The Problem of Dual-Taxation in Indian Country: The Billion Dollar Tax Weevil
By Nick Sortal
There are the types of casinos you see in Las Vegas, Atlantic City and Biloxi, Miss., managed by major casino companies and often publicly traded. Then there are the 494 Native American casinos—the majority of which collect less than $25 million in annual revenues.
Guess which group is overall making the most money? (Hint: This is a publication about Native American business.)
The most recent figures show that gamblers now spend more at Native American casinos nationwide than they do at traditional, commercial casinos. Alan Meister, principal economist for Nathan Associates in Irvine, California, highlighted the shift earlier this year when he released his 15th annual Casino City’s Indian Gaming Industry Report, with revenue figures for 2015. (It takes some time to compile the data because most Native American casinos don’t have to reveal their revenues.)
Meister computes that $30.5 billion was gambled at Native American casinos in 2015, compared to $29.8 billion at commercial casinos. Racetrack casinos (think of your nearby horse track or dog track, and their efforts to add slots) were good for another $8.5 billion.
Indian gaming began booming only about 25 years ago, three decades behind Las Vegas, and Meister sees even more growth.
“There are some markets that are not yet mature,” he says.
Some Indian casinos could also increase business if they attain compacts with their states. Federal law allows casinos without compacts to operate only Class II bingo-style slots; a compact would mean more entertaining (i.e., lucrative) slot machine titles.
The top Native American casinos—Foxwoods, Mohegan Sun, and Seminole Hard Rock Tampa—are relatively well known, but those are just the top end of the 494 Native American casinos dotted across the 28 states. Meister found that these casinos generally are faring well amid a slow growth economy.
But Meister stresses that there is a great disparity among tribes; 57 percent of the casinos collect $25 million or less.
“For a lot of small facilities, they’re just helping the tribes to provide jobs,” he says.
This year, commissioned by the American Gaming Association, Meister computed total economic impact figures, taking the revenue numbers and employing what economists call a multiplier effect.
“We’re talking about how money trickles down through the economy,” Meister says.
His numbers: That $30 billion per year translates to $96.6 billion in output.
Tribal gaming is by far the biggest driver in Indian economies. Non-gaming businesses account for about $3.9 billion, according to Meister.
The tribes have done a good job learning from commercial casinos, Meister notes. The tribes’ non-gaming casino revenues also increased 4.5 percent to $3.9 billion.
“Tribal gaming has continued to follow the trend of adding more nongaming amenities,” he says. Nowhere is this trend more true than commercial casinos in Las Vegas, where nongaming revenue is greater than gaming revenue.
Meanwhile, tribal leaders say they define progress not by bigger houses or cars, but by providing optimal health care and education to members.
“Some are still living in poverty, and it’s hard to have meaningful discussion with policy makers when they have this notion that all tribes are rich,” says Mark Macarro, chairman of the Pechanga Band of Luseno Indians e in California.
Added Ernie Stevens Jr., chairman of the National Indian Gaming Association: “We’re still trying to negotiate with folks who don’t understand what a good tradeoff is.”
Macarro said it’s important that gambling creates a revenue stream for cultural and sacred sight protection.
He says the tribe had a 2,000-year-old live oak endangered by a power line about 15 years ago. Another time a mining company was going to build a pit near a cultural site.
“We were able to get that mine to go away, and the powerline was moved to more than 200 feet away from the tree,” Macarro says. “Those two things would not have been possible without Indian gaming.”
The future may include sports betting, fantasy sports, internet gaming and social gaming, but Macarro says, “In terms of what we’re doing, we need to protect our brick and mortar. Everything flows from that.”
But he also cites population stats, declaring that the U.S. has 78 million Baby Boomers, 69 million Gen Xers but 100 million Millennials.
“So knowing when the shift happens is going to be critical, and we need to be ready for that,” he says. ♦
Indian Gaming Facts
In calendar year 2015, there were 242 Native American tribes operating nearly 357,000 gaming machines and nearly 7,700 table games in 494 gaming facilities across 28 states.
Gaming revenue at Indian gaming facilities nationwide grew approximately 5.5 percent in 2015 to an all-time high of approximately $30.5 billion.
2015 was the sixth consecutive year of growth for Indian gaming.
Indian gaming became the largest casino gaming segment, generating 44.3 percent of all U.S. casino gaming revenue in 2015.
The growth rate of non-gaming revenue at Indian gaming facilities (4.5 percent) was strong but slightly less than that of gaming revenue.
There continued to be a wide disparity in the performance of Indian gaming.
Gaming revenue grew in 24 states, including double-digit growth in four states.
However, gaming revenue declined in four states, including a double-digit decline in one state.
The top two states generated approximately 40 percent of total gaming revenue at Indian gaming facilities; the top five states generated about 63 percent; and the top 10 states generated 85 percent.
Indian gaming facilities, including non-gaming operations, directly and indirectly generated approximately $103 billion in output, 770,000 jobs, $35.5 billion in wages, $1.76 billion in direct revenue sharing payments to federal, state, and local governments, and $10.5 billion in federal, state, and local taxes.
Nick Sortal is based in Plantation, Florida and writes for The Miami Herald, CDC Gaming Reports and other publications. Reach him at NickSortal@BellSouth.net.
SOURCE: Alan Meister, Nathan Associates
