 
     interests continually isolate the same few examples of Indian 
     Gaming prosperity and champion these cases in the media and 
     on Capitol Hill. The example of the Mashantucket-Pequot's 
     Foxwoods casino in Connecticut is somehow being mistakenly 
     applied universally to all Indian Gaming nationwide. The fact 
     is that even their darling Mashantucket-Pequot casino in 
     Connecticut is destroying taxpaying businesses and having a 
     detrimental effect on the surrounding communities.
       In 1983 the U.S. Congress established a 2,300-acre 
     settlement boundary for the Mashantucket-Pequot tribe in 
     Connecticut. This settlement boundary outlined an area in 
     which the Indians could acquire land and place it into trust. 
     Under current law, this land then becomes part of the tribe's 
     sovereign lands and is no longer within the jurisdiction of 
     state or local governments. More notably, the land is no 
     longer subject to taxation, zoning or environmental controls. 
     Thus acquired land does not have to be reservation land and 
     the Secretary of the Interior only requires that Indian 
     tribes not acquire land in trust for gaming purposes in 
     states where they currently have no land. Originally, the 
     local communities in Connecticut were very supportive of this 
     1983 ruling and honestly believed that the tribe was owed 
     some historical redress. But the subsequent loss of tax 
     revenue and local control has made Indian Gaming a nightmare 
     for many communities.
       The Mashantucket-Pequot tribe is profiting over $800 
     million a year from their Foxwoods casino and the 320 members 
     of the tribe are becoming incredibly wealthy. Besides 
     enriching themselves, the Indians have taken the casino 
     profits to purchase land

[[Page E1153]]

     within these settlement boundaries and put them into trust. 
     The result has been a loss of property taxes to the local 
     community and loss of authority and the ability to regulate 
     Indian Gaming expansion. The local community is experiencing 
     this loss in tax revenue at the same time that it must spend 
     for greater services to administer the increased traffic and 
     crowds that the casinos attract. These local communities are 
     finding it necessary to hire more police and more employees 
     in order to meet the increased traffic and road problems, as 
     well as the increased demand for emergency services. Also 
     included in these revenue costs are the increasing number of 
     depleted businesses. Indians are setting up non-gaming, 
     untaxed businesses and attracting consumers who would 
     otherwise spend their dollars in local businesses. In 
     response, the three cities of Ledyard, North Stonington and 
     Preston, Connecticut formed a coalition to fight the 
     increased practice of Indians taking lands into trust and are 
     now in court in an attempt to stop Indian Gaming expansion. 
     If Indian Gaming was as beneficial to states as the Indians 
     claim, states would not be so unwilling to negotiate with 
     tribes and would not go to court in an attempt to stop the 
     expansion of Indian Gaming.
       Another typical example of the negative effects of Indian 
     Gaming is what is occurring in Sault Ste. Marie, Michigan. 
     Similar to what is occurring nationwide, the local Sault Ste. 
     Marie tribe is using the substantial profits from its casinos 
     to acquire lands and then transfer these lands to federal 
     trust. The city of Sault Ste. Marie is finding out first hand 
     just how powerless it is in restraining this uncontrolled and 
     untaxed expansion of Indian Gaming. Sault Ste. Marie is 
     losing its tax base and losing authority, for example its 
     zoning and building inspection authority, and is against the 
     Indians taking more land. The complaint that the city of 
     Sault Ste. Marie filed with the Bureau of Indian Affairs to 
     curb expansion of Indian Gaming in its locality is still 
     pending. These examples illustrate that many Indian tribes 
     sense the ``boondoggle'' nature of the current Indian Gaming 
     laws and, knowing a good deal when they see it, will employ 
     shrewd tactics to realize their goals. Indians are simply 
     exploiting ambiguities and loopholes in the current laws and 
     offering revisionist views of Congressional intent. The 
     Indians are succeeding in their long-term goal of acquiring 
     as much land as possible and putting it into trust.
