by: D. MICHAEL MCBRIDE III
3/9/2008 12:00 AM
Last week, U.S. Reps. Dan Boren and Tom Cole held congressional oversight hearings in Miami, Okla., to investigate the economic impact of proposed federal rules to limit Class II Indian Gaming. The testimony was dramatic. Tribal and local government leaders testified to the tremendous economic advantages Indian gaming has brought to Oklahoma-highlighting how far state-tribal relationships have come in recent years.
Class II gaming has long been present in Oklahoma. Indeed, the success of Class II electronically aided bingo paved the way for the 2004 voter-approved tribal-state compact, allowing additional Class III gaming devices (similar to slot machines).
The compact has worked well, and Oklahoma has received more than $80 million for use in education and increased teacher pay. But, Class III shared revenues are only a small part of the story.
Indian gaming by the numbers
In Oklahoma, 33 tribes have Class III compacts and there are approximately 30,000 Class II gaming devices as of 2006. Oklahoma Indian gaming generated nearly $2.5 billion of tribal government revenue and grew by 25 percent.
Non-Indians and local businesses also benefit. Around 75 percent of all employees of tribal gaming operations are non-Indian and many are female. As the oversight committee heard, for every $100 the tribe generates, an additional $2,500 is pumped into the local community purchases.
Moreover, for every 10 casino jobs created by Indian gaming in Oklahoma, 25 are created in the non-Indian community. Local leaders testified to these benefits. For example, Ottawa County is the country's largest environmental disaster Superfund site and lost 2,000 jobs when the B.F.
Goodrich plant closed in 1986. Things got so bad that a sign on Main Street read, "the last one to leave Miami, turn out the lights." If it were not for area tribes and their entrepreneurial spirit, leaders testified, Miami might not have survived.
No doubt, gaming stirs passion, both for and against. The debate has always involved questions of morality and societal preferences.
But Indian gaming is not "commercial" and is already regulated in ways intended to address societal concerns. Indian tribes, by law, can use gaming revenue only for public purposes. Tribal casinos are not "for-profit"; they use gaming to fund tribal government where taxation is not allowed.
When passing the Indian Gaming Regulatory Act in 1988, Congress encouraged Indian gaming as a means of promoting tribal self-sufficiency and reversing the deplorable socioeconomic conditions of many tribes.
Why then does the federal government want to limit the most effective economic development engine ever promoted by the United States Congress for tribes and their surrounding communities? The National Indian Gaming Commission believes that technology has blurred the lines between Class II and Class III games and wants more stringent rules to limit technologic aids in playing bingo, pulltabs, and other Class II games.
Cole described the commission's rule making as "destructive, highly unjust and deeply troubling," that will "cripple economic development in Indian country."
This dire prediction is supported by the numbers. The commission hired an economist, Dr. Alan Meister, to analyze the impact of the proposed rules on Class II gaming revenues. Although Meister estimates that Oklahoma might increase in its annual Class III "revenue share" from about $54 million to $122 million, tribes could lose more than $2.8 billion and 3,336 jobs will be lost. This loss affects all of us. With Oklahoma containing 59 percent of all Class II games nationwide (and making up 65 percent of gaming devices within Oklahoma tribal casinos), this loss to the Oklahoma economy will be devastating.
Under the proposed rules, almost all of the 22,000 Class II bingo devices in Oklahoma - nearly half of all tribal games - would have to be modified or discontinued.
Large tribes may weather the storm; many have already migrated to Class III devices at their larger casinos. But, it would be devastating for small tribes and rural economies, with their razor-thin margins.
Oklahoma will be disproportionately affected by the proposed rules, which could cost the industry between $1.2 billion and $2.8 billion and wreck a flourishing tourism and recreation industry. People visit, have a good time and leave their dollars here. If the rules take effect, everyone in Oklahoma will hurt. If Indian gaming sneezes, Oklahoma will catch a cold.
D. Michael McBride III, is chairman of the Indian Law & Gaming Practice Group and an attorney with Crowe & Dunlevy, P.C.
Copyright © 2008, World Publishing Co. All rights reserved