Tax Policy: A Profile of the Indian Gaming Industry (Letter Report,
05/05/97, GAO/GGD-97-91).
Pursuant to a congressional request, GAO provided an updated profile of
the Indian gaming industry, focusing on: (1) the amount of transfers to
the tribes from their gaming facilities; (2) a comparison of Indian
gaming revenues with the revenues generated by other legalized gaming
activities; and (3) the federal tax treatment of Indian tribes and tribe
members.
GAO noted that: (1) as of December 31, 1996, 184 tribes were operating
281 gaming facilities; (2) for 178 of these facilities, operated by 126
tribes, GAO obtained and examined 1995 financial statements; (3) these
178 facilities reported generating gaming revenues (dollars wagered
minus payouts) of about $4.5 billion, with 8 of them accounting for
about 40 percent of these revenues; (4) the gaming facilities also
reported generating over $300 million in revenues from sales such as
food, beverages, and hotel rooms; (5) net income (total revenues minus
expenses) reported for the 178 facilities was about $1.9 billion,
representing 38 percent of the $4.9 billion total revenues; (6)
according to the financial statements, about $1.6 billion was
transferred to 106 tribes in 1995; (7) for 20 tribes, the financial
statements did not show any transfers; (8) none of the financial
statements indicated how the transfers were used by the tribes; (9)
gaming revenues generated by all class II and class III Indian
facilities for which GAO had financial statements equaled at least 10
percent of the estimated gaming revenues generated by legalized gaming
reported by the gaming industry in 1995; (10) in the aggregate, 109
class III Indian facilities generated about the same total amount in
gaming revenues as the 12 Atlantic City casinos and more than half the
gaming revenues of the 213 Nevada casinos; (11) average gaming revenues
for these Indian facilities were significantly less than those of
Atlantic City casinos but about equal to the average for the Nevada
casinos; (12) in terms of the distribution of gaming revenues among the
facilities, class III Indian facilities were similar to Nevada casinos,
a small proportion of the facilities accounted for a large share of the
aggregate gaming revenues; (13) by contrast, the gaming revenues of the
12 Atlantic City casinos were more equally distributed; (14) the
Internal Revenue Service has determined that Indian tribes are not
subject to federal income tax because they are political agencies not
included within the meaning of the income tax provisions of the Internal
Revenue Code; (15) Indian tribes are not, however, tax-exempt
organizations within the meaning of provisions of the Code that exempt
certain categories of organizations from income tax; (16) individual
tribe members are subject to federal income tax; and (17) payments of n*
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-97-91
TITLE: Tax Policy: A Profile of the Indian Gaming Industry
DATE: 05/05/97
SUBJECT: Recreation
Indian lands
Native Americans
Financial statements
Financial statement audits
Indian affairs legislation
Profits
Income taxes
Tax exempt status
IDENTIFIER: Nevada
Atlantic City (NJ)
**************************************************************************
* This file contains an ASCII representation of the text of a GAO *
* report. Delineations within the text indicating chapter titles, *
* headings, and bullets are preserved. Major divisions and subdivisions *
* of the text, such as Chapters, Sections, and Appendixes, are *
* identified by double and single lines. The numbers on the right end *
* of these lines indicate the position of each of the subsections in the *
* document outline. These numbers do NOT correspond with the page *
* numbers of the printed product. *
* *
* No attempt has been made to display graphic images, although figure *
* captions are reproduced. Tables are included, but may not resemble *
* those in the printed version. *
* *
* A printed copy of this report may be obtained from the GAO Document *
* Distribution Facility by calling (202) 512-6000, by faxing your *
* request to (301) 258-4066, or by writing to P.O. Box 6015, *
* Gaithersburg, MD 20884-6015. We are unable to accept electronic orders *
* for printed documents at this time. *
**************************************************************************
Cover
================================================================ COVER
Report to the Chairman, Committee on Ways and Means, House of
Representatives
May 1997
TAX POLICY - A PROFILE OF THE
INDIAN GAMING INDUSTRY
GAO/GGD-97-91
Indian Gaming Industry
(268761)
Abbreviations
=============================================================== ABBREV
BIA - Bureau of Indian Affairs
IGRA - Indian Gaming Regulatory Act of 1988
IRA - Indian Reorganization Act of 1934
IRS - Internal Revenue Service
NIGC - National Indian Gaming Commission
Letter
=============================================================== LETTER
B-275479
May 5, 1997
The Honorable Bill Archer
Chairman, Committee on Ways and Means
House of Representatives
Dear Mr. Chairman:
Indian gaming activities and the revenues generated from them have
grown substantially since the late 1980s. Recognizing this,
Congress, as part of its deliberations on the Seven-Year Balanced
Budget Reconciliation Act of 1995, debated taxing the income earned
from gaming activities by Indian tribes and also by some tax-exempt
organizations. Since the debate, you have asked us to provide you
with information on the Indian gaming industry.
This report is a follow-up to the preliminary data we provided you in
August 1996.\1
In this report, our objectives are to provide you with (1) an updated
profile of the Indian gaming industry, (2) information on the amount
of transfers to the tribes from their gaming facilities, (3) a
comparison of Indian gaming revenues with the revenues generated by
other legalized gaming activities, and (4) a summary of the federal
tax treatment of Indian tribes and tribe members.
--------------------
\1 See Profile of Indian Gaming (GAO/GGD-96-148R, Aug. 20, 1996).
BACKGROUND
------------------------------------------------------------ Letter :1
In the late 1970s, Indian tribes began authorizing or conducting
various types of gaming activity with only tribal oversight. In
1987, the Supreme Court confirmed that Indian tribes had authority to
operate gaming establishments on their trust lands without having to
comply with state laws and regulations.\2 To resolve outstanding
issues between tribes and states and to provide oversight, Congress
passed the Indian Gaming Regulatory Act of 1988 (IGRA).\3
IGRA established the following three classes of gaming to be
regulated by a combination of the tribal governments, state
governments, Bureau of Indian Affairs (BIA)--an agency of the
Department of the Interior, and National Indian Gaming Commission
(NIGC).
Class I gaming consists of social gaming for nominal prizes or
ceremonial gaming. It is regulated solely by the tribe, and no
financial reporting to other authorities is required.
Class II gaming includes bingo, pull-tabs, and punch-boards.
Tribes can conduct only class II games that are legal under
state law, and these games are regulated by the tribes and NIGC.
Class III gaming consists of all other forms of gaming, including
casino games, slot machines, and pari-mutuel betting.\4 Class
III games are regulated as indicated below.
Tribes are required to obtain state, NIGC, and Department of Interior
approval to establish and operate class III gaming facilities. IGRA
requires that tribes and states negotiate a tribal-state compact to
balance the interests of both the state and the tribe. The Secretary
of the Interior is authorized to approve any tribal-state compact and
has delegated this authority to the Assistant Secretary--Indian
Affairs, who is responsible for BIA. All class II and III gaming
operations on Indian lands are required to submit copies of their
annual financial statement audits to NIGC.\5
The tribal-state compact is an agreement that may include provisions
concerning standards for the operation and maintenance of the gaming
facility, the application of laws and regulations of the tribe or the
state that are related to the licensing and regulation of the gaming
activity, and the assessment by the state of amounts necessary to
defray the costs of regulating the gaming activity.
IGRA specifies that the tribal ordinance concerning the conduct of
class II or III gaming on Indian lands within the tribe's
jurisdiction must provide that the net revenues from any tribal
gaming are not to be used for purposes other than to (1) fund tribal
government operations or programs, (2) provide for the general
welfare of the Indian tribe and its members, (3) promote tribal
economic development, (4) donate to charitable organizations, or (5)
help fund operations of local government agencies. Tribes may
distribute a portion of their net revenues directly to tribal
members, provided that the tribes have a revenue allocation plan
approved by BIA. This plan is to describe how tribes intend to
allocate net revenues among various governmental, educational, and
charitable projects, including direct payments to tribal members.
--------------------
\2 California v. Cabazon Band of Mission Indians, 480 U.S. 202
(1987).
\3 See 25 U.S.C. sections 2701-2721.
\4 Pari-mutuel betting is generally considered to include on-track,
off-track, and inter-track betting on horse racing, dog racing, and
jai-alai.
\5 See 25 C.F.R. section 571.13 and 25 U.S.C. section 2710(b)(2)(C)
(1996).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
As of December 31, 1996, 184 tribes were operating 281 gaming
facilities. For 178 of these facilities, operated by 126 tribes, we
obtained and examined 1995 financial statements.\6 These 178
facilities reported generating gaming revenues (dollars wagered minus
payouts) of about $4.5 billion, with 8 of them accounting for about
40 percent of these revenues. The gaming facilities also reported
generating over $300 million in revenues from sales such as food,
beverages, and hotel rooms. Net income (total revenues minus
expenses) reported for the 178 facilities was about $1.9 billion,
representing 38 percent of the $4.9 billion total revenues.
According to the financial statements, about $1.6 billion was
transferred to 106 tribes in 1995.\7 Of this $1.6 billion, more than
50 percent went to 10 tribes. For 20 tribes, the financial
statements did not show any transfers. None of the financial
statements indicated how the transfers were used by the tribes.
Gaming revenues generated by all class II and class III Indian
facilities for which we had financial statements equaled at least 10
percent of the estimated gaming revenues generated by legalized
gaming (including casinos, lotteries, pari-mutuel betting, and
others) reported by the gaming industry in 1995.
