Tribes Fear Backlash to Prosperity

Less than five years after California voters approved Indian gambling, the casinos have grown to about a $5-billion industry, a figure that some academic experts say could grow fivefold over the next several years.

Yet amid the unprecedented prosperity that gambling has brought to a handful of tribes, Indian leaders worry that the rapid expansion of casinos could generate a backlash that would put their sudden new wealth at risk.

So far, as a Times poll taken last week indicates, the tribes retain a strongly favorable image with Californians. But tribal leaders concede that they have misstepped as their wealth and influence have grown.

Oversized campaign contributions, high-profile disputes with local governments over the impact of casinos on traffic and water, and infighting among tribal members over who should be allowed to share in the wealth all have created potential image problems.

“While we know lots and lots about struggling to survive, we don’t know very much about prosperity,” said Kevin Gover, a tribal lobbyist and former assistant secretary of the Department of the Interior. “The one thing we cannot afford to let happen in Indian gaming is to allow the public to perceive us as greedy or ungrateful.”

Opponents of tribal gaming already argue that the Indians take unfair advantage of federal laws that recognize tribal governments as separate sovereign entities, exempt from most state laws and regulations.

“The Indians suffered terribly in the past,” said Cheryl Schmit, leader of Stand Up for California, an organization that opposes the spread of casinos. “But over the past 60 years, they have been able to use our public schools and drive off the reservation to take jobs in our industries. They can do military service.

“They’re citizens of the state, and receive its benefits,” she said. But at the same time, “they act like governments taking advantage of a system with the help of attorneys and public relations experts who assert their authority to build empires.”

Most of the state’s Indians continue to live in poverty. The state has 107 federally recognized tribes, but only 15 have casinos with the maximum 2,000 slot machines allowed under the compacts between the state and tribes that govern Indian gambling. An additional 36 tribes have casinos that each operate 300 or more slot machines.

Of the roughly 45,000 enrolled members of the state’s recognized tribes, more than 6,000 belong to two tribes, the Hoopa Valley and Yurok in Northern California. Hoopa Valley, which struggles with 40% unemployment, has fewer than 350 machines, said Jacob Coin, executive director of California Nations Indian Gaming Assn. Yurok, which gets by without electricity or water, has none.

Gambling revenue “has not trickled down to most Native Americans,” Coin said in an article in Indian Country Today.

Gambling Payout Grows

Yet for the tribes that own large casinos, particularly those within easy driving distance of the state’s major cities, gambling has yielded an enormous payout that has grown steadily.

Based on the percentage of personal income spent on gambling in other developed countries where casinos are readily available, Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, projects that gambling revenue in California could rise to $38 billion.

“If Californians were to spend the same proportion of their incomes as Australians do on gambling,” he said, “it would result in gross gaming revenues in California of $38 billion.”

Already, the money has made an enormous difference for the tribes, Eadington said.

“For tribal members who were on the margin of poverty, that means life-changing situations,” he said. “For their tribes, which are governments, it’s a godsend allowing them to fulfill their broad mandates.”

Said Andrew Masiel, spokesman for the Soboba Band of Luiseno Indians: “Gaming has been so good to us that we regard the 150 years before the legalization of Indian gaming as B.C.: Before Casinos.”

The United Auburn Indian Community east of Sacramento spent $215 million building its Thunder Valley Casino, which opened in June, and expects to make about $300 million in the first year of operation. As a result, the tribe hired financial consultants to help manage its 250 members’ personal fortunes.

Less than a year ago, members of the tribe lived in slum conditions on a rocky parcel characterized by clapboard homes and broken-down cars. Not one member had attended college. Roughly 80% did not know how to write a check, tribal spokesman Doug Elmets said. Some slept under the stars and cooked meals on outdoor fires in the shadows of a new subdivision just beyond the reservation border.

Almost immediately after the casino opened on 49 acres of unincorporated land, tribal members were provided with free medical, dental and vision coverage. Special education and tutoring programs were established for the tribe’s 93 children, and family counselors were hired for their parents.

Sometime in the next few years, the tribe expects to build homes on 1,100 acres and offer free housing to any member who wants to live on the land.

“The United Auburn tribe’s current generation is only beginning to see its opportunities, so it may not spread its wings financially,” Elmets said. “But the next generation will. It also will have the ability to help its children with their homework.”

From Eureka to San Diego, gaming tribes such as United Auburn are spending hefty sums to strengthen their economic and cultural bases. They are transforming existing casinos into deluxe resorts and investing in banks and commercial property, recycling operations, rice and citrus production, water bottling plants and timberlands.

