Tribal Casino Rules Revisited

A.D. Pruitt and Peter Grant, Wall Street Journal, Sept. 21, 2009

The Obama administration may make it easier for Indian tribes to build casinos on land far from their reservations, a move likely to spur a wave of new casino development.

The Interior Department, which runs the Bureau of Indian Affairs, is reconsidering a Bush administration directive requiring that off-reservation casino sites be within commuting distance of the reservation. Many tribes, struggling with high unemployment and poverty on their reservations, are looking to casinos for jobs and other economic benefits.

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About 22 Indian casinos on non-reservation land exist, and about 20 tribes have off-reservation plans in the works.

The Confederated Tribes of Warm Springs of Oregon wants to develop a casino along the Columbia River Gorge, and the St. Regis Mohawks has plans for a site in the Catskill Mountains, about 350 miles away from the tribe’s reservation–not within the required commuting distance–but less than a two-hour drive from New York City.

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Indian casinos can be particularly problematic when they run into financial trouble. One example: Foxwoods Resort Casino in Connecticut, which is in talks with lenders to restructure an enormous debt load.

Moody’s Investor Service has warned that lenders have limited recourse because, under U.S. law, they can’t seize Indian casino assets in the case of a default or bankruptcy.

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About 300 casinos have been developed by tribes since a watershed U.S. Supreme Court ruling in 1987 that greatly loosened state restrictions on such operations. In 1988, Congress said tribes could develop off-reservation casinos that were in the best interest of the tribe and not detrimental to the local community.

Casino.jpg
Casino at Niagara Falls operated by Seneca Indians.

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