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Has casino money improved lives on Minnesota’s Indian reservations?

MinnPost’s editors gave video journalist Steve Date and me the summer and fall to search for an answer.

An overhead view of Mystic Lake Casino Resort, which the Shakopee Community opened in 1992.
MinnPost photo by Steve Date

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

Forget Cinderella! Minnesota has a different rags-to-riches story, a legend that took hold 20 years ago when Indians opened the state’s first gambling casinos.

A MinnPost editor heard a variation on the story recently from an architect who’s working on a new mansion south of the Twin Cities. As this version goes, a young Dakota Indian is building a massive Tudor-style house with her share of gambling profits. The house will take its place alongside other luxurious Indian-owned homes in what has quickly become one of Minnesota’s most posh neighborhoods.

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Are the stories broadly true? Did casino gambling propel Indians into enviable wealth or at least into solid middle-class prosperity? Did it give Minnesota’s Indians better lives with more control over their economies and their destinies? Did it restore cultural pride and empower their tribal governments to move effectively toward self-determination for a new generation of Indians?

More than idle curiosity drives the questions. At least 100,000 Indians live in Minnesota, and their status is an important piece of the state’s economic, social and historic fabric. So MinnPost’s editors gave Steve Date and me the summer and fall to search for answers.

Steve’s day job is teaching school in Minneapolis. On the side, though, he’s an independent filmmaker and video journalist. And the best way to introduce Steve along with this project is to show an introductory video:

Steve also is an enrolled member of the White Earth Nation, one of Minnesota’s largest Indian bands. What’s great about working with him on this project is his rare perspective. He’s fascinated by Indian life and culture. But he had never set foot on the White Earth reservation until last summer. In other words, he approaches the subject with keen personal interest but also with some detachment.

What do I bring to the project? History, maybe. As a former northern Minnesota correspondent for the Minneapolis Star Tribune, I covered pre-casino life on Indian reservations for years. Typically the stories were about natives who were proud but sad, desperately poor but stubbornly hopeful.

When you partner with a teacher, you have to do your homework. So I hit the Internet looking for material that might inform our search. I found a wealth of news reports and studies marking the 10-year anniversary of the big casino-opening boom in Minnesota and other states. After that, interest seemed to fade. So we would be pretty much on our own.

We had a lot of ground to cover. Eleven Indian tribes operate 18 casinos scattered across Minnesota. Most of them treat the details of their casino operations as trade secrets. So we weren’t going to find readily available press releases saying how much they have earned and how the earnings were distributed or spent tribe by tribe.

Entrenched poverty

Steve and I started our reporting on the Mille Lacs reservation a couple of hours drive north of the Twin Cities.

Tribal officials had agreed to meet with us in their government center, a modern building designed to reflect east-central Minnesota’s natural, forested areas where the Mille Lac band has lived for some 250 years. As we walked to an upstairs meeting room, I couldn’t help but admire exquisite exhibits of birch-bark crafts and other native art.

Casinos on Minnesota ReservationsFrom what we had seen, the reservation looked prosperous – new schools, roads, stores and a tribal museum overlooking the big lake. I wondered whether the U.S. Census Bureau had messed up here in 1990 when it found that three-fourths of the Indians lived in official poverty.

Could that be accurate, we asked Curt Kalk, the secretary/treasurer of the Mille Lacs Band of Ojibwe.

No, he said. He was pretty certain that the poverty rate must have been even higher. 

“I didn’t know anyone living above the poverty line,” Kalk said.

Kalk is 49 years old. He grew up on the reservation, as did generations of his ancestors who are pictured on his office wall in traditional ceremonial dress.

As recently as 1990, no one on the reservation could afford a decent car, Kalk said, “and you could hear every car coming down the road” because no one could afford mufflers either.

It follows that tires were used, and flats were common.

“I was the sling-shot king because there were old inner tubes everywhere,” Kalk said.

If the Census Bureau understated the poverty on Mille Lacs, it probably wasn’t exaggerating the extreme poverty it reported on Minnesota’s other large reservations. At the Red Lake reservation, residents were so poor that 41 percent of their homes lacked telephones and 5 percent had no indoor plumbing.

Further west on the White Earth reservation, one in five households had no vehicle at all in 1990. Robert Goodwin, the current director of employment and training, told Steve that as recently as the 1960s, most families had neither cars nor running water. During winter months they hauled in water on sleds.

There were only four telephones in the community, Goodwin recalled. His family owned one of the two TV sets, so people gathered at his place to watch boxing on Friday nights.

Such was the sorry state of Indian life in Minnesota.

Casinos open a new era

Even so, hope was stirring in Indian Country, hope based on the promise of casino gambling.

In treaties tribes had negotiated with the United States long ago, Indian nations had ceded land in exchange for pledges that the federal government would provide certain support such as health and welfare services for Indian people.