About 15 miles west of glitzy Palm Springs and just off Interstate 10, the Morongo Band of Mission Indians is expected to soon complete a 23-story hotel, the centerpiece of a 600,000-square-foot casino resort complex that will generate an estimated $2.8 billion in new jobs and other economic benefits in the region over the next five years. About 40 miles south, the Cabazon Band of Mission Indians, which recently added a convention center to its casino complex, plans to replace its 4-year-old, 3,000-square-foot museum with a new cultural center three times that size. The tiny Rumsey Band of Wintun Indians in Northern California now owns its own Ford dealership.

In an emerging trend, more and more tribes just entering the casino business are sidestepping mainstream lending institutions and investor groups and seeking help instead from established tribal powerhouses.

The Chemehuevi Indian Tribe’s modest casino at Lake Havasu recently expanded with a loan from the San Manuel Band of Mission Indians. The poverty-stricken Torres Martinez Desert Cahuilla Indians near Indio hope to build their first casino with funding from the Mohegan Sun Casino complex in Connecticut.

But even some tribal leaders wonder if their high-profile activities eventually will erode public support, which already has frayed in cities and towns nearest the casinos.

Some Neighbors Upset

Casino opponents, who include residents of neighboring communities and union activists trying to organize casino workers, complain of increased traffic, a drain on emergency services and unfair competition faced by businesses off the reservations that must pay state taxes and follow government regulations.

In San Diego County, 25 families saw their wells run dry after the Barona Band of Mission Indians began expanding its casino and irrigating its new golf course.

In Palms Springs, the powerful Agua Caliente Band of Cahuilla Indians was forced by public opposition to eliminate golf practice ranges, 75-foot observation towers, theme parks and a second casino from a downtown development proposal.

The tribe has been engaged in a legal battle with California campaign finance regulators over whether the state has the right to sue the tribe to enforce campaign finance reporting laws. The tribe donated $7.5 million to political campaigns in a single year, then claimed that as a sovereign nation it is immune to financial disclosure laws. The dispute appears headed to the U.S. Supreme Court.

“There have been amateurish mistakes made, such as the size and notorious nature of some of the campaign donations made during the California recall election,” in which tribes gave $11 million to candidates perceived as friendly to their interests, said Gover, the tribal lobbyist.

State Shortchanged

Opponents of the casinos also say the tribes have failed to make up for the costs their activities have imposed on the state.

When Indian gambling began in California, part of the deal was that casino-owning tribes would put money into two funds. One would help pay for the state’s regulation of gambling and address problem gambling and environmental problems associated with the casinos. The other would provide financial help to struggling tribes without casinos.

Over the last three years, the state’s most prosperous gaming tribes have given more than $140 million to those “tribal revenue sharing funds.” But getting the money to those who need it has been far from easy.

After years of haggling with state officials, gambling tribes announced in March that they had formed committees to distribute grants for such things as enhanced fire protection services.

San Diego County, which was devastated by wildfires late last year, expects to receive $4 million this year from three local tribes.

The fund to help poorer tribes guarantees $1.1 million a year to each of them.

“About 40% of the people on our reservation are diabetic, so we are going to build a medical center staffed by prevention counselors and nutritionists,” said Rick Poe, chairman of the Manchester Point Arena Band of Pomo Indians, whose reservation is in an infrequently traveled area 90 miles north of San Francisco. “In addition, we just got an additional grant from the Morongo tribe, which will help pay for after-school tutoring.”

Meanwhile, even on the reservations of wealthy tribes, the vestiges of years of poverty remain visible. Beyond the gated entrance of the successful Pechanga reservation in the Riverside County community of Temecula are scads of modest mobile homes and stucco residences edging uneven dirt roads that flood every time it rains.

Wealth Not Apparent

The only obvious signs of boom times are the recently built tribal clinic and the shiny new cars, trucks and children’s bicycles in the driveways.

“Welcome to my mansion,” said Jackie Madariaga, 56, secretary-treasurer of the Pechanga Development Corp., parking his pickup beside a grove of old cottonwood trees and a 750-square-foot wood-framed house that he and his wife designed on a napkin and built with hand tools.

But though their physical circumstances may not have changed dramatically, there is no denying the impact that gambling wealth has had.

Sycuan Band tribal elder George Prietto grew up on a square-mile wasteland of a reservation where his mother prepared meals of acorn mush and boiled yucca blossoms and tribal members got by on day jobs or welfare and cheap wine.

Now, the canyon where he grew up, about 20 miles east of San Diego, includes a casino resort of sparkling fountains and neon-rimmed archways and turrets.

“Before the casino, nobody wanted to be Indian; people called us savages,” Prietto said, breaking into a smile. “These days, I still play the rattle and drum and sing traditional songs. But people call me ‘boss.’ ”