Measuring the Effects of Tribal Gaming in the United States

Written By Robert DellaFave on June 24, 2014
United States Indian casinos infographic

Thirteen of California’s most powerful tribes find themselves locked in a power struggle over the language of the state’s proposed iPoker legislation. Their influence is arguably the single biggest driving factor behind which gaming operators will be included if/when the industry goes live, who will be left out in the cold and how those lucky enough to be accepted must conduct their affairs.

Hard to believe that only 27 years ago these same tribes would have had absolutely no say whatsoever.

But as recently reminded us via an infographic (found below), times have changed, and today Indian gaming is as much a part of American culture as baseball and apple pie.

A brief history lesson

From the mid-19th century until the 1970’s most Indian Reservations were stricken with high poverty rates, little economic opportunity and government dependency – largely due to the placement of most reservations in undesirable areas.

It wouldn’t be until the 70’s that tribes in California and Florida decided to do something to facilitate the growth of their stagnating economies. The plan: open a few bingo parlors. Little did they know what would happen next.

Tribes in other states soon caught wind of the happenings in CA and Florida and would soon introduce bingo parlors of their own. In fact, the industry grew so fast that commercial casino operators began complaining that the tribes were siphoning patrons, and subsequently revenues, away from their commercial casinos.

In the 1980s, state governments began fighting for the right to tax Indian operated bingo parlors, also arguing that the industry needed to be regulated by government. Naturally, some tribes saw government intervention as a threat to their sovereignty. Tensions rose.

By 1988, the Federal Government would feel compelled to step in, ultimately resulting in the passage of the Indian Gaming Regulatory Act (IRGA) in 1988.

To summarize, the IGRA segmented gambling into three classes and authorized the establishment of the National Indian Gaming Commission. As a provision, in order to run Class III gaming operations – which included slot machines, and banked games – the tribe must negotiate a compact with the state.

Furthermore, the Federal Government would recognize Indian self-sufficiency and only step in when criminal activities or unfair treatment towards players are suspected. It is also the job of government to ensure that tribal gaming revenues are used towards the betterment of the tribe.

Since the IGRA’s establishment, Indian gaming has expanded at an unprecedented pace, ballooning from a $100 million niche in 1988 to a nearly $28 billion a year industry by 2012.

But in the three states that have legalized Internet poker, Indian tribes are either not present or have little influence over operations. With Pennsylvania and California set to enter the mix, that’s about to change.

Highlights of Calvin Ayre infographic

  • Indian gaming accounted for 43 percent of all gaming revenue in the United States in 2012, only 4 percent less than commercial casinos. That equates to $27.9 billion out of the $66.3 billion generated by the nation’s gambling facilities .
  • Tribal gaming is prevalent in 30 states, and of the 20 of where it is not, 16 of those do not inhabit federally recognized tribes. Only Utah, Missouri, Massachusetts and Rhode Island prohibit Native American gaming.
  • 240 out of the 566 federally recognized tribes operate one or more gaming venues. There are currently 460 Native American owned and operated casinos, bingo parlors and other gambling halls in the US.
  • Indian casinos generate $91 billion in non-gaming related activities, or nearly 3.3 times that what they do from gaming alone.
  • In 2012, Indian tribes forwent $12.3 billion of their revenue to federal, state and local governments.
  • Tribal gaming accounted for 679,000 jobs and $30 billion in paid wages.

Tribal Gaming in the US

This Infographic is brought to you by

Predicting the impact of regulated online poker on CA’s tribal gaming industry

There is no denying the influence of tribal factions in California. Card rooms are limited to spreading player-banked games, effectively ruling out slot machines, craps, roulette and traditional forms of blackjack and other table games. Conversely, tribal casinos in the state can host just about any gambling game they please.

But with regards to online poker, the tribes ability to feature more game variants may prove to be a detriment.

To elaborate: because cardrooms like the Commerce and the Bicycle are restricted in what games they can host, they’ve based their reputation almost exclusively on the most popular non-house banked game of them all – poker.

Take the Commerce for example. At 240 tables, it houses the largest poker room in the  world. Not only that, poker players at the Commerce are treated like royalty. And with the construction of the Crowne Suite Hotel in 2001, the one drawback to visiting the Commerce from out-of-town has all but been eradicated.

So I ask you this, should the Morongo Band of Mission Indians get its way, and PokerStars is permitted reentry into the US, who benefits from the cross-promotional opportunities afforded by a partnership more: The Commerce, which already hosts one of the most popular stops on the WPT and is the second home of a myriad of recognizable pros, or the Morongo, who’s only casino touts a generally half-filled 22 table poker room?

The answer seems clear.

Granted, tribes like the Pechanga boast formidable live poker arenas, but in the end, it’s the cardrooms that likely benefit the most from online poker, not the tribes.

Then again, PokerStars could always just build a new branded poker room at the Morongo like they plan to do at Resorts in New Jersey, and my theory flies right out the window.

In either case, the mere fact that tribal factions in California are essentially in control of the state’s iGaming fate speaks volumes to how far they’ve come since their days of impoverishment and economic hardship.

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Robert DellaFave

Robert DellaFave writes for a variety of online gaming sites and is also working on programming a poker simulation creative enough to beat the best. Follow Robert on Twitter @DivergentGames and on Google+

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