Professors Rand and Light Featured in Article on Tribal Gaming

HIGH-ROLLING ACADEMICS: UND professors study Indian gaming

by Chuck Haga, Grand Forks Herald
Published Sunday, January 18, 2009

They aren’t economists — one teaches law, the other political science — but two UND professors have claimed a promising niche in a still-expanding market: Indian gaming.

Kathryn Rand, professor and soon to be acting dean of UND’s Law School, and Steven Light, associate professor of political science, saw their academic interests intersect in 1996 when she was clerking for a federal judge in Milwaukee and he was finishing a degree at Northwestern University.

They were looking for a research project to collaborate on when Rand’s judge took on a case involving the relatively new Indian Tribal Gaming Regulatory Act. Specifically, the case concerned a dispute over tribal membership — and rights to gaming revenues — in a Wisconsin tribe.

In the years since, they have published three books on Indian gaming law and policy, testified before Congress and guided reporters from national news outlets through the fog of tribal sovereignty and the intricacies of tribal-state gaming compacts.

In 2002, they founded UND’s Institute for the Study of Tribal Gaming Law and Policy, the first of its kind in the country.

For the two academics, it’s been a good bet.

“This was a $26 billion industry last year,” Light said. “It has tripled in the past decade.”

But as the national economy continues to stumble, that growth “is probably going to reach a point where it flattens out,” he said. “People just don’t have the entertainment dollars to spend, so there’s a slowdown in new construction, and financing is drying up. “This was a $26 billion industry last year,” Light said. “It has tripled in the past decade.”

But as the national economy continues to stumble, that growth “is probably going to reach a point where it flattens out,” he said. “People just don’t have the entertainment dollars to spend, so there’s a slowdown in new construction, and financing is drying up.

“For the first time, tribes are laying off people and cutting hours. And those laid-off workers are not likely to find new jobs in rural areas, where most Indian casinos are.”

Revenue sharing

But because of a good regional farm economy and, in North Dakota, ripple effects of the oil boom, “people here still have discretionary money,” Rand said. “And Indian gaming in this part of the country is on a relatively modest scale. They’re not counting on people flying in from all over,” so the risks of over-extension are less.

Also, “with their economic problems, states may be more inclined now to see tribal gaming as a win-win proposition,” she said. Florida, California and other cash-strapped states are pushing new arrangements for direct revenue sharing from tribes and payments in lieu of property taxes (reservation land is exempt) to local governments.

The states and local entities “are more likely to see (gaming) as something that could have a positive impact not just on the tribal communities but on the larger community as well,” Rand said, “through jobs, tax revenue, tourism and all the indirect effects.”

Also boding well for the future of Indian gaming: The Obama administration is likely to be friendlier than the Bush administration, Rand and Light said.

“And the public’s attitude toward legalized gambling has shifted so dramatically,” Rand said. “Where before it was generally seen as a vice or outright sin, it’s now widely seen as an acceptable form of entertainment, not that much different from going to the movies. People are less distrustful of Indian casinos. They’ve seen that they’re fair, well-regulated. And they get a good deal at the buffet.”

Tribes’ biggest nightmare, Light said, is federal law changing to allow non-Indian interests, including the states, to grab a bigger share of the gaming industry. That’s unlikely in the foreseeable future, he said, because tribes have banded together to lobby effectively in Washington and at state legislatures.

Some expansion, like the idea floated in recent years for a casino in or near Grand Forks operated by the Turtle Mountain Band of Chippewa, faces hurdles at the local, state and federal levels. The Interior Department rejected the band’s application last January, saying it was incomplete. But while “it may be dead now, it might not be dead forever,” Rand said.

In the long run, “I’d bet on the continued growth of Indian gaming,” she said.

More diversity

Light said he expects tribes to do more to assess and deal with problems of compulsive gamblers at their casinos. “They’re more sensitive to the problem because they’re already dealing with social problems on their reservations and don’t want to add to those,” he said.

Diversification of tribal economies also will continue, the professors agree, and that priority is reflected in one of the region’s latest gambling expansion projects.

With a $31 million loan from the Shakopee Mdewakanton Sioux Community south of the Twin Cities, the Red Lake Band of Chippewa is building a new casino at the southern edge of the reservation. It will replace a small gambling hall in Red Lake that originally was a family-oriented community center and will be restored to that purpose.

The project also will give Red Lake its first hotel and an upscale restaurant, and planners hope to add a golf course and powwow grounds. Tribal leaders hope the amenities will nurture broader development on the reservation

The Red Lake Nation also has casinos in Thief River Falls and Warroad, Minn., and claimed a combined net income of almost $6 million in its latest annual report.

The new project won broad acceptance from band members in part “because it’s not all centered on gaming,” Tribal Chairman Floyd “Buck” Jourdain said. Also, the band’s cultural committee had a role in giving the new casino a traditional Ojibwe “long house” design.

The Shakopee Mdewakanton Sioux, operators of the hugely profitable Mystic Lake Casino south of the Twin Cities, have given $1 million toward a Boys and Girls Club at Red Lake and $1 million to help revive the band’s fishing industry. The $31 million for the new casino and other projects is a loan, but it was offered under terms “a little more lenient” than would be available from other lending sources, Jourdain said.

Light said the Shakopee tribe “is at the high end of what we call the spectrum of success in Indian gaming” and has become a leader in charitable giving, with much of that going to less prosperous tribes.

“They provided a loan and grant to the Rosebud Sioux in South Dakota for a tribally owned grocery store, and they made a large loan to the Oglala Sioux in 2004 for a casino expansion,” he said. So, the Red Lake loan “is not unprecedented, though it would seem pretty risky to sink that much money into a new casino at a time of such economic uncertainty.”

Gambling on amenities

As gaming revenue overall has flattened in recent years, growth has slowed in Indian gaming revenue, too. While it continues to outpace commercial and charitable gaming, it has fallen from 15 percent growth in 2006 to 10 percent in 2007 and 5 percent last year, Light said. Some casinos have been forced to cut hours and staff.

But the Red Lake expansion project probably isn’t as big a gamble as it might seem, Light said, because of the emphasis on nongambling amenities and the move closer to Bemidji — even if it’s just by a few miles.

“Every new casino is increasingly dependent on nongaming revenues,” he said. “The tribal casinos that are still doing well are those that have those amenities and are close to urban areas.”

The Red Lake project is considerably smaller but in spirit resembles other recent projects at Minnesota Indian gaming sites. A $120 million expansion at Black Bear Casino at Carlton, Minn., included a 240-room hotel, steakhouse and convention center. A new Island Event and Convention Center at Treasure Island Resort and Casino near Red Wing boasts a 3,000-seat showroom that can compete with other big-time entertainment venues in the region.

“Anyone who has been to Las Vegas recently knows that the trend is to upscaling,” Light said. With Red Lake’s new 40-suite hotel, upscale restaurant and plans for a golf course, “the band is exactly tracking what’s happening in Las Vegas.”

Reach Haga at (701) 780-1102; (800) 477-6572, ext. 102; or send e-mail to chaga@gfherald.com.