We compared class III Indian facility revenues with reported revenues
from Atlantic City and Nevada casinos. In the aggregate, 109 class
III Indian facilities generated about the same total amount in gaming
revenues as the 12 Atlantic City casinos and more than half the
gaming revenues of the 213 Nevada casinos. Average gaming revenues
for these Indian facilities were significantly less than those of
Atlantic City casinos but about equal to the average for the Nevada
casinos. In terms of the distribution of gaming revenues among the
facilities, class III Indian facilities were similar to Nevada
casinos--a small proportion of the facilities accounted for a large
share of the aggregate gaming revenues. By contrast, the gaming
revenues of the 12 Atlantic City casinos were more equally
distributed.
In addition, our analyses revealed that the largest class III Indian
facilities generated higher operating income (income from gaming and
other normal operations, such as concessions) as a percentage of
total revenues than the largest Nevada and all Atlantic City casinos.
According to industry experts, this difference is partly due to the
fact that these Nevada and Atlantic City casinos have competition in
close proximity and are subject to various state taxes and costs that
were not generally incurred by these Indian facilities.
IRS has determined that Indian tribes are not subject to federal
income tax because they are political agencies not included within
the meaning of the income tax provisions of the Internal Revenue
Code. Thus, revenues generated from gaming operations of federally
recognized Indian tribes are not taxable. Indian tribes are not,
however, tax-exempt organizations within the meaning of provisions of
the Code that exempt certain categories of organizations from income
tax. Individual tribe members are subject to federal income tax.
Payments of net revenues from gaming operations to members of Indian
tribes are generally taxable, and the tribe is responsible for
withholding income taxes from the payments.
--------------------
\6 Some facilities were not included in our analyses because they
were new and financial statements were not yet required; the
financial statements submitted were incomplete; or the financial
statements were not filed as of the date we completed our data
collection. (See app. I.)
\7 In addition to transfers, some tribes received a total of $91
million from the gaming facilities for items such as taxes and fees,
rent and other charges, and cost reimbursements, which are not
included in the $1.6 billion.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3
We determined the number of tribes with gaming facilities by
reviewing documents provided by NIGC, which identified all tribes
with gaming operations as of December 31, 1996. To perform our
analyses on revenues, costs and expenses, and net income, for
example, we obtained 1995 financial statements that were submitted to
NIGC as of November 22, 1996. The sample of facilities included in
our report consists of the 178 gaming facilities represented by these
financial statements. The sample is not representative of the
universe of all Indian gaming facilities. Some facilities were not
included in our analyses because they were new and not yet required
to file financial statements, the financial statements submitted were
incomplete, or the financial statements were not filed as of the date
we completed our data collection (see app. I). We used Audit and
Accounting Guide: Audits of Casinos, published by the American
Institute of Certified Public Accountants, and spoke with industry
experts for guidance in deciding what data to extract from the
financial statements and what analyses to perform on these data.
We also used the financial statements to determine the amount of
transfers to the tribes. The transfers as described in this report
represent the amounts in the financial statements allocated to the
"tribes." The amounts could have been received by the tribal
government or tribal members, but we were not able to determine this
because the financial statements did not indicate how the transfers
were used or who received them.
To compare Indian gaming with other legalized gaming activities, we
used data reported in International Gaming and Wagering Business and
financial statement data submitted to the Nevada and Atlantic City
gaming commissions.\8
To describe the legal issues regarding the taxation of Indian gaming
revenues, we reviewed relevant sections of the Internal Revenue Code
and the IRS and Department of the Treasury rulings and regulations
pertaining to the taxation of Indian tribes. We also interviewed
officials from Treasury, IRS, and BIA. (See app. I for more details
on our scope and methodology.)
We conducted our review from October 1996 through March 1997 in
accordance with generally accepted government auditing standards. We
obtained comments on a draft of this report from the Internal Revenue
Service, the Department of the Interior, and the Chair of NIGC.
These comments are discussed at the end of this letter.
--------------------
\8 International Gaming and Wagering Business is a trade publication
that annually publishes estimates prepared by Christiansen/Cummings
Associates, Inc., on the amounts of money wagered and spent on each
type of legal gambling activity in the United States.
PROFILE OF THE INDIAN GAMING
INDUSTRY
------------------------------------------------------------ Letter :4
As shown in figure 1, Indian gaming revenues have grown significantly
since 1988 when IGRA was enacted. IGRA provided the regulatory
framework for tribes to establish and operate gaming facilities.
Figure 1: Indian Gaming
Revenues, 1985-95
(See figure in printed
edition.)
Note: Conversion to 1995 constant dollars used the Consumer Price
Index.
Source: International Gaming and Wagering Business, selected issues
between 1985 and 1995; and GAO analysis of 1995 financial statements
that were filed with NIGC as of November 22, 1996.
MORE THAN HALF OF
CONTINENTAL U.S. TRIBES
OPERATED GAMING FACILITIES
---------------------------------------------------------- Letter :4.1
According to information provided by NIGC, 184 of the 555 Indian
tribes officially recognized by the United States were operating a
total of 281 gaming facilities as of December 31, 1996. Of the 184
tribes, 182 were in the continental United States, representing 55
percent of all continental U.S. tribes (329). The remaining two
tribes were in Alaska. According to NIGC, the 226 tribes in Alaska
are generally too remote or too small to operate gaming facilities.\9
An additional 32 tribes had been authorized to operate gaming
facilities but had not opened any as of December 31, 1996, according
to NIGC information. (See fig. 2 for the distribution of Indian
gaming facilities in operation.)
Figure 2: Distribution of
Indian Gaming Facilities
(See figure in printed
edition.)
Note 1: Map does not show
those operations that were
closed by December 31, 1996.
(See figure in printed
edition.)
Note 2: This information may
not agree with NIGC's records
because of differences in
methodologies used to identify
and count facilities.
(See figure in printed
edition.)
Source: GAO analysis of NIGC's
list of gaming facilities as of
December 31, 1996.
(See figure in printed
edition.)
--------------------
\9 Additionally, it is unclear whether certain lands set aside for
Alaska natives under the Alaska Native Claims Settlement Act meet the
IGRA definition of Indian lands on which gaming may be conducted.
(See 43 U.S.C. 1601 et seq.)
REVENUES FROM INDIAN GAMING
FACILITIES EXCEEDED $4
BILLION
---------------------------------------------------------- Letter :4.2
From our analyses of the 178 gaming facilities' financial statements,
we found that reported gaming revenues were about $4.5 billion and
revenues from other activities, such as food, beverages, and hotel
rooms, were over $300 million (see table 1). Median gaming revenues
for class II facilities were about $2.5 million and for class III,
about $12.7 million.\10
Total net income was about $1.9 billion, with a median of $0.6
million for class II and $4.9 million for class III facilities.
About 90 percent of the facilities generated net income, and about 10
percent generated net losses. Most of the facilities were class III,
and they accounted for a large majority of all gaming revenues, total
revenues, and net income.
Table 1
1995 Revenues, Costs and Expenses, and
Net Income for Class II and III Indian
Gaming Facilities
Class Class
II III Total
(N=66) (N=112 (N=178 Class Class
Income statement item \a )\a )\a II III Total
-------------------------------- ------ ------ ------ ------ ------ ------
Revenue
--------------------------------------------------------------------------------
Gaming $568 $3,979 $4,547 12% 88% 100%
Other\b 35 306 341 10 90 100
Total 603 4,285 4,888 12 88 100
Costs and expenses 367 2,644 3,011 12 88 100
Net income 236 1,641 1,877 13 87 100
--------------------------------------------------------------------------------
\a The "N" represents number of facilities.
\b Other revenues include, for example, revenues from food,
beverages, hotel rooms, and interest.
Source: GAO analysis of 1995 financial statements that were filed
with NIGC as of November 22, 1996.
About 40 percent of all gaming revenues were generated by eight of
the class III gaming facilities. Figure 3 shows the distribution of
gaming revenues for the 66 class II Indian facilities represented in
our analysis. More than half of all class II gaming revenues were
generated by eight facilities with gaming revenues of at least $20
million.
Figure 3: Distribution of
Class II Facilities' Gaming
Revenues
(See figure in printed
edition.)
Note: The "N" represents the number of facilities.
Source: GAO analysis of 1995 financial statements that were filed
with NIGC as of November 22, 1996.
Figure 4 shows the distribution of gaming revenues for the 112 class
III Indian facilities represented in our analysis. Almost half of
the gaming revenues were generated by eight facilities with gaming
revenues of at least $100 million each.
Figure 4: Distribution of
Class III Facilities' Gaming
Revenues
(See figure in printed
edition.)
Note: The "N" represents the number of facilities.
Source: GAO analysis of 1995 financial statements that were filed
with NIGC as of November 22, 1996.
--------------------
\10 See appendix I for methodology used to account for class II and
class III facilities.
NET INCOME ACCOUNTED FOR 38
PERCENT OF TOTAL REPORTED
REVENUES
---------------------------------------------------------- Letter :4.3
In total, net income of Indian gaming facilities (class II and III)
was about 38 percent of total reported revenues. Net income as a
percent of total revenues was about the same for class II and class
III facilities (see fig. 5).\11
Figure 5: Costs and Expenses
and Net Income Margins
(See figure in printed
edition.)
Source: GAO analysis of 1995 financial statements that were filed
with NIGC as of November 22, 1996.
In addition, the net income of about half of the Indian gaming
facilities was at least 30 percent of their total revenues (see fig.
6).
