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To The Tribes: What's a Gambling Monopoly Really Worth?

Category: Gambling
Posted: 11/20/11 17:47

by Dave Mindeman

There is a persistent theme developing that mixes public policy with the public perception of jobs in every way possible.

The GOP has consistently linked tax increases to job losses. Convincing us that any higher tax to business will immediately result in job losses. This idea continues despite empirical evidence to the contrary. The current business admission has been that they are sitting on piles of cash which has not led to any changes in job creation.....and one would have to assume that more tax cutting would only increase the piles.

This jobs/policy mix has been adopted by others as well. After all, it does get attention in a job starved economy. The Tribal Gaming Lobby has figured this out....

Minnesota?s 18 Indian casinos employ more than 20,000 people, making it one of the largest industries in the state. But casino operators say expanding non-Indian gaming to help pay for a Minnesota Vikings stadium means casino job cuts of 30 percent. ?7,000 people could lose their jobs over this,? said John McCarthy, the head of the Minnesota Indian Gaming Association.

The Tribal lobby has been effective with this approach. But there are several areas of argument that they leave out....

1) Tribal gaming has had racino and pull tab competition (in limited form) for quite some time. I don't think there is much evidence that these have had much direct impact on the ups and downs of their gambling revenue. What the expansion of these areas might do to tribal revenues is really an unknown, but to automatically assume it will be negative to the point of layoffs is a fair stretch. Especially when expansion would probably create new jobs to minimize that impact.

2) The whole idea behind gambling expansion is to increase state revenues without raising taxes. The Tribal gaming casinos pay no revenue to the state while the methods of gambling expansion will. And although it is granted that jobs in tribal gaming do pay income and sales taxes in regards to their societal integration, the gambling expansion jobs would do the same. It is just that expansion would have the added benefit of direct state revenue.

The larger issue here is that the Tribal Gaming community could make all of this a moot point. They really have the power to make all of this go away by voluntarily discussing a limited renegotiation of the gambling contract.

If the tribes want to maintain a monopoly, then the question becomes, "how much is it worth to them?"

If they would be willing to give a certain percentage of the proceeds directly to the state, then state investment in competition gambling might be negotiable as to scope and even existence.

When these original contracts were negotiated, the Tribes got very favorable terms. Those terms have been in place for decades. And the Tribes are certainly entitled to do what is necessary to keep their monopoly...including legal action. But wouldn't it be more beneficial to all concerned if the Tribes shared some of their state protected profits with the state....in return for additional assurances on that protection?

Before everybody spends significant dollars on lobbying to take sides on the issue, why doesn't everybody consider a solution that might benefit everybody......without a public policy fight?

Just asking.
comments (2) permalink
11/21/11 12:02
When the agreement was made with Gov. Perpich, it was the first of its kind. The terms were extremely bent toward the Indian tribe position; and at the time it did not seem unreasonable. Other states that followed managed to get a return on the contract which helped to pay for gambling abuse issues, etc. I am not objecting to the tribal contract -- I just expected that the money involved would really improve all of the Indian people's lives, not just become profitable for a few. The northern tribes which did not move into gambling are having the same poverty issues they had before. The Tribes that have profited have not done much about alleviating that poverty for their fellows.
As for gambling expansion, the Tribal casinos will always have the edge over pull tabs or racino. They are different venues entirely and attract different clientele. The state needs revenue and gambling is an option. If the Tribes object and want to stop it, then they could save their lobbying money and simply do some additional negotiation on the contract. If you think changes to the contract is extortion, then I would say your view is not grasping the larger pictue.
11/21/11 09:58
Your suggestion that the tribes "voluntarily" pay the state to make the threat of competition go away is an endorsement of extortion. Your belief that significant expansion won't hurt tribal operations is naive and illogical. In a mature gaming market, any major expansion will take business away from existing operations. Moreover, once states get a taste of gambling money, they always demand more, so expansion will continue. Ultimately, as history has shown us, the white guys will have destroyed the only sustenance Indian tribes had. What a progressive position you have taken. Not.



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