« Practicing For Perfection - Part III | Main | “Hit the Backwall…HARDER” »

DI and the Small Market Part 1

It wasn't so long ago that if you wanted to play “legal” craps in America, you had one choice, Nevada. 

You could play illegal craps in just about any city and many rural games thrived for years, most under the benign neglect of local law enforcement. Indeed some places, like Hot Springs Arkansas were an "open secret" Mecca for adult fun. Of course, once outside the law, there was little to ensure an honest game and cheating by the house and hustlers was the rule rather than the exception at many of these places.

Then, in an effort to save a decaying resort town, Atlantic City was opened to gaming. ten years later, the National Indian Gaming Regulatory Act of 1988 allowed recognized sovereign Indian Tribes the right to operate  "Class 3" games of chance.  Class 3 includes craps and most other familiar table games and slots.

Native Americans, often with help from foreign investors, have opened casinos on their lands in the majority of states. Although the IGCA is a Federal Act, reaffirmed by the US Supreme Court, the specifics of each tribe's casinos are negotiated by "compact" with state government in which the reservation is located.  Therefore, there is no guaranteed uniformity in rules, vigorish or pay-outs from state -to- state or even casino-to-casino in a given state. This is something that players need to keep in mind as they consider risking any money at tribal casinos. (more on this later)

American History is rife with non-natives recognizing, and taking a good thing when they see it in Native hands. There are 558 federally recognized tribes, who own and operate over 330 casinos in 36 states. As of 2002, they claimed about 35% of America's $42 billion legal gaming revenue.  Just as with land, gold and oil, once the rest of America saw the Indians making big money with gaming, they have been predictably trying to cut themselves in. State governments have tried to increase taxes on tribal gaming, re-negotiating the compacts as they have come up for renewal. This creates added pressure on the tribes involved to maximize their "hold" and is another factor the small market player should not ignore. (more on this later)

As the awareness of gambling'' strength as a potential  "revenue stream enhancement" has grown in state capitols across the country, especially as other tax bases decline, governors and state legislatures have opened their ears to the offers of the "Casino-Corps" the big, big entities like Harrah's and others.

One by one, state governments have turned to issuing licenses to the gaming industry corporations, who in turn give up a cut of their profits and create some jobs. Typically these corporations are issued licenses for specific geographic zones, like Tunica and Shreveport. For this discussion, we can call these "Medium Markets" and include any area where the casinos are not  "stand-alone" entities but are part of "destinations" Also I would include the Detroit land based casinos, Chicago and Saint Louis' Boats as a "medium" markets although they are not all in one small "zone."

This is another essential identifying quirk of the "Small Market" casino; Because tribal casinos must be located on the reservation of the operating tribe per federal law, they don't tend to "cluster" like those run by the "casino-corps." This means, that when we talk about small market casinos we are usually talking about tribal casinos, and being located in reservations, they are usually out of the way.  The remoteness does, however have to factor into the player's plans and can affect his/her judgment when it becomes time to make decisions regarding win goals and loss limits. Again, that will be examined farther on.

This isolation is not true of all tribal casinos, for instance, the Oneida Tribe's reservation encompasses the Green Bay, WI airport and they have a Vegas-style casino adjacent to it and a slot/bingo/card room a mile away.

The distinctions made above are more important than they appear to be at first reading. Although all small market casinos are not tribal, most are. Because each tribe must negotiate a specific "compact" with the governor of their reservation's state (an oxymoron to be sure) every tribe is under different pressures and constraints. This is being written in Minnesota. Here several different tribes have opened casinos. None have craps. Some have blackjack. One even had video craps before the state had them remove it.

Once the state saw the revenues of the first tribal casinos, they demanded higher "taxes" in subsequent compacts for latecomers. One deal for a Minneapolis metro area casino with 3 tribes fell apart over money issues. In nearby Wisconsin, the Ho Chunk tribe closed their 3 table craps operation near the resort of Wisconsin Dells because that state kept trying to squeeze more money out of the tribe's casino. Craps went because it could not guarantee revenue like slots set at the state minimum 80% (!) lifetime return. In Vegas or Atlantic City if there were 80% slots offered no one would play (they would be illegal, too) yet out in the boonies, "It's the only game in town" and they rake it in. That  "Only game In Town" mentality is an extremely important factor that must be considered by the small market player and will be addressed in detail later in the article.

By the way; not all Tribal Casinos are small. Foxwoods, in Connecticut, is the world's largest and nearby Mohegan Sun is following in Foxwoods footsteps. These palaces were carved out of the New England Woods and in their short lives have not only impacted the neighboring small towns, but the State of Connecticut itself. Those two are examples of small market casinos that have grown into medium markets in their own right, drawing players from Canada to New York and Philadelphia. As they grew into regional economic powerhouses they have been able to insulate themselves from the whims of state governments that might otherwise "re-negotiate' the compacts as in Minnesota and Wisconsin.

You can't discuss tribal gaming in 2006 without a word about one man; Jack Abramoff.  Abramoff was a well, connected lobbyist, who pleaded guilty to 3 counts fraud, tax evasion and conspiracy to bribe public officials last month. Although that's just the tip of the iceberg, his plea deal includes assisting prosecutors with many anticipated cases. The "Fraud" part of that conviction is significant to the small market player. Essentially, what Abramoff has admitted to playing one tribe against another by taking millions from tribes interested in getting gambling established and more millions from other tribes who wanted to protect their already established gaming from new competition. Not only was the con illegal, it was done with open disdain and blatant racial contempt towards the natives who paid the lobbyist. Emails have surfaced in which Abramoff and lawmakers refer to the natives they were bilking as "Troglodytes, Monkeys and Morons"

As this scandal unfolds, it is uncertain what ramifications portend for those of us who play at tribal casinos. Certainly, it can't fail to bring about some more bad blood in a long and sordid history between Native Americans and State and Federal Governments. The fallout from the scandal may include liberalized licensing for more casinos and it could just as easily work against it. Time will tell.

Right now there are over 330 small (Native) and 430 commercial casinos in the US. Most of the commercial houses are located in "destinations" like Vegas, Atlantic City and Tunica,. There are small clusters of "boats" in the Midwest and some cities (Detroit, New Orleans) allow a few commercial operations. Those are the Large and medium Markets. But for the rest of the country the closest casino is a drive out to the reservation, to a Sovereign Nation.

Next time, we will take a look at what that means for the Gambler, the Craps Player and most importantly the Dice Influencer.

In the meantime, I'd like to hear from you if you play in small market regularly or occasionally.

Thanks for reading,
DeadCat

By "DeadCat" Copyright © 2006

Do you have questions or comments about the articles and subjects discussed here at the Dice Institute? Sign up for our member's forum and share them with us!

About

This page contains a single entry from the blog posted on March 9, 2007 12:15 AM.

The previous post in this blog was Practicing For Perfection - Part III.

The next post in this blog is “Hit the Backwall…HARDER”.

Many more can be found on the main index page or by looking through the archives.

Creative Commons License
This weblog is licensed under a Creative Commons License.
Powered by
Movable Type 3.34