Tribes hadn’t ceded the right to regulate legal activity on their reservations, including the running of games of chance. States objected. But after a series of court skirmishes, the tribes prevailed. And by the 1980s, leaders – from Congress to the Minnesota statehouse to the reservations – were betting big time that gambling profits could turn around the fortunes of American Indians.

In this video, Kevin Leecy, chairman of the Bois Forte Band of Ojibwe, explains the tribal right to conduct gaming:

In 1992, three Minnesota tribes opened large casinos. Fifteen more casinos quickly followed. And the sad stories of impoverishment gave way to news accounts of eye-popping incomes and gated communities where Indians lived in veritable mansions with luxury vehicles parked in their garages.

The Shakopee Mdewakanton Community was one of the first reservations in Minnesota to open a gaming hall. In this video, Shakopee Tribal Chair Charlie Vig tells how Little Six Bingo Parlor grew into the present day Mystic Lake Casino complex:

The initial spurt of casino income prompted assumptions that Indians finally had found a “new buffalo,” a modern-day source of wealth and sustenance which could spur renewed economic and cultural vitality. The Federal Reserve Bank of Minneapolis explored that assumption in 2003.

Indeed, there were initial success stories on reservations like Mille Lacs.

“Between 1989 and 1999, despite a huge influx in population – drawn in part by the prospect of new casino jobs – per capita income (adjusted for inflation) increased 322 percent for Mille Lacs reservation inhabitants,” the Minneapolis Fed reported. “Median household income was up 213 percent to $30,422. … The proportion of reservation children below federal poverty levels declined 67 percent. Unemployment rates went up 7 percentage points, but that’s largely because both labor force size and participation increased dramatically.”

What was true at Mille Lacs during that first decade of casino operations was true to varying degrees for all the tribes that had opened casinos.

“All reservations showed increases in population and income, as well as decreases in unemployment and poverty, but reservations with higher levels of per capita casino revenue showed far greater changes,” said the Minneapolis Fed report.

White Earth Community College
MinnPost photo by Steve DateFor White Earth, the Shooting Star Casino is big enough to turn modest profits and invest in community amenities like schools and health clinics.

Cash cow

If casinos were a “new buffalo” at Mille Lacs, they were giant cash cows for Indians holding reservation land in and near the greater Twin Cities metro area. Those reservations gave rise to the stories about overnight millionaires.

The newly wealthy were members of Dakota bands. Their ranks were so small that Census data about them would be useless to us. The margins of error on estimates of income, poverty and employment are just too big.

Adding to the challenge, those Dakota bands closely guard their incomes and information about how casino profits are shared with members. Leaders of the Shakopee Mdewakanton Sioux Community don’t even disclose membership numbers. Steve asked, and he was politely informed such subjects weren’t open for discussion.

We found some hints, though, on the website of the Shakopee Community, which owns and operates Mystic Lake Casino Resort and nearby Little Six Casino. It controls the only Minnesota Indian reservation located within the seven-county metropolitan area.

In the 1950s and 1960s, the Dakota families living near Prior Lake were so poor that they “fought hard to make ends meet and to put food on the table,” the site says. After years of negotiations, the U.S. Bureau of Indian Affairs agreed in 1969 to officially recognize their small community as a legitimate Indian tribe. Still, life was a struggle.

“During the early 1970s, Community members depended on food subsidies,” the website says. “Low paying jobs were still the norm.”

In this video, Tribal Chairman Vig describes what his community was like in the ‘70s and ‘80s, before gaming arrived:

While the Little Six Bingo Palace signalled a turnaround in 1982, the cash truly began to flow a decade later with the opening of Mystic Lake Casino. The website says that the impact was “incredible and immediate.”

Incredible, indeed. The Shakopee Community never has disclosed the precise amount of its casino take, but the Star Tribune gathered enough information from individual members and court files to report in 2005 that adult members of Shakopee each had “received roughly $1 million a year.”

The Community also acquired enough land to expand its reservation – originally 250 acres in the 1880s – to more than 3,300 acres. To name just a few amenities, it built community centers, hotels, roads, a golf course, a sewer and water system and a Mystic Lake retail store at the Mall of America. The Community also has donated tens of millions of dollars to other Indian tribes and to various causes.

Members of the Prairie Island Mdewakanton Dakota Tribe own another large casino near the metro area, Treasure Island Resort & Casino just south of Hastings. They also received substantial profit-sharing payments, the Star Tribune reported.

The other side of the story

So there was some basis to the Cinderella story. But we found another side of the story with a far different narrative.

By starting at Mille Lacs, Steve and I had started somewhere near the middle of the state and also the middle of the story of casinos in Minnesota. The Mille Lacs reservation is near the northern reaches of the Twin Cities and the I-35 corridor. There and at the Fond du Lac reservation near Duluth, the casino gains have been solid and real but not as dramatic as for the Dakota tribes.

