The 1987 Supreme Court decision in Cabezon Band of Mission Indians v. California reaffirmed tribal sovereignty. In this decision the court determined the Cabezon Band of Indians, as a sovereign government, had the authority to participate in government gaming. The following year, the U.S. Congress passed the Indian Gaming Regulatory Act (IGRA) with the hope that tribal gaming would help strengthen tribal governments and improve the quality of life on reservations.
- The Prairie Island Indian Community is opposed to any expansion of gambling in Minnesota. Tribal government gaming already generates millions in tax revenue for the state of Minnesota. Expanding gambling off reservations in a mature market will not generate additional dollars, but will take away resources that allow tribal governments to provide employment, vital programs and infrastructure to rural communities.
- Any expansion of gambling would have severe economic consequences for rural communities in the state of Minnesota. Tribal communities have worked hard to establish and grow gaming operations that benefit tribal members, surrounding communities and the state as a whole. Expansion would harm rural economies and have a negative impact on existing businesses. Rural economies rely on jobs produced and services purchased by tribal casinos.
Tribal government gaming on the Prairie Island Indian Community reservation, located in rural Goodhue County, began in 1984 when the tribal government enacted laws authorizing the play of high stakes bingo. In 1988, the federal government, recognizing the right of tribes and the success of tribal government gaming on Indian reservations, adopted the Indian Gaming Regulatory Act (IGRA) to “provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments.”
Under the IGRA, the Prairie Island Indian Community negotiated and signed compacts with the state of Minnesota, authorizing two types of casino games: video games of chance (1988) and blackjack (1991). These remain the only casino games offered at tribal casinos in Minnesota. The Prairie Island Indian Community’s initial government gaming activity – high stakes bingo – also remains an important part of the tribal business.
Importantly, the revenue received from these tribal gaming activities goes directly toward funding the operation of tribal government services; it is not shared with an outside operator. While other governmental units in Minnesota, such as cities and counties, receive funding from the state for basic government operations or can turn to taxation to raise operating revenue, the Prairie Island Indian Community’s primary revenue source for funding its government is from these gaming activities.
Prairie Island Development
The Prairie Island Indian Community is now the largest employer in rural Goodhue County, creating more than 1,700 good-paying jobs, most of which provide full benefits. The Community generates $13 million in annual state and federal taxes and spends more than $50 million annually with Minnesota businesses. Economic impact studies have indicated that more than 200 new businesses have been created in the region to support the operations of the casino. The jobs created produce taxes for the state and remove people from the welfare rolls, reducing the burdens on cash-strapped rural counties.
Minnesota’s Indian gaming industry is not immune to economic pressures. Tribal casinos have seen their business suffer along with the rest of the economy. With a mature gaming market in Minnesota, proposals to expand gaming in the state would result in the loss of business and jobs at existing casinos, thus seriously damaging the economies of rural communities.
Tribal gaming is among the most regulated industries in the country. Regulating bodies include:
- Indian Gaming Regulatory Act
- State-Tribal Compacts (agreements)
- Minnesota Department of Public Safety Gambling Enforcement Division
- Tribal Gaming Commissions
- National Indian Gaming Commission
Indian Gaming Regulatory Act
Immediately after the Cabazon ruling was handed down in 1987, tribes began operating high-stakes bingo and other gaming programs. State governments, frustrated at their lack of authority over these activities, appealed to Congress for legislation to give them more power over tribal gaming. The result was the Indian Gaming Regulatory Act of 1988 (IGRA).
Contrary to popular perception, the IGRA did not expand the power of tribal governments; in fact, it curtailed them by giving state governments unprecedented authority over tribal gaming activities. The IGRA required tribes to negotiate agreements with states in order to engage in Class III (casino-style) gaming activities.
The IGRA sets forth an economic rationale for Indian gaming on reservations. The major purpose of the Act, according to Congress, was “to provide a statutory foundation for Indian gambling operations as a means of promoting economic development, self-sufficiency and strong tribal government.”
The other purposes of the IGRA were to assure that tribal governments would be the sole owners and beneficiaries of reservation gaming programs; to establish federal regulatory authority and gaming standards; to establish the National Indian Gaming Commission; and to assure the integrity of tribal gaming.
