According to National Indian Gaming Commission figures, in 2014 the nation’s 459 tribal casinos in 28 states experienced revenue growth of just 1.5 percent, even with the addition of 10 new tribal casinos–and that was an improvement over 2013 when tribal casinos, including 24 new properties, posted a 0.5 percent increase in gambling revenue. Between 2012 and 2014, nine states in the Upper Midwest experienced a 2.5 percent drop in gambling revenue during the period.
As a result, said Kathryn R.L. Rand, co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota, “There are places that are feeling saturation and competition more acutely than others, but all tribes are paying attention to diversification. It’s happening sooner rather than later in some parts of the country where the industry is no longer experiencing the kind of growth it used to.”
One example is the 1,100-member Nottawaseppi Huron Band of the Potawatomi, which depends on revenue from its FireKeepers casino that opened near Battle Creek, Michigan in 2009, but now faces competition from three casinos in Detroit, tribal casinos within a half-hour drive of every significant population center and a new commercial casino in Toledo, Ohio that opened in 2012.
Today the tribe uses casino revenue to finance new ventures. In 2013 it added a 242-room hotel tower and a 17,000 square foot events and conference center at FireKeepers. It also founded Skasge, a solar power company formed in 2011 that provides electricity for the casino and some facilities on the reservation located 20 miles southwest of the casino. The tribe plans to eventually sell solar technology power to the grid. In 2014, the tribe formed Waseyabek Development Company, which will be the parent company for the band’s future endeavors. The tribe also purchased parcels of land via bankruptcy auctions around south-central Michigan.
Nottawaseppi Tribal Chairman Homer A. Mandoka said, “If we were to put all our eggs in one sector like Detroit and the car industry, when the economy caches a cold, Michigan catches pneumonia. You can’t diversify your economy if you don’t have funds or don’t have access to funds. And really, we weren’t in a place to do any of that, and most tribes aren’t, until the day it is granted to you that you can actually open a casino.”
Prior to the opening of FireKeepers, Mandoka said the 120-acre Nottawaseppi reservation was dusty and unpaved, with a half-dozen shack houses. Mandoka said, “Three weren’t even livable but they were being lived in,” with no indoor plumbing. Now gaming revenue has brought about two dozen new homes on cul-de-sacs, smooth paved streets and government buildings including a Head Start center and a huge new powwow atrium. Mandoka said revenue from FireKeepers provides more than 75 percent of the tribal annual budget of $30 million.
Several tribes began diversifying since the late 1980s, building outlet malls, water parks, golf courses, bowling alleys and other non-gaming venues, such as the Rincon Band of the Luiseno Indians near San Diego and the Colusa Indian Tribe near Sacramento. In 2007 the two tribes formed the private equity company First National Capital Partners which has bought four companies, including a netting manufacturer and a firm that builds shipping cases for bombs.
Other tribes connect their diversification efforts to their past, such as the Yocha Dehe Wintun tribe near Sacramento, which produces olive oil, wine and honey. Tribal Chairman Leland Kinter said, “This carries on our tribe’s historic connection with the land of the beautiful Capay Valley which is an important part of who we are as a people.” The Cherokee Nation in Oklahoma, the largest Native American tribe with more than 300,000 members, formed a holding company, Cherokee Nation Businesses, which posted $829 million in revenue in 2014 including profits from manufacturing and service contracts with Cisco, the Department of Homeland Security, Lucent and others.
Mandoka stated, “You need to use your distributions and reserves to go out and get yourselves into a good position. But most models still have a very important slice of the pie that is from the casino.” Rand agreed, stating, “The casinos give tribes collateral for loans from banks and institutional legitimacy that make them safe bets for other kinds of businesses, for contracts with the government, for partnerships with local governments. Then they have a track record of good business relationships with vendors and people in their tribes with knowledge of growing businesses. It allows tribes to do even more in terms of economic diversification than they could be before tribal gaming.”
Rincon council member Steven Stallings, vice chairman of the California Nations Indian Gaming Association, said, “Our goal is to have economic diversification to the point that it would pay 100 percent of tribal government operations and our health plan if the casino went away. The tribes that aren’t thinking about this really need to be.”