       Changes should be made to the Indian Gaming Regulatory Act 
     of 1988 to give states more authority to limit/control the 
     expansion of Indian Gaming. As the Act stands now, which 
     allows tribes to seek land outside their reservations without 
     regard to any legitimate land claim or settlement issue, 
     chaos and disorder will continue, making planning by states 
     for future Indian Gaming growth impossible. Further, the Act 
     currently demands that states must negotiate compacts with 
     federally recognized tribes. These states constantly find 
     themselves on the defensive with regard to their negotiating 
     positions due to the ambiguity of the law, the aggressiveness 
     of the Indians, as well as their misinformation agenda, and 
     past decisions by the courts in favor of the tribes. A state 
     should not be charged with negotiating in bad faith if it 
     simply wants to limit a tribe's gaming operations to that of 
     the state's public policy on gaming.
       The state of Wisconsin provides a good example of the 
     unfair advantages that Indian-owned businesses have over non-
     Indian businesses and how this is ultimately hurting the 
     local communities. A 1995 independent study entitled ``The 
     Economic Impact of Native American Gaming in Wisconsin'' by 
     the Wisconsin Policy Research Institute showed that the 17 
     Indian casinos in Wisconsin, which gross approximately $655 
     million a year, are also generating an additional $60 million 
     through stores, lodging and other non-gaming businesses. The 
     report documents that many businesses in the local economy, 
     such as restaurants, bars and movie theaters are losing money 
     to Indian-owned businesses and would experience higher demand 
     if nearby Indian Gaming was not available. The study further 
     disclosed that areas in the state without casinos are losing 
     about $223 million to areas where Indian Gaming is present. 
     The report estimated these transferred funds to be a gain of 
     $7,882 per tribal member. This transfer is nothing more than 
     a shift of business and money from non-Indian, taxpaying 
     citizens and localities towards further enriching government 
     assisted tribes. Despite all the claims from the Indian 
     lobby, this independent report also concludes that when all 
     effects are taken into account, Indian Gaming is not even a 
     major revenue source for the state.
       A large majority of the proceeds from Indian Gaming go to 
     investments and land acquisitions. Contrary to what pro-
     Indian Gaming forces would have you believe, the majority of 
     these investments do not include healthcare, charitable 
     contributions, nongaming related capital construction, 
     education or social services. The Mashantucket-Pequot tribe, 
     for example, is even attempting to expand into the Las Vegas 
     market through heavy investments. Clearly, with these types 
     of expenditures, Indian Gaming is nothing more than a 
     business machine that is escaping taxes.
       In addition, many tribes make per capita distributions of 
     net profits to all enrolled members of their tribes, or to a 
     select few. The IGRA does not require that Indian profits be 
     devoted to collective programs of the tribes; therefore, in 
     many cases, only individuals profit. The previously discussed 
     1995 study by the Wisconsin Policy Research Institute 
     revealed that a Minnesota tribe, the Shakopee Mdewakanton 
     Sioux Community, with 218 members, had given members per 
     capita grants of $450,000 each out of casino profits for a 
     single year. The example of the Yavapais tribe from Arizona 
     illustrates another instance of tribal members enriching 
     themselves, as has been the case for other gaming tribes 
     across the country. The tribe of 800 members is raking in 
     over $100 million a year in profits from their Fort McDowell 
     casino. In fact, the tribe is profiting so much that each 
     member receives an annual dividend check of $36,000, pushing 
     the income of some members to over $100,000. In addition, 
     children as young as 13 are taking financial management 
     courses in preparation for the day they reach their 
     eighteenth birthday. At this time these teenagers will 
     receive as much as $500,000 in trust money. It is not 
     uncommon for car dealers to park their vehicles on the 
     reservation for eager buyers looking to unload some cash. The 
     bottom line is that these tribes are getting incredibly rich 
     and according to the Wisconsin study, such wealth is 
     resulting in members quitting jobs and young members ending 
     their educations early. Clearly, these payments to members do 
     not have long-term tribal benefits. It would make better 
     sense to apply the proceeds of gaming to long-term tribal 
     benefits and not to payments to make specific individuals 
     wealthy. Put simply, tribal members are not only receiving 
     welfare payment from the tribe but from the federal and state 
     government as well.