Meanwhile, the vast majority of Minnesota Indians belonged to tribes controlling remote reservations in sparsely populated northern areas where casino profits were helpful but modest.

The White Earth Nation claims some 20,000 members. Further east, the Red Lake and Leech Lake bands of Ojibwe claim 9,300 and 8,900 members respectively.  

Census data and published reports suggest that the Shakopee Community has between 250 and 500 members. The Prairie Island tribe counts its membership at about 800.

Terry Tibbetts told Steve the story from the perspective of the White Earth Nation in far northwestern Minnesota. White Earth operates the Shooting Star Casino, Hotel and Event Center in Mahnomen (population 1,223). Tibbetts sits on the White Earth Tribal Council.

The best way to catch this version of the story is to hear Tibbetts tell it in this video:

Here’s a summary in Tibbetts’s words:

“The big myth out there in Indian country is you look at Shakopee Mdewakanton. … where they distribute up around three quarters of a million to almost a million dollars per person.  … But they got the luxury of being in the Twin Cities metro area where they are busy, busy, busy.

“We’re rural,” Tibbetts continued. “We are probably 70 miles from the nearest big town – which we call a big town… Bemidji or Detroit Lakes. So our casino is as big as its ever going to get. … We’ve got to make do with what we’ve got.”

For White Earth and other big reservations up north, “as big as we’re ever going to get” means big enough to turn modest profits and invest in community amenities like schools and health clinics – maybe, even, hand out holiday turkeys.

But members of White Earth, the state’s largest band, do not get per-capita profit-sharing payments. The same is true on the other largest Northern Minnesota reservations. Some bands closer to the Twin Cities will not say how much members are paid. 

In East Central Minnesota, Mille Lacs members are paid $900 a month. And at Fond du Lac, band members get $400 a month from casino operations in Duluth and along I-35. That’s enough to make payments on a reliable used vehicle that could get you to work or to school, but certainly not enough to build a fancy house or buy a BMW.

Tribal chairwoman Karen Diver explains Fond du Lac’s per-capita payments in this video:

By several measures the state’s largest bands still struggle.

Nearly 40 percent of the Indians at the Leech Lake and Red Lake reservations continue to live in poverty, according to Census data collected between 2006 and 2010. Even for the relatively well to do Mille Lacs members, the poverty rate hovers above 30 percent.

Further, the latest Census data suggest that initial economic gains may have eroded after the year 2000. Median incomes have fallen and poverty rates deepened on the state’s largest reservations – Leech Lake, Red Lake and White Earth – headquarters for nearly 35,000 tribal members.

Even given enormous prosperity on some reservations, gains from 20 years of casino gambling have not brought Minnesota’s overall Indian population to the economic levels of the state as a whole. Household incomes on reservations remain significantly lower than the U.S. and Minnesota averages, unemployment rates higher than average, and housing conditions worse than those for the average American.

For all Minnesotans, the median household income over the five years ending in 2010 was $57,243, according to the Census Bureau’s American Community Survey. For Indians on reservations it was $31,033. During the same period, 10.6 percent of all Minnesotans lived in poverty compared with 36.6 percent of Indians on reservations.

Income and poverty on Minnesota’s largest reservations

Income and poverty on Minnesota's largest reservations
Source: U.S. Census Bureau and Minnesota State Demographic CenterThe data available for the Dakota tribes operating large casinos near the Twin Cities don’t appear here. Because the tribes are so small, the margins of error for those factors are too large to be reliable.

Pool the profits?

One idea we heard often from non-Indians calls for rich tribes to share a portion of their casino take with those not so well positioned geographically, thereby evening out the casino benefits across the state.

Knowing something about tribal identity and politics, Steve and I had dismissed that idea. Talk to Minnesota Indians, and you learn that they come from separate sovereign units, each with its own identity, history and political reality. While they collaborate on some endeavors and many leaders go out of their way to hire members of other tribes when they can, they also compete with one another.

Still, we heard the question often enough to decide we should ask it of tribal officials.

Here’s the response Steve heard from Diver, the chairwoman at Fond du Lac: “The idea of communal wealth certainly doesn’t hold true for the United States now does it? If Wisconsin is having a budget deficit, they don’t necessarily ask Minnesota to chip in. So this egalitarian myth that people tend to want to impose on Indian nations really undervalues the … reality of each of the tribal nations here being independent and sovereign in their own right. Their primary obligation (is) to serve their own community members.”

So there!

Diver had more to say on the question, and you can catch it here:

Diver’s response reminds us how silly it can be to settle for easy answers to questions about the complex impact of casinos on Indian life.

Clearly, poverty rates alone are not going to tell this story. We have more questions now than when we started. Have casinos at least led to more jobs for Indians? More diplomas? More independence and pride?

We’ll chase those and other questions in the next installments of this report.