Reservation Poverty - Influence of Casinos

Influence of Casinos

Indian gaming casinos are often considered a potential solution to reservation poverty. Because reservations are exempt from many federal and state regulations, including those prohibiting gambling, tribes are able to operate commercial casinos on reservations. These casinos can provide jobs on the reservation, attract tourists, and bring in money for tribes to fund education, health, and social service programs. The Ojibwe of Minnesota have built two schools, the Choctaw of Oklahoma have built a new hospital, and the Pueblo of New Mexico have rebuilt their water system, all using casino profits. Other tribes fund child and elder care programs, health services, fire and police protection, and housing development with gambling earnings. Casinos also provide much-needed job opportunities on reservations. In 1989, average levels of unemployment on reservations was above 30 percent. In the next decade, that rate dropped to 13 percent on reservations with casinos, while remaining stagnant on reservations without casinos.

Casinos' impact on overall economic conditions, however, is limited. Through the 1990s, the number of reservation residents eligible for public assistance programs increased across on most reservations. Although the rate of increase was slightly less on reservations that had casinos, the casinos were unable to reverse trends of worsening poverty. There are a number of factors explaining why casinos have done little to change living conditions on many reservations, despite the income they bring in. First, a relatively small number of casinos bring in the majority of casino income. In the 1990s, ten casinos brought in more than half the earned money, and 20 percent of casinos brought in more than 80 percent of earnings. Those that are most financially successful tend to be small reservations with relatively few inhabitants located near metropolitan areas that do not have as high poverty rates as larger, more rural reservations, which hold a much greater portion of the nations' reservation inhabitants. Many of the reservations facing the most dire poverty also are the most geographically isolated, meaning outside tourists rarely travel to the casinos. Instead, they are visited by reservation residents. Depending on the profit distribution plan of the tribe, this can result in a redistribution of income from many to a few, and a factionalization of the reservation population between those who spend at casinos and those who earn from them. When reservation residents spend portions of their sometimes very sparse incomes gambling, casinos can serve to exacerbate rather than relieve conditions of poverty. This is especially true when a casino's income is sent off the reservation, as is frequently the case when tribal governments must rely on outside investors to build casinos. These non-native investors often take substantial portions of the profits for years following construction to repay their initial contributions. Beyond initial investments, some casinos rely on outside management companies for day-to-day operations. Currently, fifteen percent of casino revenues go to such management firms.

Beyond limited economic efficacy, casinos have faced criticism on cultural grounds. Some tribal leaders have raised concerns that gambling goes against cultural beliefs and values, and is not a solid cultural foundation for native economic development. Without culturally sensitive investment in education and job creation, they assert, conditions of poverty will not change.