Nonprofit, nonpartisan journalism. Supported by readers.


Casino profits give tribal governments a surge of confidence

On Minnesota’s reservations there’s a new will to fight problems that plagued Indians in the pre-casino days.

The Black Bear Hotel and Casino complex at Fond du Lac.
MinnPost photo by Steve Date

Fourth of five installments. You can read the whole series here.

This piece was a struggle. Our first worry was for you, the reader. You could expect to be engaged in our earlier questions of whether casino profits have helped ease poverty on Minnesota’s Indian reservations, whether they have provided more jobs for adults and better educations for kids.

This installment, though, is supposed to explore questions of whether casinos have helped Indian tribes become more self-sufficient with stronger governments.

This is treacherous journalistic territory. In part, it calls for assessing a new spirit rising up on reservations, something one could sense rather than measure: New confidence and the will to fight the many problems that plagued Indians in the pre-casino days.

Karen Diver expressed the spirit during an interview with my colleague Steve Date. She is chairwoman of the Fond du Lac Band of Lake Superior Chippewa. You can see her statement in context in this video:

In short, here’s what she said: “There is so much criticism of tribal communities — maybe some deserved [and] an awful lot that isn’t. But if you’re not willing to give us the credit for what we have done, then I don’t think you deserve the right to give us the crap either. Hey, we haven’t been frittering our resources away!”

Article continues after advertisement

OK. Indians don’t have to sit back and take “the crap” anymore. That’s a profound development.

Still, the very definitions embedded in questions we were asking for this segment are elusive and open to dispute. What does it mean for a tribe to be self-sufficient? How strong is strong enough for a tribal government to move effectively toward self-determination for a new generation of Indians? What are the pitfalls?

Lurking in the background was the fear that we could lose you, the reader, if we strayed into the intricate history and the esoteric legalese of tribal sovereignty. We won’t do that. Instead, we will offer this plain-spoken video summarizing those points:

The need, the law, the vision

Think about it, though. Self-sufficiency and effective self-rule are the keys to everything else, to enabling Minnesota’s Indians to stand strong and pull themselves out of the problems that had plagued tribes for so many generations.

Indeed, Congress took the unusual step of setting these specific goals into law when it passed the Indian Gaming Regulatory Act in 1988.

The vision at the time was that casino gambling could help transform Indian Country, bringing urgently needed jobs, replacing run-down rural hamlets with vibrant towns and fostering hope where despair had been a chronic condition.

In practical terms, the act set up mechanisms for tribes to exercise their right to open casinos without running afoul of state and local gambling prohibitions. Congress went further, though, stating that the law was intended to promote tribal economic development, self-sufficiency and strong tribal governments.

The next year, Minnesota became the first state in the nation to deploy the new mechanisms by forging gaming compacts with its tribes. State leaders were driven by deep concerns for Indian reservations and also for the failing economies in surrounding rural areas. 

So, another way to ask the questions we explore here is to ask whether the intent of Congress and the state of Minnesota has been achieved during the 20 years since the first big casinos opened.

A measure of backbone

OK. Here goes. We didn’t have to look far for an illustration of strengthened tribal backbone. It came in recent court battle between the Fond du Lac Band and the city of Duluth.

Professor David Wilkins
Photo by Leo KimProfessor David Wilkins

To make sure this case serves as a fair indicator of emerging self-sufficiency and sovereignty, I asked Professor David Wilkins of the University of Minnesota’s Department of American Indian Studies. He has written extensively on tribal sovereignty.

“Absolutely,” Wilkins said.

So let’s take a look at it, beginning with the background.

I was working in the Star Tribune’s Duluth bureau back in the early 1980s as a northern Minnesota correspondent. Nearly all of my stories were about severe economic depression gripping the region.

Taconite mines were closing across the Iron Range. Families were dropping their keys on the kitchen counters, leaving their homes to the banks holding the mortgages and saying goodbye to the region for good.

Those who stayed were severely strapped for income. One mother told me she had no money for toilet paper, so she rinsed out rags for the family to use in the bathroom.

The problems poured from the Range into Duluth, driving a frantic search for economic development.

Fond du Lac Resource Management and Tribal Council Building
MinnPost photo by Steve DateThe Fond du Lac Resource Management and Tribal Court building

A winning deal for sovereignty

Indians living on the Fond du Lac reservation just south of Duluth could understand the hardship all too well. Many of their families had gone poor and jobless for generations.

It was by pooling their misery that the desperate city and the long-depressed reservation came up with a scheme for declaring a site on Duluth’s main drag, East Superior Street, to be tribal land where the Fond du Lac band could run one of Minnesota’s first high-stakes bingo halls.

It took some doing in Washington, but in 1986 Fond du Luth opened, adding a blaze of neon to downtown Duluth where too many storefronts had gone dark.

