Gamblers looking for the biggest casino in the United States need directions not to Las Vegas but to Foxwoods Resort Casino in southeastern Connecticut, midway between Boston and New York City. And the owner of the 6.7 million-square-foot facility — bigger than the Pentagon — is not any of the big names associated with Las Vegas like Harrah's or Caesar's but the Mashantucket Pequot Tribal Nation, a federally recognized Indian tribe with fewer than 1,000 members.
Native American tribes own almost as many casinos in the United States — 459 — as do private companies, which have 492, counting horse track locations. Tribal casino revenues totaled $26.7 billion in 2011, compared to $35.6 billion for commercial casinos. The décor may be different — more Native Americana at tribal facilities — and the locations more out of the way. But the slots and the games are much the same. And, just like the states, Indian tribes have one overriding reason for promoting gambling on tribal lands: money.
Gambling “gives [tribes] enough money to employ people on the reservation, to generate economic activity on the reservation,” says Jason Giles, executive director of the National Indian Gaming Association, in Washington. “That's the primary goal of having a gaming operation.”
“Gambling has usually been pushed and legalized insofar as it can be relevant to developing government resources,” says Kevin Washburn, a gaming-law expert and dean of the University of New Mexico Law School in Albuquerque. “It's similar for tribes. They've built hospitals, roads and schools and increased the level of government services generally.”
Indian gaming has been controversial from the beginning of its modern era in the 1980s, when the U.S. Supreme Court rebuffed an effort by state and local authorities to restrict bingo games at Indian reservations in Riverside County, Calif. The court's 6-3 decision in California v. Cabazon Band (1987) relied on the federal interest in promoting tribal self-sufficiency to hold that states cannot regulate Indian gaming except as permitted by federal law. Congress responded the next year by passing the Indian Gaming Regulatory Act, which protects tribes' right to allow gambling subject to compacts to be negotiated in good faith with state governments.
Today, 247 tribes — not quite half of the 554 recognized tribes — operate gaming facilities in 29 states. Some are near population centers such as those in California, Connecticut, Florida and Oklahoma; others are more remote, like those in Alaska or Montana. Overall revenues have been steady, according to Giles, despite the 2008 recession and slow recovery since. But the overall figure obscures significant disparities. Forty of the casinos account for more than three-fourths of the revenue, he says, while “the vast majority” of tribes get no revenue from their gaming. “There are haves and have-nots in tribal gaming,” Washburn says.
Relations with state governments remain critical and contentious. In Florida, the Seminole Tribe charged the state government in the 1990s with bad faith in negotiations over a gaming compact; the Supreme Court blocked the suit in a 1996 decision. Only in 2010 did the Seminoles and the state finally reach agreement on allowing full casino operations. The compact includes a provision — as in most of the state-tribal agreements — for the tribe to share revenue with the state government.
Bigger than the Pentagon, the Foxwoods Resort Casino in Connecticut, owned by the tiny Mashantucket Pequot Tribe, is the nation's largest casino. (Felix Stein)
Until recently, the Pequots were definitely in the “have” category. Foxwoods has produced billions of dollars in revenue for the tribe since full casino operations began in 1992. The proceeds allowed the tribal council to dispense annual stipends to adult tribal members exceeding $100,000 apiece. But the payments have been suspended since the casino hit hard times brought on by the recession, increased competition and overinvestment.
Today, the casino is $2.3 billion in debt and trying to negotiate a severe refinancing with creditors. The tribal council says the community “is pulling together,” but a tribal elder was less sanguine in a comment to an Associated Press reporter. “Our stress levels are very high up here,” Loretta Libby remarked. “I just don't know what's going to happen.”
Nationally, further expansion of Indian gaming may be geographically limited, Washburn says. “There's not a whole lot of undeveloped markets,” he says. “Most of the tribes that have markets for gambling have been offering it already.”
The lagging economy also poses a challenge, according to Giles. “It's a business that's dependent on consumers and their ability to spend entertainment dollars,” he says. “Until the economy gets stronger, we're going to remain where it's at.
“There are plenty of tribes with expansion plans, but the market's going to have to be more secure for the tribes to do that.”
— Kenneth Jost