Indian Casinos Boom to Tribes and States
By Kavan Peterson, Staff Writer
Native American-run casinos and resorts continued to expand at a rapid pace in 2005, raking in billions of dollars for Indian tribes and state governments across the country.
Indian gaming generated about $22.7 billion in revenue in 2005, up 15.6 percent from 2004, according to the Indian Gaming Industry Report, an independent report on the industry. The report found that state and local governments in the 30 states with Indian casinos received more than $1 billion from fees and revenue-sharing agreements, a 20 percent increase from 2004. The report includes state-by-state revenue and profit-sharing numbers.
States and Native American tribes increasingly have relied on gambling, one of the most popular forms of entertainment in the United States, to generate money for schools and other public services and for tax relief.
Indian gaming grew more than three times as fast as the commercial gaming industry, which also has experienced record profits in recent years. And 2005 was the 11th consecutive year in which Indian gaming grew by at least 15 percent, said the report's author, Alan Meister, an economist with the Analysis Group, an international financial strategy and consulting business.
"That consistent of growth over an 11-year period is pretty astounding in any industry," Meister said.
Indian gaming has surged since Congress in 1988 upheld the right of tribes to operate casinos on their reservations. Since 1988, 227 tribes have opened 420 gaming facilities in 30 states.
Casinos have been a huge boon to Native American tribes, and in most cases gaming has been the first and only successful source of economic development and employment on Indian reservations.
The expansion of Indian gaming prompted many states to legalize or increase commercial gambling. Since 1988, 12 states have joined New Jersey and Nevada in allowing 455 privately owned casinos to open, and 11 states have put slot machines at racetracks, creating 29 "racinos." Commercial gaming generates more than $4 billion a year in state tax revenues, according to the American Gaming Association. In addition, 42 states now operate lotteries that generate more than $16 billion annually in revenue.
States cannot tax profits from Indian gaming, but tribes must negotiate compacts with states to operate casinos that usually include revenue-sharing agreements to defray regulatory costs. State and local governments also benefit from an estimated $2.3 billion in tax revenues from secondary economic activity generated by Indian gaming facilities, such as increased sales tax collections from tourists and payroll taxes from the 310,000 jobs supported by the industry, the report found.
The five highest-grossing states for Indian gaming in 2005 were California, Connecticut, Arizona, Oklahoma and Minnesota. Nevada easily surpasses other states in total gaming revenues when commercial gaming is included, followed by California, New Jersey, Louisiana and Mississippi.