       Despite the fact that Indian Gaming is a $4 billion a year 
     business, the federal government continues to provide Indians 
     with billions in additional compensation. In this climate of 
     budget cuts, funding is being taken away from other programs 
     in order to continue to fund the insulated Indian programs. 
     Due to the large funding of Indian programs out of the 
     Interior Appropriations bill, other Interior programs will 
     face steep cuts as a result. These forfeited programs--i.e. 
     the National Park Service maintenance program, the 
     Smithsonian, the National Gallery of Art, and the federal 
     government's land-management responsibilities--have no 
     secondary sources of revenue as Indian Gaming does. Interior 
     Appropriations is the sole source of funding for these 
     programs. Compared with 1995 levels, forest services are 
     being cut by over 20% and land management accounts are losing 
     about 15% of their funding. The overall result is a depleted 
     natural resources budget which will weaken the government's 
     ability to protect national parks and wildlife refuges. 
     Revenue from Indian Gaming is in no way reducing the 
     government deficit as Indian interests like to claim.
       In addition to buying up businesses, acquiring land and 
     enriching themselves, Indians are also using their untaxed 
     profits to influence politicians and legislation in order to 
     expand their government subsidized monopolies. Using the 
     state of California as an example, an initiative is currently 
     in circulation that would allow slot machines in Palm 
     Springs. If enough signatures are gathered, it will appear on 
     the ballot on November 5, 1996. Indian tribes are using 
     millions of dollars generated by illegal gaming enterprises 
     in California for both lobbying and campaign contributions in 
     an attempt to make their illegal activities legal. These 
     Indian tribes are currently offering slot machines on their 
     reservations despite unsettled lawsuits contesting their 
     legality and Governor Pete Wilson's opposition to them. 
     Indians have manipulated the rules in California by being 
     able to operate casinos while non-Indian owned gaming 
     businesses, which are regulated and taxed, are unable to 
     operate in the state. Governor Wilson and Attorney General 
     Dan Lungren argue that Indians are breaking the law by 
     operating over 9,000 gaming devices, including about 8,500 
     slot machines, at 20 California casinos on tribal land. These 
     tribes are operating these devices without the benefit of any 
     compact signed by Governor Wilson.
       The Cabazon Band of Mission Indians, an 18 member tribe 
     from Indio, California, have given $606,282 worth in campaign 
     contributions to further their cause. Observing the size of 
     these contributions and the fact that none of the tribe's 
     gaming profits are subject to federal or state tax, one can 
     only imagine as to what extent this tribe is enriching 
     themselves through their illegal gaming activities. The 
     Cabazon tribe is not alone. Total contributions by all Indian 
     groups in the state reached $2,421,076 in the period from 
     1994-1995. In addition, the California Indian Nation PAC 
     contributed $658,843 from 1993-1995. Indians have also 
     learned how to influence lawmakers and policy on the national 
     level. Through large contributions, savvy lobbying, a media 
     push and by developing a network of advocacy groups, the 
     Indians recently stopped an effort in Congress to impose a 
     tax on revenues generated by their gaming operations. These 
     tribes also hired expensive lobbyists to further their cause.
