Indian casinos

Investigative Reporters and Editors, Inc. The IRE Journal, Mar/Apr 2001 by Pace, David

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Analysis shows reservation gaming pays off for very few Native Americans

A steady drumbeat of news stories throughout the 1990s documented the rapid growth of casino gambling on American Indian reservations. From small stakes bingo parlors that generated just $100 million in 1988, Indian gambling exploded into an $8 billion industry, with scores of glitzy casinos to rival the best that Las Vegas could offer.

But lingering questions remained. How had the billions of dollars in gambling revenues changed the lives of Indians on reservations, historically among the nation's poorest areas? Was gambling solving the unemployment, poverty and welfare problems that have plagued reservations since their creation in the 19th century? The Associated Press set out last spring to answer those questions by gathering data on a broad range of quality of life variables during the 1990s and then using it to compare reservations that have casinos with those that don't.

The immediate problem in designing such a research project was the scarcity of data collected at the reservation level. The 1990 Census provides a detailed snapshot of reservation life at the beginning of the casino boom, from education levels to poverty rates to housing conditions. But comparative information from the 2000 Census won't be available for several more years, and the Census Bureau collects no reservationlevel data in the years between the decennial census. We found only two other government sources of reservation-level data: The biennial workforce report compiled by the Bureau of Indian Affairs from unemployment data provided by tribes, and the Agriculture Department's Food Distribution Program on Indian Reservations.

Finding data

Rather than wait for the 2000 Census, we used the BIA workforce reports for 1991 and 1997, and the Agriculture Department's FDPIR data for 1990 and 1998 as two comparative variables. We also obtained from the Department of Health and Human Services a breakdown by race of welfare caseloads in each state. That enabled us to compare American Indian welfare participation during the 1990s in states that permit casino gambling with those that don't. Finally, we asked the Census Bureau's geography division to create a database of all the counties that are part of Indian reservations. That enabled us to use the bureau's 1989 and 1995 county income and poverty estimates, and its 1990 and 1997 county business pattern records, for comparative analysis.

The next major hurdle was dividing tribes into gaming and non-gaming categories. To operate a Las Vegas-style casino, the National Indian Gaming Regulatory Act requires that a tribe first negotiate a compact with the state. From the National Indian Gaming Association, we obtained a current list of Indian gaming operations and used it to divide tribes into gaming and non-gaming categories. We divided them based on the legal definition, designating as gaming tribes those that operate Class III casinos under compacts with states. Tribes with small-stakes bingo games were combined with those that have no gambling operations into the non-gaming category.

The analysis found that welfare participation on Indian reservations with casinos grew far less during the 1990s than on other reservations. But the historically high unemployment and poverty levels on reservations changed very little during the 1990s, despite the influx of gambling money. Between 1991 and 1997, when the U.S. unemployment rate dropped from 6.9 percent to 4.9 percent, the unemployment rate for 146 tribes with casinos declined from 55.9 percent to 52.2 percent, and it actually increased slightly among the 55 tribes with casinos that opened before 1992. Among the 144 tribes without casinos, the unemployment rate increased from 43.6 percent in 1991 to 48.3 percent six years later. Similarly, the average poverty rate in counties where there are gaming tribes declined only slightly between 1989 and 1995, from 17.7 percent to 15.5 percent. In counties of non-gaming tribes, the poverty rate increased slightly, from 18.2 percent to 18.4 percent. In the U.S. as a whole, the poverty rate increased from 12.8 percent to 13.8 percent during that period.

Gambling revenues

To understand why gambling revenues weren't having more of an impact, we tried to determine where the money was going. We filed a Freedom of Information Act request with the National Indian Gaming Commission - the agency with regulatory oversight of the Indian gambling industry - asking for a revenue breakdown of the casinos. The commission refused to release financial data on individual casinos, saying it was proprietary information. But it did classify the casinos into six different revenue categories, from those making more than $100 million a year to those making less than $3 million a year, and provide a cumulative revenue total for each category. We then used the tribal enrollment numbers in the workforce reports from the Bureau of Indian Affairs to calculate the actual number of Indians belonging to tribes in each of the six categories.