Scope and Term of the Compacts
Each of Minnesota’s 11 Indian tribes negotiated a compact with the state of Minnesota for video games of chance, and a compact for blackjack. The compacts established negotiating procedures; regulatory standards; licensing requirements; technical specifications for all games; and remedies for violation of the compacts.
Minnesota’s compacts do not include a terminus date. When the agreements were negotiated, tribes were concerned that they would be unable to raise the necessary capital to develop their casino operations if the long-term future of their compacts was uncertain. The open-ended compacts enabled tribes to secure the financing they needed and ensure uninterrupted government revenues for the long-term rebuilding of their communities. Nine other states besides Minnesota have tribal gaming compacts with no termination date. They are Colorado, Connecticut, Idaho, Kansas, Mississippi, Nebraska, Nevada, Oregon and Washington.
In exchange for open-ended compacts, tribes agreed to limit the scope of their gaming activities to video games and blackjack, forfeiting the right to offer roulette, baccarat and other high-stakes games found in Nevada and New Jersey casinos, and in tribal casinos in many other states.
Minnesota’s tribal-state compacts may not be “re-opened” or renegotiated unless both sides agree to do so. However, technical amendments have been made to update equipment specifications and other details.
The State’s Powers
Through the compact negotiation process, tribal governments have granted the State of Minnesota substantial powers to regulate gaming at Indian casinos.
Agents of the Minnesota Department of Public Safety are authorized to inspect without notice any premises or records related to the operation of video games of chance; test and approve all video slots, and remove those found non-compliant with compact standards; and prohibit the purchase or lease of video slot machines from vendors not licensed in Minnesota, South Dakota, Nevada or New Jersey.
Each tribe operating video games of chance must retain a certified public accountant (CPA) to audit the books and records of all such gaming. The Minnesota Department of Public Safety, Gambling Enforcement Division, has access to the audit results and the work papers of the accountant. The state is authorized to review all sources of revenue to the tribe related to video gaming, to review expenses and other operational costs, and to determine if the gambling proceeds are going to the tribe.
All employees involved in the operation or management of Class III gaming must be licensed by the tribe, subject to criminal background checks by the Minnesota Department of Public Safety. Special training is required for dealers, pit bosses and floor supervisors.
In addition, the compacts include a prohibition against entering into a management contract if any management official has been determined to “pose a threat to the public interest or to the effective regulation and control of gaming.” Individuals may be denied employment or dismissed if they have been convicted of a felony within five years of employment, or if they have ever been convicted of a felony or gross misdemeanor involving fraud, misrepresentation or gambling.
Technical Standards for Video Games of Chance and Blackjack
Under the compacts, all video games of chance must be tested and approved by an independent test laboratory to determine compliance with compact standards. The compacts also establish specifications for the play of blackjack, including the type of cards used, the types of wagers allowed, the procedure for dealing the cards and the various betting options available to the player during the game. Blackjack staffing levels and video surveillance requirements are also specified.
Minnesota’s Tribal Casinos
In Minnesota, all tribal gaming casinos are managed by tribal governments or tribal gaming commissions as specified under tribal ordinances and federal law. The IGRA requires that tribes be the “sole owner and primary beneficiary” of all Indian gaming activities.
Indian tribes are the primary regulators of Class II gaming. Regulation of Class III gaming may be addressed in the Tribal-State compacts and varies by state with the tribes remaining the primary regulator in most states. Both Class II and Class III gaming are subject to the provisions of the Indian Gaming Regulatory Act and oversight by the National Indian Gaming Commission.
National Indian Gaming Commission (NIGC)
As an independent federal regulatory agency of the United States, the National Indian Gaming Commission (NIGC) was established pursuant to the Indian Gaming Regulatory Act of 1988 (IGRA). The IGRA comprises a chairman and two commissioners, each of whom serves on a full-time basis for a three-year term. The chairman is appointed by the president and must be confirmed by the Senate. The secretary of the interior appoints the other two commissioners. Under the IGRA, at least two of the three commissioners must be enrolled members of a federally recognized Indian tribe, and no more than two members may be of the same political party.
The NIGC’s primary mission is to regulate gaming activities on Indian lands for the purpose of shielding Indian tribes from organized crime and other corrupting influences; to ensure that Indian tribes are the primary beneficiaries of gaming revenue; and to assure that gaming is conducted fairly and honestly by both operators and players.