       The uncontrolled expansion of Indian Gaming makes these 
     operations highly vulnerable to money laundering and other 
     types of illegal activity. A recent GAO study concluded that 
     these casinos may become more susceptible to individuals who 
     attempt to launder illegal profits due to the increased 
     amount of money wagered. This determination is correct as 
     Indian tribes across the country are experiencing a rise in 
     crime and corruption from gaming operations on their

[[Page E1154]]

     lands. Indian Gaming is not required to disclose its 
     recordkeeping and most currency transactions as most 
     businesses are required to do under the Bank Secrecy Act of 
     1970. This information is used by law enforcement and 
     regulatory agencies to ensure compliance. Under the Indian 
     Gaming Regulatory Act, Indian casinos are not subject to the 
     Bank Secrecy Act and report currency transactions pursuant to 
     a more limited Internal Revenue Service provision. This 
     reporting provision applies only to certain cash receipts and 
     includes no recordkeeping requirements. To date, the IRS has 
     not completed any compliance reviews of tribal casinos. This 
     recent GAO study determined that these differences in 
     reporting requirements may cause problems for law enforcement 
     looking for a consistent paper trail of records with which to 
     trace all gaming activity of customers engaged in large 
     cash transactions, as well as to help identify potential 
     money laundering activities. Currency transaction 
     regulations and reporting requirements provide the primary 
     deterrent to, and means of detection of, money laundering 
     and corruption.
       Counties with casinos in the state of Minnesota experienced 
     twice as much crime as counties without casinos between the 
     years 1988 and 1994. This increase was primarily due to 
     crimes associated with gaming, such as fraud, theft, forgery 
     and counterfeiting. Several members of the White Earth tribe, 
     for example, have recently been indicted for alleged 
     corruption in connection with the theft of funds allocated 
     for construction of a casino on tribal land. Local police are 
     burdened by the crime on these Indian casinos. As an example, 
     they now respond to twice as many incidents of crime at the 
     Grand Casino Mille Lacs operated by the Mille Lacs Bank of 
     Chippewa Indians. State authorities are powerless to subject 
     Indian Gaming operations with the proper limitations and 
     controls to combat crime as other businesses must abide by. 
     Even when states do sign compacts with the tribes they are 
     helpless in monitoring the Indians to see whether they are 
     abiding these compacts. In short, these authorities are 
     unable to ensure the safety and integrity of Indian casinos. 
     Taxpayers not only find themselves supporting Indian programs 
     through federal funding, they are also paying heavily to have 
     these corruption cases investigated and the criminals 
     prosecuted and punished.
       The 1995 Wisconsin study sums up the current Indian Gaming 
     state of affairs quite well. It makes the correct conclusion 
     that public officials need to have access to more data on 
     this new industry than current agreements allow in order to 
     fully understand its impact. Most information about the scale 
     of this new industry is being promoted by the Indians 
     themselves. The government and the public should not be 
     coaxed into permitting the Indians to operate without any 
     regulation and to expand at their uncontrolled and ever 
     increasing rate; especially with their assistance in the form 
     of tax dollars. This expansion is harming the relationship 
     and any future cooperation between the federal, state, and 
     local governments on the one hand and tribal governments on 
     the other. It is also debasing the good intent of the 1988 
     Indian Gaming Regulatory Act. The law had the intention of 
     balancing the rights of Indians to use their land without 
     undue interference by the state with the state's concerns 
     about controlling activities within its borders that affect 
     the well-being of its citizens. Allowing the Indians to 
     acquire land throughout the state, gain trust status, and 
     then open up gaming operations free of taxes, state controls 
     and regulations that apply to other businesses unfairly 
     favors the Indians over the states. An attempt should be made 
     to clarify Congressional intent in order to prevent further 
     instances of Indian interests taking advantage of the 
     loopholes and ambiguities in the laws, which allow for 
     uncontrolled Indian Gaming expansion, local government 
     helplessness and unnecessary litigation. The Wisconsin report 
     correctly recommends that before additional agreements with 
     Indians are negotiated or renegotiated, more studies should 
     be done to determine Indian Gaming's true consequences. 
     Americans are entitled to know the facts about the country's 
     fastest growing enterprise.

                          ____________________