Figure 6: Facilities and Net
Income Margins
(See figure in printed
edition.)
Source: GAO analysis of 1995 financial statements that were filed
with NIGC as of November 22, 1996.
--------------------
\11 Figures 5 and 6 are based on total revenues, because net income
includes more than gaming revenues.
MOST TRIBES RECEIVED
TRANSFERS FROM GAMING
FACILITIES
---------------------------------------------------------- Letter :4.4
Of the 126 tribes included in our analysis, 106 reported receiving
about $1.6 billion in transfers from their gaming facilities, as
shown in figure 7. These 106 tribes operated 149 gaming
facilities.\12 Ten of the tribes reported receiving transfers of at
least $50 million each and accounted for more than half of the total
transferred. The financial statements of 20 of the 126 tribes did
not show transfers from their gaming facilities.
Figure 7: Distribution of
Funds Reportedly Transferred to
106 Tribes
(See figure in printed
edition.)
Note: The "N" represents the number of tribes.
Source: GAO analysis of 1995 financial statements that were filed
with NIGC as of November 22, 1996.
--------------------
\12 In addition to transfers, some tribes received a total of $91
million from the gaming facilities for such items as taxes and fees,
rent and other charges, and cost reimbursements, which are not
included in the $1.6 billion.
COMPARISON OF INDIAN GAMING
WITH OTHER U.S. LEGALIZED
GAMING
------------------------------------------------------------ Letter :5
INDIAN GAMING REVENUES
REPRESENTED AT LEAST 10
PERCENT OF THE U.S. MARKET
IN 1995
---------------------------------------------------------- Letter :5.1
Table 2 shows that Indian gaming revenues (class II and III) were at
least 10 percent of the revenues estimated to have been generated by
legal gaming in 1995 and compares Indian gaming to other legalized
gaming. Because our sample of financial statements did not cover all
existing Indian facilities, the 10 percent market share could be
higher.
Table 2
Gaming Revenue Market Shares, 1995
Percentage of
Type of gaming total
--------------------------------------------------- -----------------
Casinos (does not include Indian) 40%
Lotteries 34
Indian gaming (class II and III) 10
Pari-mutuels 8
Charitable games 3
Charitable bingo 2
Card rooms and bookmaking 2
======================================================================
Total\a 100
----------------------------------------------------------------------
\a Total does not sum to 100 because of rounding.
Source: The percentage of Indian gaming was based on GAO's analysis
of class II and III 1995 financial statements that were filed with
NIGC as of November 22, 1996. The percentages of other legalized
gaming were calculated from estimates reported in International
Gaming and Wagering Business, Vol. 17, No. 8, August 1996.
Table 3 gives a breakdown of the casino segment of the gaming
industry, including class III Indian gaming.
Table 3
Casino Gaming Revenue Shares, 1995
Percentage of
Casinos total
--------------------------------------------------- -----------------
Nevada/New Jersey slot machines 32%
Riverboats 21
Indian gaming (class III) 18
Nevada/New Jersey table games 18
Noncasino devices 6
Other land-based casinos 2
Deepwater cruise ships 1
Cruises-to-nowhere 1
Other commercial gambling 1
======================================================================
Total 100
----------------------------------------------------------------------
Source: The percentage of Indian gaming was based on GAO's analysis
of class III 1995 financial statements that were filed with NIGC as
of November 22, 1996. The percentages of casino gaming were
calculated from estimates reported in International Gaming and
Wagering Business, Vol. 17, No. 8, August 1996.
CLASS III INDIAN GAMING AND
NEVADA AND ATLANTIC CITY
CASINOS
---------------------------------------------------------- Letter :5.2
In total, gaming revenues generated by class III Indian facilities
and Atlantic City casinos in 1995 were similar, as shown in table 4.
In addition, the average gaming revenues generated by class III
Indian facilities and Nevada casinos were similar. The comparisons
are for facilities and casinos with at least $1 million in gaming
revenues because that was how data were reported for Nevada.
Table 4
Reported Indian, Nevada, and Atlantic
City Gaming Revenues, 1995\a
(Dollars in thousands)
Indian class Atlantic
Income statement item III Nevada City
-------------------------------------- ------------ ------------ ------------
Gaming revenues $3,976,892 $7,030,994 $3,627,820
Other revenues\b 290,210 4,016,239 350,812
Total revenues\c $4,267,102 $11,047,234 3,978,632
Gaming revenues as a percentage of 93 64 91
total
Average gaming revenues $36,485 $33,009 $302,318
Number of facilities 109 213 12
--------------------------------------------------------------------------------
\a For facilities and casinos with $1 million and more in gaming
revenues.
\b Other revenues include, for example, revenues from food,
beverages, and hotel rooms; interest was excluded.
\c Total may not sum because of rounding.
Source: GAO analysis of class III 1995 financial statements that
were filed with NIGC as of November 22, 1996; Nevada Gaming Abstract,
December 1995, with financial data as of June 30, 1995; and financial
statement analyses prepared by the New Jersey Casino Control
Commission, March 7, 1996, for financial data as of June 30, 1995.
A small proportion of both class III Indian facilities and Nevada
casinos generated significant amounts in gaming revenues and
accounted for a large share of their respective aggregate gaming
revenues (see fig. 8). Specifically, 13 percent of Indian class III
facilities generated 59 percent of the Indian gaming revenues.
Atlantic City casinos are not shown because their gaming revenues
were more equally distributed. For example, 50 percent of the
casinos generated about 59 percent of the gaming revenues.
Figure 8: Reported Class III
Indian Facilities and Nevada
Casinos With Gaming Revenues of
$72 Million and More
(See figure in printed
edition.)
Note: The Nevada casinos in this analysis are limited to those
casinos reported by the Nevada Gaming Abstract as generating gaming
revenues of $72 million and more. Nevada may have other casinos with
gaming revenues of $72 million and more, but because of limitations
in the way the data were reported, we were not able to determine such
casinos.
Source: GAO analysis of class III 1995 financial statements that
were filed with NIGC as of November 22, 1996; and Nevada Gaming
Abstract, December 1995, with financial data as of June 30, 1995.
OPERATING INCOME AS A
PERCENTAGE OF TOTAL REVENUES
OF LARGE CLASS III INDIAN
FACILITIES WAS ALMOST TWICE
THAT OF LARGE NEVADA AND
ATLANTIC CITY CASINOS
---------------------------------------------------------- Letter :5.3
Operating income as a percentage of total revenues for large class
III Indian facilities was almost twice as much as that of large
Nevada and Atlantic City casinos. Table 5 shows the results of our
analysis of operating income for class III Indian facilities and for
Nevada and Atlantic City casinos with gaming revenues of $72 million
and more.\13 Operating income is a common measure used by industry
experts to analyze and compare the profitability of businesses. It
discounts the effects of capital structure and other nonoperating
incomes and expenses that are not directly related to the performance
of the business operations. (See the glossary for further details.)
Table 5
Reported Operating Income of Facilities
and Casinos With Gaming Revenues of $72
Million and More, 1995
Class
III Nevada Atlantic
(N=14) (N=19) City Class Atlantic
Income statement item \a \a,b (N=12)\a III Nevada City
---------------------- ------ ------ ----------- ------ ------ -----------
Revenue
--------------------------------------------------------------------------------
Gaming $2,354 $3,086 $3,628 94% 58% 91%
Other\c 141 2,250 351 6 42 9
Total\d 2,496 5,336 3,979 100 100 100
Costs and expenses 1,307 4,196 2,996 52 79 75
Operating income 1,189 1,141 982 48 21 25
--------------------------------------------------------------------------------
\a The "N" represents number of facilities.
\b The Nevada casinos in this analysis are limited to those casinos
reported by the Nevada Gaming Abstract as generating gaming revenues
of $72 million and more. Nevada may have other casinos with gaming
revenues of $72 million and more, but because of limitations in the
way the data were reported, we were not able to determine such
casinos.
\c Other revenues include, for example, revenues from food,
beverages, and hotel rooms; interest was excluded.
\d Totals may not sum because of rounding.
Source: GAO analysis of class III 1995 financial statements that
were filed with NIGC as of November 22, 1996; Nevada Gaming Abstract,
December 1995, with financial data as of June 30, 1995; and financial
statement analyses prepared by the New Jersey Casino Control
Commission, March 7, 1996, for financial data as of June 30, 1995.
According to industry experts, the difference in operating income
margin (operating income as a percentage of total revenues) between
these 14 class III facilities and these Nevada and Atlantic City
casinos is explained, in part, by the different operational
environments of the facilities. Specifically, the operating income
shown in table 5 for Nevada and Atlantic City casinos was reduced by
expenses that were not generally incurred at these Indian facilities,
such as state gaming taxes and other state requirements. For
example, Atlantic City casinos are subject to an 8-percent tax on
their gaming revenues. Further, these Nevada and Atlantic City
casinos have more competition in close proximity than the 14 class
III Indian facilities.
Another possible explanation for the differences in operating income
was the nature of the tribes' relationships with their gaming
facilities: Some tribes provided goods and services to the gaming
facilities free of charge or at a low cost, which would have reduced
their operating expenses.
--------------------
\13 To make reasonable comparisons of operating income among class
III Indian facilities and Nevada and Atlantic City casinos, we
included only those facilities reported as generating $72 million or
more in gaming revenues. The highest category included in the Nevada
Gaming Abstract was gaming revenues of $72 million and more, and all
Atlantic City casinos generated more than $72 million in gaming
revenues.
