Indian Casinos Getting Down to Business

Well, the numbers are in, and it's official: 2007 was the biggest year on record for Indian casinos. Tribal gambling revenues hit $26 billion (yes, that's billion), which was a 5% increase from the year before. And they did it despite the economy's general weakness.

National perspective
Indian casinos operate in 28 states; 225 tribes operate more than 400 tribal gambling venues; the state of Oklahoma has the largest portion of this pie, with over 100 gambling establishments and 20% growth in 2007. Nationwide, Indian casinos have become major players in their local economies, providing much needed jobs and tax revenue on the reservations.

The tribes have succeeded by exploiting both a niche and a loophole. The niche, of course, is the gambling industry. When the first tribal casino opened, in 1979, most states (except for Nevada and New Jersey) had bans on casino gambling. The tribal governments could see the profits being made in Las Vegas and Atlantic City, however, and knew that casinos could help break the long-standing poverty of the reservations. They wanted that niche.

They got it through a loophole. The American Indian reservations were formed by treaties, between the various tribes and the federal government, during the 19th and early 20th Centuries. Due to the formality of the treaty process, the tribal authorities have always been, technically, sovereign entities, and not fully bound by state or federal laws. This meant that, even though most states had banned gambling at the time, it was still legal to gamble on the reservations. Taking advantage of this, many tribes started opening casinos and casino-resorts during the 1980s.

Indian Gaming Regulatory Act
In 1987, the US Supreme Court upheld the tribes' theory behind the casinos' legality, and in 1988, the US Congress passed the Indian Gaming Regulatory Act which permitted federally recognized tribes to operate and regulate the tribal gambling venues on their reservations. The Act also defined the limits of tribes' regulation authority, and their relation to the individual states.

Bigger and bigger
In the two decades since the IGRA went into effect, Indian casinos have taken off. Indian gambling revenues grew from $200 million in 1988, to $11 billion in 2000, to last year's record profit of $26 billion. The tribal gambling establishments have developed sophisticated marketing efforts, and worked hard to make their casinos into first-class destinations, with hotels, restaurants, spas, and big-name entertainers to augment the gambling operations and attract more visitors. The numbers show that their effort has been successful.