This was historic collaboration, a new chapter for a relationship in which the Indians had been the underdog for generations. The city and the tribe set up a joint commission to manage the operation, and they were to take roughly equal shares of the profits.

Fond du Luth Casino logoThe fancy bingo hall was well positioned to add slot machines and other trappings of a true gambling casino after Congress passed the Indian Gaming Regulatory Act in 1988. But the act also opened legal questions about the original deal for sharing the proceeds. Put simply, it said that tribal governments were to be the sole proprietors of casino operations on reservation land.

In other words, the tribe had gained leverage. And it started pressing the city to change the original terms of the partnership. In 1994, the city accepted a deal under which it would get a smaller share of the casino revenues but still collect close to $6 million each year.

In 2009, though, the tribe stopped paying the city altogether. A new tribal council had examined the old agreements, sought legal and regulatory opinions and concluded that the payments to the city were outright illegal.

The city sued. But the tribe prevailed in U.S. District Court where a judge ruled in late 2011 that the 1994 agreement had violated federal rules. The city was allowed to keep more than $75 million it had collected prior to the ruling, but the tribe would be free to run the casino on its own.

Confidence backed by cash

Related legal skirmishes continue. But for purposes of this story, the key takeaway point is the fact that the tribe gradually stood up to the city, effectively asserting its sovereign power.

New confidence – expressed so boldly by tribal Chairwoman Diver earlier in this article – certainly was a factor.  But casino profits also had given the tribe the money to hire all-important legal muscle, said Wilkins at the U of M.

“In the past, tribes always had to rely on lawyers who were appointed or sanctioned by the Bureau of Indian Affairs, and those lawyers tended to encourage tribes to do whatever the Bureau wanted them to do,” Wilkins said.

Casinos on Minnesota ReservationsThe new empowerment doesn’t stop with lawyers and consultants who are beholden to the tribes rather than to the federal government. Hired legal guns are but one example of tribes asserting themselves like never before in recent history.

“You go back to the fur trade, and you see that some tribes did really well in that market depending on where they were situated in relation to the French and the English,” Wilkins said. “But once the reservation system was put into place, tribes were essentially locked into one particular area. They lost the ability to engage in operations that had sustained them so well throughout history. They became utterly dependent on federal largesse.”

Now, finally, casinos have succeeded where so many other economic development efforts failed on reservations. Of course, that effect has been uneven for the same reason noted elsewhere in this series: Casinos run on tribal lands near metro areas and on busy highways have been more successful than those in remote, rural areas.

In general, though, casinos have enabled many tribes to gain a foothold on solid economic ground, empowering them to plan and to execute their plans with real sovereign authority.

“They’ve been able to create programs, build structures and revitalize various aspects of their communities,” Wilkins said. “They just didn’t have the opportunity to do that before they had casinos – at least, not to the scale to which they are doing it now.”

Flexing new muscle

You see it happening across Minnesota, tribes flexing new muscle in a myriad of ways:

  • Various Indian bands have used hundreds of millions in casino profits to purchase land and wrap it into their reservations, sometimes against opposition from counties and cities that were loath to lose properties in their own tax bases.
  • In June, the Shakopee Mdewakanton Sioux Community effectively blocked a heavily lobbied bid to allow slot machines at Minnesota’s racetracks. The so-called racino proposal posed a competitive threat to the tribe’s Mystic Lake Casino, which is close to the Canterbury Park track. Money was a factor; the tribe agreed to fatten purses at the racetrack by roughly $75 million over 10 years. But Indian gaming advocates also deftly worked state officials to pull the deal together. (See MinnPost’s report here.)
  • Tribes that once begged for public assistance now are donating large sums for causes that reach far beyond their reservations. The Mille Lacs Band of Ojibwe, for example, says it has given more than $4 million since 2006 for educational causes, law enforcement agencies, hospitals, food shelves and other organizations serving a large swath of east central Minnesota.
  • Tribes rank among the largest contributors to political campaigns. According to the Open Secrets website run by the Center For Responsive Politics, the Shakopee Mdewakanton Sioux Community has contributed $345,600 to federal candidates, parties and outside groups during the 2012 campaign cycle. Tribes also spend large sums lobbying government policymakers. The Mille Lacs Band spent $180,000 lobbying in 2012, Open Secrets reported.
  • Thousands of Minnesotans who rarely or never set foot on reservations during pre-casino days now are regular visitors. Indian-run casinos attract some 25 million visitors a year in Minnesota, far more than the draw of state parks.

Putting money to work at home

Meanwhile, almost every Minnesota tribe is plowing casino profits into new amenities on reservations, intended to help make individuals and their communities more self-sufficient.

A good way to see this is to join Steve for a video tour of some of Minnesota’s reservation communities:

Housing needs had been urgent at Fond du Lac reservation with some 250 families on a waiting list for homes. Many of them earned enough to make mortgage payments, but banks weren’t lending on the reservation.