FEDERAL TAX TREATMENT OF
INDIANS AND INDIAN TRIBES
------------------------------------------------------------ Letter :6
OVERVIEW
---------------------------------------------------------- Letter :6.1
Although no statutory provision exempts Indian tribes from income
taxation, IRS has concluded that federally recognized Indian tribes
and their federally chartered corporations are not subject to federal
income tax.\14 With respect to tribes, IRS based its conclusion on
the determination that the tribes are political agencies that
Congress did not intend to include within the meaning of the income
tax provisions of the Internal Revenue Code. Indian tribes are not,
however, tax-exempt organizations within the meaning of the
provisions of the Code that exempt certain categories of
organizations from income tax. With respect to the tribes' federally
chartered corporations, IRS takes the view that no taxable entity
separate from the tribes exists. IRS has also found that individual
tribe members are U.S. citizens and are subject to federal income
tax unless a specific exemption can be found in a treaty or statute.
IRS has found, however, that Indian tribal governments have no
inherent exemption from federal excise taxes and, absent a specific
statutory exemption, must purchase taxable articles or services on a
tax-paid basis and must pay tax on their sale or use of taxable
articles or services. Section 7871 of the Code, enacted in 1982,
provides an exemption from certain excise taxes. In addition, Indian
tribes that are employers must pay federal employment taxes on wages
paid to employees.
A provision included as part of the House-passed Seven-Year Balanced
Budget Reconciliation Act of 1995 would have made the tribes subject,
under section 511(a) of the Code, to the unrelated business income
tax on revenues from class II and class III gaming.\15 The unrelated
business income tax currently applies to the income from the business
activities of tax-exempt organizations that are not substantially
related to the organizations' exempt function. The proposed tax
would have been the first explicit federal income tax applied to an
Indian tribe.\16 A memorandum prepared by the Congressional Research
Service, dated October 10, 1995, concluded that the proposal did not
seem to be invalid on any constitutional ground.\17
--------------------
\14 Four revenue rulings address the federal income tax status of
Indian tribal governments. See Rev. Rul. 67-284, 1967-2 C.B. 55;
Rev. Rul. 81-295, 1981-2 C.B. 15; Rev. Rul. 94-16, 1994-1 C.B.
19; and Rev. Rul. 94-65, 1994-2 C.B. 14. A revenue ruling is an
official interpretation by IRS that indicates its official policy on
an issue or a line of reasoning.
\15 H.R. 2491, 104th Cong., section 13631 (1995). The provision was
dropped in conference; see H.R. Conf. Rep. No. 104-350 at 141
Cong. Rec. H12841, 12874.
\16 See, however, section 7871(a)(5) of the Code, which provides that
an Indian tribal government shall be treated as a state for purposes
of section 511(a)(2)(B), which applies the unrelated business income
tax to colleges and universities owned or operated by state
governments.
\17 The memorandum also concluded that taxing tribal gaming proceeds,
despite the fact that state lottery revenues are untaxed, does not
implicate any constitutional right that the tribes have to being
treated on a par with states. The memorandum noted that because of
the long history of treaty-making with Indian tribes, there is the
possibility that an individual tribe may be able to invoke particular
provisions of a treaty or statute and convince the federal courts
that these provisions insulated the tribe against such a tax. The
memorandum cautioned that a court looking at such an issue would not
be likely to set aside general tax legislation as unconstitutional,
but would consider whether abrogating the particular treaty
implicated a vested property interest to which there is a right to
compensation. The memorandum concluded, however, that the prospect
of such a treaty provision seems very unlikely.
In legal memoranda commissioned by the Mashantucket Pequot Tribe, a
contrary view has been expressed. These include a memorandum
prepared by Douglas Endreson, Sonosky, Chambers, Sachse & Endreson,
Oct. 26, 1995, 95 TNT 233-40. The memorandum concludes that the
proposed tax would be unconstitutional. The memorandum also
maintains that the tax would abrogate certain treaty-protected rights
to self-government.
HISTORICAL PERSPECTIVE
---------------------------------------------------------- Letter :6.2
Before enactment of the Indian Reorganization Act of 1934 (IRA),
congressional policy had been directed toward the assimilation of
Indian tribes and the allotment of Indian lands to individual tribe
members.\18 IRA ended the practice of allotment as it applied to
tribally owned lands.\19 The act was designed to further tribal
self-government by providing for tribal organization.
IRA section 16 provided that any tribe may adopt a constitution and
bylaws, and it established a procedure for ratification by tribal
members and approval by the Secretary of the Interior.\20 Section 16
also provided that the constitution adopted by the tribe vested
certain rights and powers in the tribe, including the right to
prevent the sale and disposition of tribal lands and the right to
negotiate with federal, state, and local governments.
Section 17 provided for the formation of a business corporation and
established procedures for petition and ratification.\21 Thus, IRA
allowed for a dual mechanism by which the governmental affairs of an
Indian tribe are conducted under a constitution and bylaws adopted
under IRA section 16 and the commercial matters are handled by a
business corporation organized under section 17.
IRA section 16 provided that "In addition to all powers vested in any
Indian tribe by existing law, the constitution shall also vest in
such tribe or its tribal council [a list of powers]." An early
opinion of the Solicitor for the Department of the Interior
considered the issue of what powers are incorporated in the
constitution and bylaws of an Indian tribe by this reference to
"powers vested in any Indian tribe or tribal council."\22 The opinion
concluded that the vested powers are those powers of local
self-government that have never been terminated by law or waived by
treaty, including the power to: (1) adopt a form of government,
create offices, and prescribe the duties thereof; (2) regulate the
domestic relations of tribal members; (3) levy dues, fees, or taxes
upon tribal members; and (4) regulate the use and disposition of all
property within the jurisdiction of the tribe.
The opinion noted that the list was based on general legislation and
judicial decisions of general application and was subject to
modification with respect to particular tribes, in light of
particular powers granted or particular restrictions imposed by
special legislation.
In an early General Counsel Memorandum, IRS found that these
conclusions were
"a striking indication on the part of Congress and the executive
department of the Government charged with administering various
Indian laws that Indian tribes as such have been recognized as
political agencies and have never lost their inherent powers of
limited sovereignty . . . [and that] an Indian tribe, as
such, is not a taxable entity within the purview of the income
tax provisions of the Internal Revenue Code."\23
This principle forms the basis for the IRS policy on the income tax
status of Indian tribes, as set forth in the series of revenue
rulings. IRS has determined, however, that although Indian tribes
are governments, they are not political subdivisions of the United
States, individual states, or territories for purposes of the Code
provisions that apply special tax treatment to these governmental
units. These include the state exemptions from excise taxes, the
income tax exemption for interest on municipal bonds, and the
deduction of charitable contributions to governmental units for
estate tax purposes.\24 In 1982, Congress enacted the Indian Tribal
Tax Status Act (Tribal Tax Act), treating tribal governments as
states for a number of specified tax provisions, including provisions
relating to tax-exempt bonds, charitable contribution deductions, and
certain excise tax provisions.\25 The treatment is generally
available in transactions in which tribes exercise essential
governmental functions.
--------------------
\18 Act of June 18, 1934, ch. 576, 48 Stat. 984 (codified as
amended at 25 U.S.C. 461 et seq.).
\19 David Getches, Charles F. Wilkinson, and Robert A. Williams,
Federal Indian Law (St. Paul, Minn.: West Publishing Company,
1993), p. 216.
\20 25 U.S.C. 476 (1996).
\21 25 U.S.C. 477 (1996).
\22 Opinion dated Oct. 25, 1934, Decisions of the Department of the
Interior, Vol. 55, p. 14, cited in GCM 26556.
\23 See GCM 26556 (Dec. 20, 1949). In GCM 38853 (May 17, 1982), the
Chief Counsel's office noted that "historically, the IRS has taken
the position that the income tax statutes do not purport to tax the
political entity embodied in the concept of an Indian tribe and no
attempt has been made to tax the tribe with respect to tribal
income," and indicated that the position of the office was that "in
the absence of express legislation, no modification should be made to
the taxability of Indian tribes on tribal income."
\24 See Rev. Rul. 74-179, 1974-1 C.B. 279; Rev. Rul. 68-231,
1968-1 C.B. 48; and Rev. Rul. 58-610, 1958-2 C.B. 815. IRS
determined that because Indian tribes do not derive their powers of
self-government from the United States or the states, they are not
political subdivisions within the meaning of these provisions.
\25 Pub. L. No. 97-473, 96 Stat. 2607 (codified at I.R.C.
section 7871).
SUMMARY OF TAXATION OF
INDIAN BUSINESS ACTIVITIES
---------------------------------------------------------- Letter :6.3
The following sections outline the federal income tax treatment that
applies to the various structures that generally can be used by
tribes to carry out business activities. IGRA provides that unless a
tribe elects to license individual owners, the tribe must have the
sole proprietary interest and responsibility for the conduct of the
gaming activity. Thus, gaming operations must generally be operated
by an entity owned by the tribe, or as an arm of the tribe itself.
Payments to tribe members and the application of other federal taxes
are also discussed.
Federally Recognized Indian Tribes Are Exempt From Federal Income
Taxation. According to IRS, federally recognized Indian tribes are
not subject to federal income taxation.\26 Rev. Rul. 67-284 states
that "income tax statutes do not tax Indian tribes. The tribe is not
a taxable entity." Any income earned by the tribe is not subject to
income tax, regardless of whether the business activity is inside or
outside of Indian-owned lands.
