Since its establishment with the passage of the federal Indian Gaming Regulatory Act in 1988, the tribal gaming industry in the U.S. has experienced dramatic growth. That growth has produced major benefits for both Native American tribes and surrounding communities.
Over the past three decades, Native American gaming revenues have grown from about $235 million nationwide in 1988 to more than $29.9 billion in 2015, according to figures from the National Indian Gaming Commission.
The 2015 numbers marked a 5% increase compared to 2014, the largest increase in 10 years, according to the NIGC. In 2014, the Indian gaming industry accounted for approximately 43% of all casino gaming revenue in the U.S., according to the 2016 edition of Casino City’s Indian Gaming Industry Report, released this spring.
Fertile ground
Over the years, the tribal gaming industry has found fertile ground in a number of locations in the U.S. The industry exploded in California, for instance, where 63 tribes operated casinos and other gaming facilities in 2014, drawing in about one quarter of all tribal gaming revenue. In all, 244 tribes — or about 43% of all federally recognized Native American tribes in the U.S. — operated 489 casinos and other gaming facilities across 28 states in 2014, according to the Casino City report.
Tribal gaming has shown renewed strength after slipping along with the rest of the U.S. economy during the years of the Great Recession, according to Alan Meister, an economist with Nathan Associates and author of the Indian Gaming Industry Report. Meister noted the industry recorded five consecutive years of modest growth from 2009 to 2014.
And, in 2015, the growth rate surged to levels not seen in a decade, according to National Indian Gaming Commission Chairman Jonodev Osceola Chaudhuri.
Chaudhuri said the revenue growth “reflects the fruits of tribal innovation and self-sufficiency efforts,” combined with effective strong regulation, which he credited with helping the tribal gaming industry “weather the storms of the past 10 years.”
Meister and other observers, including Steven Light and Kathryn Rand, professors at the University of North Dakota in Grand Forks and co-directors of the university’s Institute for the Study of Tribal Gaming Law and Policy, said the stronger revenues are encouraging signs not only for tribal gaming, but also for the local economies and regions surrounding the tribal gaming facilities.
Rand and Light, responding to questions in a joint email, said the “exponential growth” the industry experienced in the two decades that followed the federal government’s legalization of tribal gaming “isn’t likely or expected at this point in the industry’s development.” But Rand added:“It’s hard to argue it’s not a successful or a viable industry.”
According to the NIGC’s 2015 revenue estimates, gross gaming revenue increased in every one of the NIGC’s seven regions across the country – the first time that had happened since 2012.
As in years past, the gains were most pronounced in California and northern Nevada, where revenue surged by 8%, the NIGC reported. In Oklahoma, revenues increased by about 6.5%. In the country’s other Indian gaming regions, growth ranged from about 3-4%, the NIGC reported.
“Our partnership and hardwork has strengthened Indian gaming into the important economic engine it is today,” Chaudhuri said. “The best it’s been in 30 years, and showing the biggest increase nationwide in the past 10 years.”
Expansion
While recovering national and regional economies played a leading role in the renewed strong growth, Meister said much of the growth also can be attributed to “the introduction of new properties and the expansion of existing ones.” In 2014, for instance, a net of five new tribal casinos were added in California, Oklahoma, Minnesota and Montana, while the only facilities to close in 2014 were in North Dakota, according to the Casino City report.
Across the country, more new Native American casinos and casino renovations and expansions are in the works, as tribes such as the Mashpee Wampanoags look for a share of rapidly developing gaming markets in New England’s Boston-Providence corridor.
Such ventures are not easy, however, and can carry huge risks. The Mashpee Wampanoags, for instance, spent years working through the various steps, securing federal recognition of their tribe, followed by a compact with the Commonwealth of Massachusetts. Finally, in the fall of 2015, they received federal recognition for their right to build on the acreage they purchased near Taunton, Mass., situated within their ancestral homeland. The tribe became construction on the proposed $500 million First Light Casino Resort this spring, but the project has stalled due to legal challenges.
Other tribes across the country have chosen different paths to claim a piece of the action.
Some tribes have opted to stick with so-called Class II gaming facilities, which include such games as electronic bingo machines and, in some cases, poker and other nonhouse banked card games. These kinds of gaming operations typically subject tribes to less federal and state regulation. Fueled by rapid growth in states such as Oklahoma and Florida, in which Class III, or so-called Las Vegas-style gaming may not be allowed, Class II gaming operations have delivered strong returns for many tribes, Meister said.
As of 2014, Meister said Class II gaming revenue was growing at a faster rate than Class III gaming revenue.
“In part this is due to the maturity level of gaming and the degree of competition in states with only Class II gaming,” Meister said. “But it also is a reflection of the viability of Class II gaming machines, which have performed as well as Class III machines in some places.”
However, for many tribes, the big prize — a full-fledged Class III casino with the associated windfalls — is hard to resist. The benefits of such Las Vegas-style facilities are even more pronounced when factoring in the growth of nongaming revenue — dollars gained from entertainment, dining and other activities and amenities more typically associated with resorts rather than casinos.
Meister noted such nongaming revenue grew by 5% in 2014.
Rand and Light said in their email that the tribal casinos’ nongaming revenue growth is part of a larger trend in the gaming industry.
“That mirrors what’s happened in Las Vegas in recent years,” they said. “It’s the non-gaming amenities that are growing faster year-over-year and are contributing more to the bottom line.”
This sustained run of increased revenue has brought with it many benefits for the tribes and the surrounding regions, according to Light, Rand and Meister.
In the Casino City report, Meister noted tribal gaming directly and indirectly supported 738,000 jobs, which paid $32.6 billion in wages and pumped $95 billion into the U.S. economy in 2014. Additionally, the tribal gaming operations paid about $1.7 billion in federal, state and local taxes and $8 billion in direct revenue sharing payments to those same governmental units.
Tribal benefits
Gaming revenue benefits tribal communities as well. According to the National Bureau of Economic Research, tribes with casinos see marked improvements in employment levels and decreased poverty and mortality. Population levels in communities on reservations also stabilize or even increase, with fewer residents choosing to leave, the NBER has reported.
Many tribes also use revenue from gaming to reinvest in their communities, boosting health services, early childhood education and projects to ensure preservation of their languages and cultural heritage, according to the National Indian Gaming Commission. The money also is used to improve the physical infrastructure of tribal communities, such as new roads and schools and improvements to community water supplies.
“These can be a huge boon for the tribal community,” Rand said. “It’s an important part of their future.”
With the revenue, Light said has come a new level of business acumen needed to help the tribes run their new ventures and succeed. “In some instances, we’re talking about very sophisticated destination resorts, on par in every way with what you’d find in Las Vegas,” he said.
That also has increased the political power of tribal governments, he said. The savvy and influence likely will be needed in coming years, as tribes and nontribal gaming operations compete for many of the same customers amid continuing market saturation.
However, Meister, Rand and Light said they believe the market still has more room for growth and expansion.
Rand and Light noted they are expecting continued growth in California and Oklahoma, and are closely watching anticipated new projects in the Northeast U.S., particularly in New York and Massachusetts.
Light and Rand said in the email they also are interested to see how tribes adapt to such oncoming challenges such as the gradual legalization and growth of online gaming in the U.S.
“Everything in our economy is moving to smartphones, so the question of how much entertainment will move there, too, and whether tribes can overcome barriers to entering this market, is an intriguing one,” they said in the joint email.
Freelancer writer Jonathan Bilyk contributed to the writing and research of this article.
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