Diver and other tribal leaders negotiated with the mortgage lenders, leveraged tribal funds to cobble together other funding sources, bought land and built modest homes for the neediest families. They housed veterans. They built state-of-the-art assisted-living quarters for senior citizens.

“We are taking care of our own families,” Diver said. “Most tribes have been smart about putting their money where it is doing the most good for their community members and meeting those social needs.”

Arguing the essence of self-sufficiency

One measure of self-sufficiency could be the ability to pay your own way in the world with no outside government assistance. Tribal leaders don’t always see it that way, though.

Putting gaming money where it can do the most good doesn’t necessarily mean paying the full freight for housing and other amenities, they said. Often it means using tribal money as leverage to attract funding from the outside, funding that goes beyond support the federal government owes to tribes as part of its treaty obligations.

For example, when the feds offered stimulus money to help spur recovery from the Great Recession, Fond du Lac was prepared with shovel-ready projects.

Gary Frazer, executive director of the Minnesota Chippewa Tribes, explained the rationale:

“Everybody thinks that, ‘Well, if you are self-sufficient you don’t need government funds anymore.’ That’s not the point,” Frazer said. “The point is to use the government funds like any county, city or municipality. They all use government funds. That does not mean they are not self-sufficient. Self-sufficiency means you are able provide for those on your reservation, and one of the ways to provide for them is to use your sovereignty and seek program funding.”

Wilkins at the University of Minnesota agreed with that logic.

“Corporations get tax incentives and all kind of inducements from federal and state governments to locate to a particular area,” Wilkins said. “States may have a successful year raising taxes. That does not diminish the federal entitlement to a particular state. … Tribes are simply part of that mix. Just because they have a separate gaming operation does not mean they should then lose any federal entitlements. Tribes are absolutely right on that point.”

Diver, tribal chair of Fond du Lac, gave Steve a guided tour of her reservation, highlighting places where gaming revenue has been put to use.  One of the stops was a community housing project that she said was a perfect example of how tribes use gaming money as leverage and blend those dollars with other funding sources to benefit the community.  In this video, she goes into detail about this housing project and how gaming money has enabled them to do a much better job of meeting community needs than when they were completely dependent on government programs.

‘Brown-skinned Donald Trumps’

Wilkins worries, though, about some aspects of stepped-up tribal sovereignty.

“Tribes are acting more and more like corporations,” he said. “They are making decisions that don’t always reflect cultural values and social values.”

For example, he said, some tribes are blocking membership for reasons that are based on “very specious, very questionable arguments.” The practice has pitted cousin against cousin and neighbor against neighbor on and near some reservations.

“That kind of activity never happened on the scale we are seeing now,” Wilkins said.

Shared values and allegiance to community once counted heavily in determining tribal membership. Now it often comes down to blood quotas, DNA evidence and even court battles.

This has been one of the unintended consequences of casino money flowing into reservations – that some tribes now promote exclusion rather an inclusion. And, as pointed out in this video, determining who’s a member of a tribe has a dark side:

To be sure, tribes with lucrative gaming operations must defend their ranks. Otherwise, everyone would be claiming to be Indian and demanding a share of the take.

“People assume that tribes are all wealthy now, all rolling in dough, which is not the case,” Wilkins said. “That’s the latest stereotype out there, that Indians are all rich now because of casinos. That new stereotype doesn’t supplant the pre-existing stereotypes of Indians as wards, Indians as drunkards, as Indians as savages. Those continue to exist, yet we now have this latest stereotype that we are all brown-skinned Donald Trumps.”

So tribes walk a fine line, he said, between guarding their membership rolls and honoring tradition in which an extended family had a spiritual and religious identity at its core, and outsiders who shared the core values were welcomed.

“This is all very, very complicated, and we don’t know how it is going to shake out in the next generation or so,” Wilkins said. “But I’m very concerned when I see what’s beginning to happen in certain communities.  . .. I worry because capitalism is a greedy piece of an enterprise. And tribes, in order to maintain their foothold in the capitalistic game, are sometimes engaging in activities like disenrollment that rarely reflect their historic values and their understanding of how they are related to each other.”

‘What is it that you want from us?’

Yes, indeed, wealth and empowered sovereignty can be heady stuff and loaded with pitfalls too.

But Diver at the Fond du Lac reservation emphasized that tribes have a long way to go.

She is frustrated with critics who envy the new gambling largesse. And she is defensive about outside efforts to take away the tribes’ exclusive right to run casinos in Minnesota.

“What is it that you want from us?” Diver asked. “Do you want us poor and dependent? Or do you want us growing and meeting the needs of our own communities with money that you did not have to give us?”

Still, Diver and every other Indian we interviewed – to a person – echoed Wilkins’ worries over threats to traditional culture and values.

Tribal sovereignty is a complex concept which can be understood through cultural prisms – not economic considerations alone. We’ll examine the cultural piece in the next and final installment of this series.