The Senate Finance Committee Report on legislation that later became
the Tribal Tax Act recognized IRS' position that sections 1 and 11 of
the Internal Revenue Code do not reach Indian tribes as set forth in
Rev. Rul. 67-284 and stated that the proposed legislation did not
amend this treatment.\27
Federally Chartered Tribal Corporations Are Not Subject to Federal
Income Taxation. IRS has determined that federally chartered tribal
corporations organized under IRA section 17 are not subject to
federal income taxation, regardless of where the income is earned.
In Rev. Rul. 81-295, IRS found that a federally chartered Indian
tribal corporation has the same tax status as the tribe and is not
taxable. The revenue ruling described a particular federally
chartered Indian tribe. The tribe was formally organized under a
constitution and bylaws pursuant to IRA section 16. In addition, at
the time of formal organization, the tribal members had ratified a
corporate charter as permitted by IRA section 17. The Secretary of
the Interior had approved the tribe's constitution and bylaws and the
corporation's charter. This principle was affirmed in Rev. Rul.
94-16.
Further, in Rev. Rul. 94-65, IRS concluded that a tribal
corporation organized under the Oklahoma Indian Welfare Act section 3
is not subject to federal income taxation on the income earned in the
conduct of commercial business in or outside of Indian-owned
lands.\28
State-chartered Tribal Corporations Are Subject to Federal Income
Tax. IRS has determined that a corporation organized by an Indian
tribe under state law is subject to federal income tax regardless of
the location of the activities that generate the income. In Rev.
Rul. 94-16, IRS reasoned that a corporation organized by an Indian
tribe under state law is not the same as an Indian tribal corporation
organized under IRA section 17 and does not share the same tax status
as the tribe for federal income tax purposes.
Wholly-owned Tribal Law Corporations Generally Have Not Been Subject
to Administrative Attempts to Impose Income Taxes. Although IRS has
addressed the tax status of federally recognized Indian tribes and
federally chartered corporations, it has not issued a published
ruling on the tax status of wholly-owned corporations chartered under
tribal law. Many Indian tribal governments have organized
wholly-owned tribal corporations to conduct business operations
rather than obtain a state or federal charter. Although IRS has not
issued published rulings, IRS officials are not aware of any
administrative attempt to date to impose federal income taxes on
wholly-owned tribal corporations.
Payment of Other Federal Taxes. IRS has determined that Indian
tribal governments have no inherent exemption from excise taxes, but
section 7871 of the Code provides them with a limited exemption. In
Rev. Rul. 94-82, 1994-2 C.B. 412, IRS cited Confederated Tribes of
the Warm Springs Reservation v. Kurtz, in which the court found that
an Indian tribe did not fit within the excise tax exemption for "any
State, any political subdivision of a State, or the District of
Columbia."\29 The court reasoned that since the tribe did not derive
authority from the state, the state government exemption is not
applicable to the tribe.
Section 7871 specifically provides that a tribal government is to be
treated as a state for purposes of certain excise taxes if the
transaction involves the exercise of an essential governmental
function. Consequently, Indian tribes performing essential
governmental functions share the same excise tax exemptions as states
for many excise taxes. However, both Indian tribes and states are
subject to wagering excise taxes. The states are, however, exempt
from excise taxes on lotteries.
Payments to Tribal Members Are Taxable. No provision of the Internal
Revenue Code exempts individual Indians from the payment of federal
income tax; thus, exemptions must be based on a treaty or an act of
Congress.\30 In some cases, a tribal member may receive general
welfare payments from the tribe. Although amounts paid for general
welfare may not be taxable, payments made pro rata to all tribal
members are evidence that the payments are not based on need and,
thus, probably will not qualify for the general welfare exclusion.\31
The Indian Gaming Regulatory Act of 1988 provided that the net
revenues from any tribal gaming are not to be used for purposes other
than to (1) fund tribal government operations or programs, (2)
provide for the general welfare of the Indian tribe and its members,
(3) promote tribal economic development, (4) donate to charitable
organizations, or (5) help fund operations of local government
agencies.\32
IGRA also provided that net revenues from gaming may be used to make
per capita payments to members of the Indian tribe, but only if the
tribe has prepared a revenue allocation plan to allocate revenues to
uses authorized by IGRA. The plan must be approved by the Secretary
of the Interior as adequate, particularly with respect to the funding
of tribal government operations or programs and promoting tribal
economic development. IGRA also required that the interests of
minors and other legally incompetent persons entitled to receive any
of the payments be protected and preserved. Because the payments are
per capita distributions of gaming proceeds, they are generally
subject to taxation when distributed. Additionally, IGRA itself
provides that the per capita payments are subject to federal
taxation, and the act requires that tribes notify their members of
the tax liability when payments are made.
Section 3402(r) of the Internal Revenue Code provides that every
person making a payment to a member of an Indian tribe from the net
revenues from class II or class III gaming activity must withhold
income taxes from the payment. The withholding is capped at 31
percent. Tribal governments must report the total amount of taxable
per capita payments made to each tribal member on Form 1099-Misc.
Tribal governments are to report any federal income tax withheld on
per capita payments on Form 945, Annual Return of Withheld Federal
Income Tax, and make any necessary federal tax deposits.
--------------------
\26 BIA publishes a list of federally acknowledged Indian tribes in
the Federal Register. See 25 C.F.R. section 83.5(a) (1996 ed.).
\27 S. Rept. 97-646, at 8 (1982) reprinted in 1982 U.S.C.C.A.N.
4580, 4586.
\28 25 U.S.C. 503.
\29 691 F.2d 878 (9th Cir. 1982).
\30 Squire v. Capoeman, 351 U.S. 1 (1956). Subsequent federal
appeals court cases have interpreted Squire v. Capoeman to mean that
a tax exemption must be based on some particular language in a treaty
or statute and that an exemption may not be based on policy alone.
United States v. Anderson, 625 F.2d 910, 913, cert. denied. 450
U.S. 920 (1980).
\31 IRS policy has long provided for exclusion of public assistance
payments or social welfare payments from income. These payments may
include food stamps, housing assistance benefits, and Medicare
benefits.
\32 25 U.S.C. 2710(b)(2) (1996).
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
We provided a draft of this report to the Internal Revenue Service,
Department of the Interior, and National Indian Gaming Commission.
IRS' Office of Chief Counsel generally agreed with our presentation
of the federal tax treatment of Indian tribes and their members and
provided some technical comments. We have incorporated those
comments where appropriate. Interior's Director of Audit and
Evaluation provided a technical comment regarding the authority to
approve class III gaming and tribal-state compacts, which we
incorporated.
NIGC provided a number of technical comments that we incorporated as
appropriate. Two of the comments warrant further discussion. First,
the NIGC Acting Chair indicated that our number of tribes and
facilities did not agree with NIGC's records. In an April 18, 1997,
meeting with NIGC officials, we discussed the number of tribes and
facilities and made changes to the report where appropriate.
However, our final figures and list of facilities are not the same as
NIGC's because of differences in the methodology used to identify and
count facilities. NIGC officials acknowledged the differences in
methodology and agreed with our final figures and list of facilities.
Second, the NIGC Acting Chair also indicated that we should not
include state gaming taxes and other payments to the state as
examples of expenses incurred by Atlantic City and Nevada casinos but
not by Indian gaming facilities. She stated that some tribal-state
compacts may include payments from either the tribe or the gaming
facility to states. We told NIGC officials that information provided
by industry specialists and in the financial statements of the gaming
facilities included in our analysis of operating income showed no
payments of taxes or other fees to the state. We also explained to
NIGC officials that this information is not meant to indicate that
tribes or their gaming facilities pay no taxes or fees to states but
to explain some of the differences in the operating income between
Indian gaming facilities and Atlantic City and Nevada casinos. NIGC
officials accepted this explanation.
Interior's Assistant Secretary--Indian Affairs provided additional
written comments. The Department agreed with our presentation of the
federal tax treatment of Indian tribes and their members. It
suggested that our report should also compare revenues of Indian
gaming facilities with revenues of the various states lotteries. The
letter stated that it is Interior's position that tribes are
governments, like states, and that it is therefore more appropriate
to compare the gaming revenues of governmental entities rather than
to compare gaming revenues of Indian tribes with those of privately
owned casinos. We compared revenues from class III gaming (primarily
table games and slot machines) with revenues from like gaming
activities in Atlantic City and Nevada casinos. We did not compare
Indian gaming revenues with state lottery revenues because Indian
gaming does not include lotteries; therefore, such a comparison would
be inappropriate.
---------------------------------------------------------- Letter :7.1
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter. At that time, we will send copies to
the Ranking Minority Member, House Ways and Means Committee; the
Senate Finance Committee Chairman and Ranking Minority Member; the
Commissioner of Internal Revenue; the Secretary of the Interior; the
Chair of the National Indian Gaming Commission; and to other
interested parties. We will also make copies available to others
upon request.
Major contributors to this report are listed in appendix III. If you
have any questions or we can be of further assistance, please call me
at (202) 512-9110.
Sincerely yours,
Lynda D. Willis
Director, Tax Policy
and Administration Issues
OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I
OBJECTIVES
Our objectives in this report were to provide (1) an updated profile
of the Indian gaming industry, (2) information on the amount of
transfers to the tribes from their gaming facilities, (3) a
comparison of Indian gaming revenues with the revenues generated by
other legalized gaming activities, and (4) a summary of the federal
tax treatment of Indian tribes and tribe members.
