The Native American heritage is centuries old and built upon a foundation of self-sufficiency and service to community. The above paraphrasing of the Dakota Tribe proverb, “We shall be known forever by the tracks we leave” summarises this commitment to creating security and prosperity for future generations.
Like so many businesses across the world, the Native American gaming industry was hit hard by the Covid-19 pandemic. Casinos around the globe had their doors closed and, in the case of the Native Americans, this principal source of essential revenue temporarily dried up.
Having largely weathered this most dreadful storm¸ tribal leaders quickly concluded that this dependence on land-based gaming needed to be supplemented by more diverse business activities and that continuing to be a ‘one-trick-pony’ would not secure future generations.
As Rodney Butler, Chairman of the Mashantucket Pequot Tribal Nation, owners of the celebrated Foxwoods Resort Casino, so succinctly puts it: “The fact that the casino revenues went from millions to zero overnight just fully reiterated the need for diverse revenue streams.”
The story behind the story
The Native American gaming industry is made up of casinos, bingo halls and other gambling operations that operate on designated Indian reservations and other tribal lands in the US. These areas have tribal sovereignty, and the federal government has limited powers to forbid gambling in these territories. There are currently around 460 Native American gambling operations, run by 240 tribes.
A Supreme Court judgement in the 1970s ruled that states do not have the authority to regulate Native activities on their reservations, and it was not long before bingo operations began appearing in tribal locations around the country.
Naturally, this remained a delicate political and legal issue, with concerns surrounding organised crime. However, in 1992, a Department of Justice report concluded that there was no link between criminal activity in Native gaming and organised crime.
In 1988, the Indian Gaming Regulatory Act (IGRA) maintained tribal sovereignty over the creation of casinos, with the states and Natives required to form ‘compacts’ (negotiated political agreements), with the federal government retaining overall power over gaming regulation. States have used the compacts to impose some taxation on reservations, but the tribes still have the right to operates all classes of gaming accepted by the state in which they are located.
Following IGRA, the National Indian Gaming Commission was created as a federal agency, with responsibility for regulating high-stakes Native gaming.
Three classes of Native American gaming
Class I Gaming is traditional Indian gaming and social gaming for small prizes. It is entirely regulated by the tribes and not subject to IGRA requirements.
Class II Gaming is basically bingo, including electronic, computer or other forms of technology. Games such as pull-tabs, punch boards and instant bingo, together with non-banker card games (P2P as opposed to against the house) are also covered by Class II.
Provided the games are permitted in the relevant state, the tribes conduct, license and regulate Class II in accordance with gaming ordinance approved by the National Indian Gaming Commission (NIGC).
Class III Gaming basically covers all forms that are neither Class I nor Class II. Casino table games and slots are all Class III games, as are betting and wagering games and electronic facsimiles of any game of chance.
The NIGC holds certain powers over Class II and Class III gaming, including budget approval, civil fines, fees, subpoenas and permanent orders. In the case of Class III gaming, all contracts must be approved by the Chairman of the NIGC.
A market with monumental impact
The magnitude of the Native American gaming market, and its impact on its own communities, can never be understated. Over many years, casinos and bingo halls on the reservations have created thousands of jobs and generated the funding for housing, education, medical services and countless other benefits. The reality is that overall, the gambling industry has greatly benefitted Native American communities.
In terms of it impact on the wider gaming industry, consider Foxwoods. Located in Ledyard, Connecticut, the resort occupies an area of nine million square feet (840,000sqm) and includes six casinos, with 250 gaming tables and over 5,500 slot machines, several restaurants and approaching 3,000 hotel bedrooms. Prior to the opening of the Venetian Macau, this Native American operation in rural Connecticut was the largest casino complex in the world.
Land-based business diversification
Several of the tribes have expanded their non-gambling business operations to include construction, logistics, real estate, healthcare and various other interests. For example, the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians in Michigan, have announced a 25-year plan to develop hundreds of acres of land near its casino, building housing, retail, manufacturing and a new hotel. And also in Michigan, a company owned by the Little River Band of Ottawa Indians, also in Michigan, is selling burger franchises to other tribes, having gone into partnership with the national burger chain, Wahlburgers, established by celebrity brothers Mark, Donnie and Paul Wahlberg.
And one final example is Command Holdings, the non-gambling business of Foxwoods owners, the Mashantucket Pequots. In 2022, the company acquired WWC Global, a Florida-based management consultancy that works with federal agencies, including the defence and state departments and was recently awarded a $37.5m contract supporting the federal Cybersecurity & Infrastructure Security Agency.
The long-term objective for the Mashantuckets is that non-gambling activity can form 50-80% of the tribe’s business portfolio, thereby providing the stability and certainty required should another significantly challenging scenario arise.
Houses, haulage and hackers, plus burgers with the not-so-new kids on the block… the tribes have clearly taken to diversification like ducks to water!
The immense online opportunity
Even prior to the pandemic, a number of tribal casino operators had understood which way the winds were blowing in terms of federal and state relaxation of gambling regulations, and the inevitable rise of the online betting and gaming sectors. They also acknowledged that if they did not act, then the competitive pressures that these new genres would exert on their traditional land-based activities would be considerable.
New generations of players and gamblers were emerging, young adults who had grown up with computers, PC gaming, internet access and, more recently, personal mobile devices. The ubiquitous nature of these new platforms, plus their immediacy and privacy, made it inevitable that their popularity would grow rapidly, and that a significant proportion of this new generation may find the notion of traveling to a very public land-based location somewhat less attractive.
Getting a piece of this new action was barely up for debate, it was essential. And the partnerships that are now being formed on an almost weekly basis between Native American casino operators and proven partners within the online betting and gaming business will prove invaluable going forwards.
This too is a form of diversification, common across the traditional gaming industry and, as the accelerated growth of all online concepts brought on by the pandemic, one that is largely immune to such events.
As US laws continue to relax, and more states open up, the establishment of strong sports betting and online gaming partnerships and activities should be come a cornerstone of Native American economies long into the future.
Land-based casino expansion and diversification
In addition to the online opportunities, tribes are even looking at expanding their land-based gaming activities, rather than scaling back. The recent announcement that the Mohegan Tribe in Connecticut is a member of a group attempting to secure a New York City license to build a casino in Manhattan’s East Side is a positive and proactive sign, as is the Chickasaw Nation of Oklahoma’s involvement in the proposed project at Coney Island, as outlined elsewhere in this issue.
The fact of the matter is that gambling has evolved over recent decades to become the dominant contributor to tribal economies. In 2021, the tribal gaming GGR was a record-breaking $39bn according to NIGA. Any threat to such revenues, and the services they fund, is a threat to the people themselves.
Having endured the pandemic, described by VP of Native American Gaming & Finance at PNC Bank, Patrick Davison, as “a real eye-opener for tribes,” leaders and officials are now committed to looking at the greater security that comes with diversification and ensuring that this generation of Native Americans is indeed known for the tracks that it leaves.
