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Tuesday, December 11, 2012

Economic Diversity in Indian Country: Two Success Stories


Tribal gaming is the most successful, visible, and controversial economic driver in Indian Country. The Indian Gaming Regulatory Act of 1988 was intended to promote the federal policy goals of “tribal economic development, tribal self-sufficiency, and strong tribal government.” Now, 241 tribes out of 565 federally recognized Indian tribes conduct gaming operations, and Indian gaming revenues totaled $26 billion in 2011.

Despite that success, Indian reservations remain the most impoverished communities within the United States. Indian gaming faces inevitable competition from both non-Indian commercial casinos and internet gaming. Tribal economies must diversify, because gaming alone is not enough to bring most tribes out of poverty and bring jobs to Indian Country in the long term. Realizing this, most gaming tribes have implemented diversity initiatives. Here are two success stories in which visionary and committed leaders have diversified and strengthened tribal economies.

The Winnebago Tribe of Nebraska’s experience is a roadmap for other tribes hoping to diversify. The Tribe’s first casino was a success, but competition from non-Indian gaming expansion quickly cut into revenues. In 1994, the Tribe created Ho-Chunk, Inc., a tribally owned corporation. Ho-Chunk now employs 1,400 people in 24 businesses in 10 states and 5 countries in construction, government contracting, green energy, and information technology. Ho-Chunk has grown to $230 million in annual revenue.

Meanwhile, the Tulalip Tribes of Washington have taken full advantage of a prime location 30 minutes north of Seattle on Interstate 5. The Tribes built a successful first casino in 1992, but even then recognized the need for economic diversification. The Tribes invested gaming proceeds in a municipal corporation to build roads, sewers, and a wastewater treatment facility for a business park called Quil Ceda Village. In 1998, Home Depot and Wal-Mart signed on as anchor tenants. Between 2003 and 2008, the Tribes built the 2,000-machine Tulalip Resort Casino, a 100-store outlet mall, a large concert venue, and a 12-story hotel for the casino. Today, Quil Ceda Village businesses, including the casino, generate over $720 million annually and employ 3,600 tribal citizens and area residents.

If one thing is clear from these examples, both Tulalip and Winnebago have benefitted by reinvesting gaming revenue into tribal businesses. Some tribes distribute revenue from gaming or judgments for the tribe via “per capita” cash distributions to help tribal citizens meet their own economic needs and spread the benefits of tribal success directly to tribe members. Other tribes choose to reinvest the revenue to create jobs and tribal programs for their members. While tribal business can reinvest these revenues tax-free, tribal members must pay taxes on distributions. Gaming tribes must balance the immediate needs of poverty-stricken tribal citizens and the need to make long-term investments in their economies.

To learn more about Tulalip and Winnebago, read the full article in the latest edition of Gaming Legal News here.