SCOPE AND METHODOLOGY
PROFILE OF THE INDIAN GAMING
INDUSTRY
------------------------------------------------------- Appendix I:0.1
To determine the number of tribes with gaming facilities, we reviewed
documents provided by NIGC identifying all tribes with gaming
operations as of December 31, 1996. This information included only
class II and class III gaming facilities. Information on the number
of tribes with class I facilities was not readily available because
class I gaming consists of social gaming for nominal prizes or
ceremonial gaming, which is regulated solely by the tribes.
To develop a comprehensive list of tribes and gaming facilities, NIGC
contacted all tribes except for those in Alaska, where it contacted
only the tribes that were known to be attempting to open gaming
facilities. According to NIGC, most of the 226 tribes in Alaska are
not operating gaming facilities, primarily because of the remoteness
and small size of the tribes' membership.\1 (A list of tribes and
their known gaming facilities as of December 31, 1996, appears in
app. II.)
IGRA categorizes gaming activities as class II or class III. For
purposes of our analysis, however, we categorized facilities based on
whether they had approved tribal ordinances and tribal-state
compacts. We categorized gaming facilities without compacts as class
II facilities, even though they may operate class III games. We
treated gaming facilities with class III games and compacts in place,
per BIA listing of compacts as of December 14, 1995, as class III
facilities. NICG told us that in several states, tribes and states
may no longer have valid compacts in place.
To perform our analyses on revenues, costs and expenses, and net
income, for example, we used data contained in 1995 financial
statements that were submitted to NIGC as of November 22, 1996.\2
This was the date on which we ended our data gathering to begin our
analyses. For this time frame, NIGC had financial statements from
126 tribes representing 178 facilities. The financial statements of
174 of these facilities were independently audited, and the majority
received unqualified opinions.\3 We also verified our listings of
financial statements received with NIGC officials to ensure that we
had received all of them. (See app. II, footnote a.)
The sample of facilities included in our report consists of the 178
gaming facilities represented by these financial statements. The
sample is not representative of the universe of all Indian gaming
facilities. Table I.1 represents the 1995 financial statement
submission status of all gaming facilities existing as of December
31, 1996, according to information provided by NIGC.\4 We verified
this information with NIGC officials to clarify questions and
inconsistencies. We do not know the characteristics of those gaming
facilities for which we did not analyze the financial statements. We
did not determine why some tribes did not submit financial statements
beyond what is indicated in table I.1 because such an analysis,
although important for compliance purposes, was outside the scope of
this report.
Table I.1
1995 Financial Statement Filing Status
of Facilities as of December 31, 1996
Number of
Filing status facilities
-------------------------------------------------- ------------------
Filed and included in our analysis 178
Filed but not included in our analysis because 30
financial statements were incomplete or submitted
after the completion of our data gathering
Did not file or received filing extensions 44
Not required to file because they were not 36
operating for one year as of 1995 or were opened
in 1996
Included in our analysis but closed by December (7)
31, 1996
======================================================================
Total known gaming facilities as of December 31, 281
1996
----------------------------------------------------------------------
Source: GAO analysis of Indian gaming operations and financial
statement submissions, based on information from and discussions with
NIGC officials.
For those facilities included in our analyses, we extracted
information that allowed us to determine gaming revenues, total
revenues, costs and expenses, operating income, and net income. We
used Audit and Accounting Guide: Audits of Casinos, published by the
American Institute of Certified Public Accountants, and spoke with
industry experts for guidance in deciding which data to extract from
the financial statements and what analyses to perform on these data.
(See the glossary for the accounting terms we used throughout this
report.)
Our analyses do not include data from the balance sheet or statement
of cash flows, such as assets, liabilities, equity, or debt payments,
because this information was not reported consistently by the
different facilities.
--------------------
\1 Additionally, it is unclear whether certain lands set aside for
Alaska natives under the Alaska Native Claims Settlement Act meet the
IGRA definition of Indian lands on which gaming may be conducted.
(See 43 U.S.C. 1601 et seq.)
\2 The financial statements we analyzed had different fiscal year
ending dates, but we considered a financial statement to be a 1995
statement if its fiscal year ended in 1995.
\3 An unqualified opinion on the financial statements generally means
that the auditor concludes the financial statements and accompanying
notes present fairly, in all material respects, the assets,
liabilities, and net position of the entity at the end of the period;
and the net costs, changes in net position, and cash flows for the
period then ended are in conformity with the entity's basis of
accounting or generally accepted accounting principles.
\4 NIGC updates the status of gaming facilities and financial
statement submissions quarterly. The quarter ending on December 31,
1996, was the closest quarter to November 22, 1996, the date we
completed our data collection.
TRANSFERS TO THE TRIBES
------------------------------------------------------- Appendix I:0.2
To determine the amount of transfers to the tribes, we analyzed
information contained in the financial statements. The transfers as
described in this report represent the amounts in the financial
statements allocated to the tribes. IGRA provides that net revenues
from tribal gaming must be devoted to certain uses, including funding
tribal government operations. Net revenues is defined as gross
gaming revenues minus prizes and gaming-related operating expenses,
not including management fees. In figure I.1, we depict, in general,
how the transfers flow from the gaming facility to the tribe as
indicated in the financial statements.
Figure I.1: Flow of Transfers
From the Gaming Facility to the
Tribe
(See figure in printed
edition.)
Note: This flowchart has been
simplified to represent, in
general, the revenue flow
across all financial
statements. Other revenues
include, for example, revenues
from food, beverages, hotel
rooms, and interest.
(See figure in printed
edition.)
Source: GAO analysis of 1995
financial statements.
(See figure in printed
edition.)
As noted in the Background section of this report, IGRA limits how
these transfers can be used. The transfers as described in this
report represent the amounts in the financial statements allocated to
the "tribes." The amounts could have been received by tribal
government or tribal members, but we were not able to determine this
because the financial statements did not indicate how the transfers
were used or who received them. In addition, to determine the
economic impact of gaming on the tribes, several factors would need
to be considered, such as poverty levels and other revenues generated
by the tribes; we did not address these factors because they were
beyond the scope of this report. We obtained information on the
amount of items, such as taxes and fees, rent and other charges, and
cost reimbursements, from the financial statements to the extent such
amounts were reported.
COMPARISON OF INDIAN AND
NON-INDIAN GAMING REVENUES
------------------------------------------------------- Appendix I:0.3
To compare Indian gaming revenues with the gaming revenues of other
legalized gaming, we used data reported in International Gaming and
Wagering Business and financial statement data submitted to the
Nevada and Atlantic City gaming commissions. We obtained the
financial data on Nevada casinos from Nevada Gaming Abstract, a
report prepared by the Nevada State Gaming Control Board for fiscal
year data as of June 30, 1995. The information presented in the
Abstract comes from unaudited standard financial statements that
licensees whose gaming revenues are $1 million or more are required
to file. We obtained the Atlantic City financial data from unaudited
standard financial statements that all New Jersey casinos are
required to file and from financial analyses prepared by the New
Jersey Casino Control Commission as of June 30, 1995. We did not
independently verify the data included in these reports.
We used data published in International Gaming and Wagering Business
to determine the gaming revenue shares of legalized gaming as a whole
and also the casino segment in particular. The legalized gaming
categories we included are those used in this publication. We
substituted the amounts of Indian gaming revenues for the amounts
used in this publication only for consistency with our analyses in
the rest of our report. The amounts published for Indian gaming,
however, were similar to the amounts we determined from the financial
statements.
We used the financial data of Nevada and Atlantic City casinos only
to compare class III facilities. Class III facilities relied
primarily on casino games and slot machines, and this was also the
case for Nevada and Atlantic City casinos. We included only
facilities with gaming revenues of $1 million and more because the
Nevada financial data were aggregated and included only facilities
with these gaming revenues. To make valid comparisons of revenues
among the Indian facilities and casinos, we subtracted the amount of
promotional allowances (free food, hotel rooms, and so on given to
customers as incentives) from "other revenues" for those facilities
and casinos that reported such amounts as "revenues."
We used operating income to compare the results of these operations
because operating income is a common measure used by industry experts
to analyze and compare the profitability of businesses. It discounts
the effects of capital structure and other nonoperating incomes and
expenses that are not directly related to the performance of business
operations.
SUMMARY OF LEGAL ISSUES
PERTAINING TO THE TAXATION
OF INDIAN TRIBES
------------------------------------------------------- Appendix I:0.4
To describe the legal issues regarding the taxation of Indian gaming
revenues, we reviewed relevant sections of the Internal Revenue Code
and the IRS and Department of the Treasury rulings and regulations
pertaining to the taxation of Indian tribes. We also interviewed
officials from Treasury, IRS, and BIA.