To achieve these goals, the NIGC is authorized to conduct investigations; undertake enforcement actions, including the issuance of notices of violation, assessment of civil fines, and/or issuance of closure orders; conduct background investigations; conduct audits; and review and approve tribal gaming ordinances.
The NIGC maintains its headquarters in Washington, D.C., with five regional offices, located in Portland, Ore.; Sacramento, Calif.; Phoenix, Ariz.; St. Paul, Minn.; and Tulsa, Okla.
*Information from Minnesota Indian Gaming Association (MIGA) Web site: www.mnindiangaming.com.
• 556 to 634 jobs lost in Minnesota
• $16.9 to 19.5 million in lost wages statewide
• $6 to 7 million reduction in spending with Minnesota businesses
• 30 to 40 percent decrease in funds available to support tribal government and tribal programs
• 30 to 35 percent decrease in revenue at Treasure Island Resort & Casino
Thanks to proceeds from Treasure Island Resort & Casino, the Prairie Island Indian Community is able to build roads and clinics, install sanitary water and sewer systems, and provide jobs and educational opportunities for tribal members. Gaming expansion would reduce the amount of funds available to support the tribe by 30 to 40 percent. This would dramatically limit the tribe’s ability to provide for its members.
Currently, Treasure Island employs nearly 1,700 people and is Goodhue County’s largest employer. The expansion of gaming would result in job losses for 556 to 634 Minnesotans. Of this, Treasure Island would lose 274 to 327 jobs or 16 percent of their staff, which is the equivalent of Goodhue County losing their ninth and tenth largest employer. In Goodhue County, nearly one out of every 33 jobs would be lost.
Treasure Island has an annual payroll of almost $45 million. The average wage for a casino employee is $26,200, when tips are included the average wage increases to $29,700. Expanding gambling would result in Minnesota losing more than $26.7 million annually in wages.
Spending and Production:
Annually, Treasure Island spends more than $46 million in goods and services, including over $31 million with Minnesota vendors. The expansion of gaming would directly result in a reduction of spending with Minnesota businesses totaling $6 to 7 million annually.
• Treasure Island: 274-327 Jobs
• Goodhue County: 282-316 Jobs
• Total: 556-643 Jobs
• Treasure Island: $6.8-8.2 Million
• Goodhue County: $10.1-11.3 Million
• Total: $16.9-19.5 Million
• Treasure Island: $6-7 Million
• Goodhue County: $29-33 Million
• Total: $35-40 Million
* This report does not include the impact an expansion of gambling would have on 17 other tribally owned casinos and the subsequent losses in employment, wages and spending experienced in these counties and in Minnesota.
- Bingo operation begins.
- IGRA formally recognizes right of tribes to operate gaming facilities.
- Slot compact is signed and slot machines are added.
- Blackjack compact is signed. Bingo operations are reduced while the casino is enhanced; 250 slot machines and eight blackjack tables added.
- 25,000-square-foot addition creates room for 450 more slot machines and 32 blackjack tables.
- A second 25,000-square-foot addition provides room for 300 slot machines and 12 blackjack tables.
- Three new restaurants, a bar, commons area with valet parking, 32,000- square-foot state-of-the-art kitchen, gift shop, Island Passport customer service area, ballroom and new entertainment area comprise 78,000-square-foot addition.
- 37-slip marina and 95-slot RV park open.
- 9,854-square-foot addition to accommodate business offices.
- 250-room hotel opens adjacent to the casino.
- Spirit of the Water, 120-passenger cruise yacht, was purchased and begins operation.
- Mount Frontenac Golf Course purchased to provide a complementary amenity to tribal casino.
- Nearly 200,000 square feet were added to the current facility as well as improvements to existing space. The upgrades focused on the casino’s gaming floor and main entrance, administrative offices and warehouse.
- New clubhouse at Mount Frontenac Golf course allows seating for 150 guests.
- Tribe opens Dakota Station, a convenience store and gas station.
- Parlay Lounge opens (Treasure Island’s upscale lounge featuring live weekend entertainment).
- Treasure Island breaks ground on a $50 million project that includes 230 additional hotel rooms, an event center featuring entertainment and convention space and a family fun center.
- The Island Event and Convention Center, Island Xtreme Bowl and 230 new hotel rooms open to the public.