TRIBES AND KNOWN GAMING OPERATIONS
AS OF DECEMBER 31, 1996\A
========================================================== Appendix II
State Tribe Name of operation
---------- --------------------------------- ---------------------------------
Alabama Poarch Band of Creek Indians Creek Bingo Palace*
Alaska Klawock Cooperative Association Klawock Cooperative Association
(Gaming Division)*
Metlakatla Indian Community Metlacatla Indian Community Bingo
Arizona Ak Chin Indian Community Harrah's Ak-Chin Casino*
Cocopah Indian Tribe Cocopah Bingo and Casino*
Colorado River Indian Tribes Blue Water Casino*
Fort McDowell Mohave-Apache Fort McDowell Gaming Center*
Indian Community
Fort Mojave Indian Tribe Spirit Mountain Casino*
Gila River Indian Community Lone Butte Casino*
Wild Horse Casino*
Kaibab Band of Paiute Indians Pipe Spring Resort & Casino**
Pascua Yaqui Tribe of Arizona Casino of the Sun*
Quechan Indian Tribe Quechan Bingo/Casino
San Carlos Apache Tribe Apache Gold Casino*
Tohono O'odham Nation Tohono O'odham Gaming Authority-
Desert Diamond Casino*
Tonto Apache Tribe Tonto Apache Mazatzal Casino*
White Mountain Apache Tribe Hon-dah Casino*
Yavapai Apache Tribe Cliff Castle Casino*
Yavapai-Prescott Indian Tribe Yavapai-Prescott Class II Gaming*
Yavapai-Prescott Class III
Gaming*
California Agua Caliente Band of Cahuilla Spa Casino*
Indians
Auberry Big Sandy Rancheria Mono Wind Casino
Barona Band of Mission Indians Barona Casino*
Big Pine Paiute Tribe of the Sierra Springs Casino
Owens Valley
Big Valley Rancheria of Pomo Konocti Vista Casino and Bingo*
Indians
Bishop Paiute Tribe Paiute Palace Casino*
Bridgeport Indian Reservation Kiba Casino**
Cabazon Band of Mission Indians Cabazon Simulcast Wagering
Corporation*
Fantasy Springs Casino*
Cahto Tribe of the Laytonville Cahto Casino
Rancheria
Cahuilla Band of Mission Indians Cahuilla Creek Restaurant and
Casino
Chemehuevi Indian Tribe Havasu Landing Resort
Chicken Ranch Rancheria Chicken Ranch Bingo*
Coast Indian Community of the Coast Indian Gaming Facility
Resighini Rancheria
Colusa Rancheria Colusa Casino & Bingo Enterprise
Fund*
Coyote Valley Band of Pomo Shodakai Coyote Valley Casino
Indians
Elk Valley Rancheria Elk Valley Casino
Hoopa Valley Tribe Lucky Bear Casino
Hopland Reservation Hopland Casino
Jackson Rancheria Band of Miwuk Jackson Indian Bingo and Casino*
Indians
Lake Miwok Indian Nation of the Twin Pine Casino*
Middletown Rancheria
Mooretown Rancheria Mooretown Rancheria Casino
Morongo Band of Mission Indians Casino Morongo*
Pit River Tribe Pit River Casino
Redding Rancheria Tribe Win-River Casino*
Robinson Rancheria of Pomo Robinson Rancheria Bingo and
Indians Casino*
Rumsey Indian Rancheria Cache Creek Indian Bingo and
Casino*
San Manuel Band of Mission San Manuel Mission Indian Casino
Indians
Santa Rosa Rancheria The Palace Bingo*
Santa Ynez Band of Mission Santa Ynez Indian Casino*
Indians
Sherwood Valley Rancheria Black Hart Casino
Smith River Rancheria Smith River Lucky 7 Casino
Soboba Band of Mission Indians Soboba Casino
Susanville Indian Rancheria Northern Lights Casino
Sycuan Band of Mission Indians Sycuan Gaming Center
Table Mountain Rancheria Table Mountain Rancheria Casino
and Bingo*
Temecula Band of Luiseno Mission Pechanga Entertainment Center*
Indians
Trinidad Rancheria Cher-Ae Heights Bingo and Casino*
Tule River Tribe of the Tule Eagle Mountain Casino
River Indian Reservation
Twenty Nine Palms Band of Mission Spotlight 29 Casino*
Indians
Tyme Maidu Tribe of the Berry Berry Creek Rancheria Gaming
Creek Rancheria
Viejas Band of Mission Indians Viejas Casino and Turf Club
Colorado Southern Ute Indian Tribe Sky Ute Lodge and Casino*
Ute Mountain Ute Tribe Ute Mountain Casino*
Connecticu Mashantucket Pequot Tribe Foxwoods Resort Casino*
t
Mohegan Tribe of Indians Mohegan Sun Casino
Florida Miccosukee Tribe of Indians of Miccosukee Indian Bingo*
Florida
Seminole Tribe of Florida Brighton Seminole Bingo
Hollywood Seminole Gaming*
Seminole Bingo of Tampa*
Seminole Bingo Palace*
Seminole Gaming Palace -
Immokalee*
Idaho Coeur d'Alene Tribe Coeur d'Alene Tribal Bingo/
Casino*
Kootenai Tribe of Idaho Kootenai River Inn and Casino*
Nez Perce Tribe Clear River Casino
Its-Ye-Ye Bingo
Shoshone-Bannock Tribes Bannock Peak
Gaming Enterprise Fund*
Oregon Trail Outpost
Iowa Omaha Tribe of Nebraska Casino Omaha*
Sac & Fox Tribe of Mississippi in Meskwaki Bingo and Casino*
Iowa
Winnebago Tribe of Nebraska WinnaVegas Casino*
Kansas Iowa Tribe of Kansas and Nebraska Bingo Party Games*
Kickapoo Nation in Kansas Golden Eagle Casino
Prairie Band Potawatomi Prairie Band of Potawatomi Indian
Gaming Trust*
Louisiana Chitimacha Tribe of Louisiana Cypress Bayou Casino*
Coushatta Tribe of Louisiana Grand Casino Coushatta*
Tunica-Biloxi Indian Tribe of Grand Casino Avoyelles*
Louisiana
Michigan Bay Mills Indian Community Bay Mills Casino*
Kings Club Casino*
Grand Traverse Band of Ottawa/ Leelanau Sands Casino*
Chippewa Indians
Super Gaming Palace*
Turtle Creek Casino
Hannahville Indian Community Chip-in Casino/Motel*
Keweenaw Bay Indian Community Big Bucks Casino
Ojibwa Casino Resort*
Ojibwa Casino Resort-Marquette
Senior's Bingo*
Youth Bingo*
Lac Vieux Desert Band of Lake Lac Vieux Desert Casino*
Superior Chippewa Indians
Saginaw Chippewa Indian Tribe Soaring Eagle Casino*
Sault Ste. Marie Tribe of Kewadin Casino-Christmas*
Chippewa Indians
Kewadin Casino-Hessel*
Kewadin Casino-Manistique*
Kewadin Casino-St. Ignace*
Kewadin Casino-Sault Ste. Marie*
Midjim Convenience Store Pulltabs
I
Midjim Convenience Store Pulltabs
II
Vegas Kewadin Bingo
Minnesota Bois Forte Band of Chippewas Fortune Bay Casino*
Fond du Lac Reservation Business Black Bear Casino*
Committee
Fond-du-Luth Casino*
Grand Portage Band of Chippewa Grand Portage Casino*
Indians
Leech Lake Band of Chippewa Che-We Casino
Indians
Leech Lake Palace Bingo*
Northern Lights Gaming Emporium*
Lower Sioux Indian Community Jackpot Junction Casino*
Mille Lacs Band of Chippewa Grand Casino Hinckley*
Indians
Grand Casino Mille Lacs*
Prairie Island Indian Community Treasure Island Casino and Bingo*
Red Lake Band of Chippewa Indians Lake of the Woods Casino*
Red Lake Casino*
River Road Casino*
Shakopee Mdewakanton Sioux Little Six Bingo*
Community
Mystic Lake*
Upper Sioux Community Firefly Creek Casino*
White Earth Band of Chippewa Golden Eagle Bingo
Indians
Shooting Star Casino*
Mississipp Mississippi Band of Choctaw Silver Star Hotel and Casino*
i Indians
Montana Assiniboine and Sioux Tribes of Silverwolf Casino*
the Fort Peck Reservation
Blackfeet Tribe of Indians Blackfeet Bingo
Chippewa Cree Tribe of the Rocky 4 C's Cafe & Casino
Boy's Reservation
Chippewa PowWow Bingo
Crow Indian Tribe Little Bighorn Casino*
Northern Cheyenne Tribe Northern Cheyenne Social Club
Nebraska Santee Sioux Tribe of Nebraska Ohiya Casino
Nevada Fort Mojave Indian Tribe Avi Casino Enterprise, Inc.
Las Vegas Paiute Tribe Las Vegas Paiute Resort
Moapa Band of Paiutes Moapa Tribal Enterprises I
Moapa Tribal Enterprises II
New Mexico Jicarilla Apache Tribe Apache Nugget Casino
Vigil Family Enterprises
Mescalero Apache Tribe Inn of the Mountain Gods**
Pueblo of Acoma Sky City Casino*
Pueblo of Isleta Isleta Gaming Palace*
Pueblo of Pojoaque Cities of Gold Casino*
Cities of Gold Sports Bar
Pueblo of Pojoaque Casino*
Pueblo of Sandia Casino Sandia*
Pueblo of Santa Ana Santa Ana Star Casino*
Pueblo of Taos Taos Slot Room
Pueblo of Tesuque Camel Rock Casino
San Felipe Pueblo San Felipe Casino Hollywood*
San Juan Pueblo Ohkay Casino*
New York Oneida Nation of New York Turning Stone Casino
Seneca Nation of Indians Bingo Allegany*
Bingo Cattaraugus*
St. Regis Mohawk Tribe Mohawk Bingo Palace*
Tribal Bingo**
North Eastern Band of Cherokee Indians Tribal Bingo*
Carolina
Tribal Casino*
TeePee Village Casino**
North Devils Lake Sioux Tribe Spirit Lake Casinos
Dakota
Sisseton-Wahpeton Sioux Tribe Dakota Magic Casino & Resort
Standing Rock Sioux Tribe Fort Yates Pow Wow Committee
Prairie Knights Casino*
Three Affiliated Tribes of the 4 Bears Casino and Lodge*
Fort Berthold Reservation
Turtle Mountain Band of Chippewa Turtle Mountain Chippewa Big
Indians Casino*
Turtle Mountain Chippewa Mini
Casino*
Oklahoma Absentee-Shawnee Tribe of Thunderbird Entertainment Center
Oklahoma
Apache Tribe of Oklahoma Na-I-Sha Games
Cherokee Nation of Oklahoma Cherokee Nation Outpost-Catoosa*
Cherokee Nation Outpost-Roland*
Cherokee Nation Outpost-West
Siloam Springs*
Loyal Shawnee Bingo
Cheyenne and Arapaho Tribes of Cheyenne and Arapaho Bingo-
Oklahoma Clinton
Cheyenne and Arapaho Bingo-
Watonga
Lucky Star Bingo*
Chickasaw Nation of Oklahoma Ada Gaming Center*
Goldsby Gaming Center*
Sulphur Gaming Center
Thackerville Gaming Center*
Choctaw Nation of Oklahoma Choctaw High Stakes Bingo-
Arrowhead*
Choctaw High Stakes Bingo-
Durant*
Choctaw High Stakes Bingo-
Idabel*
Choctaw High Stakes Bingo-
Pocola*
Citizen Band Potawatomi Indians Potawatomi Tribal Gaming*
of Oklahoma
Comanche Indian Tribe Comanche Nation Games*
Delaware Tribe of Western Delaware Tribal Games**
Oklahoma
Eastern Shawnee Tribe of Oklahoma Eastern Shawnee Tribe of Oklahoma
Bingo Operations*
Iowa Tribe of Oklahoma Bingo Enterprise Fund*
Kaw Nation of Oklahoma Kaw Bingo*
Kiowa Tribe of Oklahoma Kiowa Bingo
Muscogee (Creek) Nation Bristow Indian Community Bingo*
Checotah Muskogee Indian
Community Bingo*
Eufaula Indian Community Bingo*
Muscogee Bingo*
Okmulgee Bingo*
Tulsa Bingo*
Ponca Tribe of Oklahoma Ponca Tribal Bingo
Sac & Fox Nation of Oklahoma Foxfire Bingo Casino, Inc.
Seminole Nation of Oklahoma Seminole Nation Bingo*
Wewoka Trading Post Gaming
Center*
Seneca-Cayuga Tribe of Oklahoma Seneca-Cayuga Bingo
Thlopthlocco Tribal Town Thlopthlocco Bingo
United Keetoowah Band of Cherokee Keetoowah Bingo
Indians
Oregon Confederated Tribes of the Grande Spirit Mountain Gaming, Inc.*
Ronde Indian Community
Confederated Tribes of the Siletz Chinook Winds*
Indians of Oregon
Confederated Tribes of the Wildhorse Gaming Resort*
Umatilla Indian Reservation
Confederated Tribes of the Warm Indian Head Gaming Center*
Springs Reservation of Oregon
Coquille Indian Tribe The Mill Casino
Cow Creek Band of Umpqua Indians Gaming Operations*
South Cheyenne River Sioux Tribe Cheyenne River Sioux Tribe Bingo
Dakota
Crow Creek Sioux Tribe Crow Creek Bingo Hall
Lode Star Casino
Flandreau Santee Sioux Tribe Royal River Casino*
Lower Brule Sioux Tribe Brule Horseman Association
Brule Sioux Booster Club
Golden Buffalo Casino*
Kul Wicasa Elderly Bingo
Lakota Care Bingo
Lakota Family Dance Club
Lower Brule Health Club
Lower Brule Youth Activities
Oglala Sioux Tribe Children's Village Bingo
Prairie Wind Casino*
Rosebud Sioux Tribe Rosebud Casino*
Sisseton-Wahpeton Sioux Tribe Dakota Sioux Casino*
Veterans Memorial Recreation
Center*
Standing Rock Sioux Tribe Bear Soldier Jackpot Bingo*
Grand River Casino
Yankton Sioux Tribe Fort Randall Casino/Hotel*
Texas Kickapoo Traditional Tribe of Lucky Eagle Casino
Texas
Washington Confederated Tribes of the Chehalis Tribal Lucky Eagle
Chehalis Reservation Casino*
Confederated Tribes of the Mill Bay Casino
Colville Reservation
Coulee Dam Casino*
Okanogan Casino/Bingo*
Jamestown S'Klallam Tribe Seven Cedars Casino*
Lower Elwha S'Klallam Tribe Lower Elwha Bingo**
Lummi Nation Lummi Casino*
Makah Indian Tribe of the Makah Makah Bingo*
Indian Reservation
Muckleshoot Indian Tribe Muckleshoot Indian Bingo*
Muckleshoot Indian Casino*
Nooksack Indian Tribe Nooksack River Casino*
Port Gamble S'Klallam Tribe Little Boston Bingo
Puyallup Tribe of Indians BJ's Enterprises, Inc.
Puyallup Tribe Bingo Palace*
Spokane Tribe of Indians Brigman's Casino
Double-Eagle Casino
Kieffer's Store
Lile Chief's Casino
Pappy's Corner
Snack'n Chat
Spokane Indian Bingo
Two Rivers Casino
Wooden Nickel Casino
Squaxin Island Tribe Little Creek Casino
Suquamish Tribe Port Madison Enterprises-Bingo
Operations Division*
Port Madison Enterprises-
Suquamish Clearwater Casino
Swinomish Indian Tribal Community Swinomish Casino & Bingo*
Tulalip Tribes of Washington Tulalip Casino*
Upper Skagit Indian Tribe Harrah's Skagit Valley Casino
Wisconsin Bad River Band of Lake Superior Bad River Casino
Chippewa Indians
Forest County Potawatomi Northern Lights Casino*
Community
Potawatomi Bingo*
Ho-Chunk Nation Ho-Chunk Bingo*
Ho-Chunk Casino*
Majestic Pines Bingo*
Majestic Pines Casino*
Rainbow Bingo*
Rainbow Casino*
Lac Courte Oreilles Band of Lake Lac Courte Oreilles Casino*
Superior Chippewas
Lac du Flambeau Band of Lake Lake of the Torches Casino*
Superior Chippewa Indians
Bingo Enterprise Fund*
Menominee Indian Tribe of Crystal Palace Casino*
Wisconsin
Menominee Nation Casino*
Menominee Tribal Bingo*
Oneida Tribe of Indians of Class II Gaming Operations*
Wisconsin
Red Cliff Band of Lake Superior Isle Vista Casino*
Chippewas
Sokaogon Chippewa Community Grand Royale
Mole Lake Bingo
Regency Resort
St. Croix Chippewa Indians of Hole in the Wall Casino*
Wisconsin
Little Hartel Casino
Sand Lake Bingo
St. Croix Casino*
Stockbridge-Munsee Community Mohican North Star Casino*
Wyoming Northern Arapaho Tribe of the 789 Bingo
Wind River Indian Reservation
--------------------------------------------------------------------------------
\a A single asterisk denotes the facilities included in our analyses
(178), the names of which were taken from the financial statements
submitted to NIGC. Other facility names were obtained from other
NIGC data. A double asterisk denotes the facilities included in our
analyses that were not operating on December 31, 1996.
Note: This information may not agree with NIGC's records because of
differences in the methodologies used to identify and count
facilities.
Source: GAO analysis of 1995 financial statements filed with NIGC
and NIGC lists of gaming facilities.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
GENERAL GOVERNMENT DIVISION
Harriet Ganson, Assistant Director, Tax Policy and
Administration Issues
Nilsa I. Perez, Assignment Manager
Keith Steck, Evaluator
Bryon Gordon, Evaluator
Pam Pavord, Evaluator
OFFICE OF GENERAL COUNSEL
Rachel DeMarcus, Assistant General Counsel
KANSAS CITY FIELD OFFICE
Doris Hynes, Evaluator
GLOSSARY
=========================================================== Appendix 0
COSTS AND EXPENSES
------------------------------------------------------- Appendix 0:0.1
Payroll, management fees, depreciation, amortization, the interest
portion of debt payments, and others. Under generally accepted
accounting principles, the principal portion of the debt payments is
not an expense and thus is not included in costs and expenses.
GAMING REVENUES
------------------------------------------------------- Appendix 0:0.2
Dollars wagered minus payouts.
NET INCOME
------------------------------------------------------- Appendix 0:0.3
Total revenues minus all costs and expenses.
NET REVENUES
------------------------------------------------------- Appendix 0:0.4
IGRA defines "net revenues" as gross gaming revenues minus prizes and
gaming-related operating expenses, not including management fees.
OPERATING INCOME
------------------------------------------------------- Appendix 0:0.5
Revenues minus costs and expenses that were related to the primary
business activities, such as salaries, advertisements, rents, and
other expenses. It did not include revenues or expenses that were
not related to the primary business activities, such as interest
income; gains on sales of assets; and depreciation, amortization, and
interest expenses.
OTHER REVENUES
------------------------------------------------------- Appendix 0:0.6
Sales such as food, beverages, and hotel rooms.
TOTAL REVENUES
------------------------------------------------------- Appendix 0:0.7
Sum of gaming revenues and other revenues.
*** End of document. ***