Sept. 18 (Bloomberg) -- Luther Strange’s campaign to shut down every betting house in Alabama has hit a roadblock: the Obama administration and the National Indian Gaming Commission.
The state attorney general, after closing private gambling operations, is now targeting bingo parlors owned by the Poarch Band of Creek Indians, whose games are federally regulated. Strange said the issue boils down to which level of government makes decisions about what games are legal.
“Are we going to be able to make them, or is it going to be some bureaucrat in Washington?” Strange said. “It’s a national issue. It raises questions of state authority. It’s right in the wheelhouse of conservative attorneys general around the country.”
Since coming to office, President Barack Obama has courted Indian groups, and his administration has relaxed or reversed regulations imposed by President George W. Bush that had made it difficult for tribes to expand their reservations and build casinos. The aim is to help Native Americans, whose unemployment rate of 12.3 percent last year compared with 6.6 percent for non-Hispanic whites, boost their economies and earn enough to provide jobs, schools and hospitals to members of the tribes.
“One day, we’re going to be able to look back on these years and say that this was a turning point,” Obama said in his third annual address to Indian leaders on Dec. 2, 2011, in Washington. “This was the moment when we began to build a strong middle class in Indian country, the moment when businesses large and small began opening up in reservations, the moment when we stopped repeating the mistakes of the past and began building a better future together.”
Tribal governments responded by donating a combined $2.5 million to Obama and aligned Democratic Party committees for his re-election, according to the Center for Responsive Politics, a Washington-based organization that tracks political money. They gave less than $500,000 to Republican presidential nominee Mitt Romney and associated groups. The community also has spent $85 million on federal lobbying since Obama took office, compared with $146 million during Bush’s two terms, the data show.
Obama’s approach is drawing protests from state and local leaders from Arizona to California who say they are losing tax revenue and the authority to enforce their own laws on gambling, particularly banning Las Vegas-style games.
Strange’s question about who gets to make those decisions is at the heart of a federal lawsuit he filed this year to shut down the Poarch Creek bingo operations, which he says violate a state ban on slot machines.
Bingo v. Slots
The tribe, supported by the Obama administration, says the state has no jurisdiction over the Native American facility, and that the electronic bingo machines aren’t slots -- even though they look and play like them.
Michigan has filed a brief in the case supporting Alabama, and Wisconsin has filed its own, similar lawsuit. “The federal government has a recent history of supporting tribal gaming at the expense of state sovereignty,” said Joy Yearout, communications director for Michigan Attorney General Bill Schuette, a Republican, in an e-mail.
The federal Indian gaming commission may soon raise the stakes in the fight. It’s poised to allow one-touch electronic bingo machines, which play even more like slots. In 2008, the commission, then headed by Bush appointee Phil Hogen, rejected another tribe’s request to use them without a state agreement, which usually includes a revenue-sharing component.
States, including such Obama-friendly ones as California, are crying foul because of the revenue that would be lost from classifying these machines as versions of bingo. The commission is “stretching the definition of bingo beyond all reasonable limits,” Jacob Appelsmith, then-senior adviser to Democratic Governor Jerry Brown, said in an Aug. 26, 2013, letter.
While it may seem a lot of fuss over bingo, it’s not your grandmother’s style of game.
The beeps and bells echo throughout the casino on the Poarch Creek reservation in Atmore, in south Alabama, as customers yank the arms of slot-like machines that also display a series of numbers the players match on a bingo card affixed to the machine. No one shouts “Bingo!”; instead, lights and sirens indicate a winner and a paper is spit out detailing a cash windfall.
“As long as there’s a bingo game going on, we can use technology to make our game be more fun for the player and make more money for us,” said former U.S. Senate Indian Affairs Committee staff director John Tahsuda, a member of the Kiowa Tribe of Oklahoma who now represents the state’s Indian Gaming Association.
Federal regulations say that bingo is a game played against other players, whether on machines that look like slots or with cards and plastic discs. When pulling a lever or pressing a button in slots, a player vies with the machine.
The Alabama bingo battle heated up in 2009, when the state Republican Party passed a resolution opposing expanded gambling because it would “significantly increase the flow of special interest money” into the Democratic Party. The resolution singled out “gambling boss” Milton McGregor, a Democratic donor who installed electronic bingo machines at his VictoryLand greyhound racing track.
Then-Governor Bob Riley, a Republican, decided the machines were actually illegal slots. Over the objections of then-Attorney General Troy King, a fellow Republican, Riley began raiding and closing non-Indian bingo facilities in 2010, including McGregor’s VictoryLand.
Riley responded to King’s opposition by throwing his political support behind Strange, who challenged the incumbent in the 2010 Republican state attorney general primary.
A major donor to the Alabama Republicans that year was the Republican State Leadership Committee, whose chairman is former Republican National Committee Chairman Ed Gillespie. The Washington-based political committee raises and spends money to elect Republicans to state offices other than governor.
The leadership committee contributed $700,000 to the state party for the 2010 elections, Internal Revenue Service records show. Most of that money, $550,000, came from the Poarch Creek.
Robbie McGhee, who runs the Poarch Creek government-relations office, oversaw the tribe’s political-donation process. He said in an interview that the Alabama Republicans asked the tribe to give through Gillespie’s group rather than directly to the state party.
Such actions allowed the Republicans to hide the fact they were getting money from gambling interests, said Rogan Kersh, a lobbying expert and provost of Wake Forest University in Winston-Salem, North Carolina. “Their fingerprints aren’t on it,” said Kersh.
The RSLC reported its first $100,000 contribution from the Poarch on July 15. A week later, the Republican committee donated $100,000 to the state party, according to records filed with the Alabama secretary of state’s office. On Aug. 4, the Alabama Republican Party gave $100,000 to Strange, his largest single donation, the records show.
“For us to protect the future of the tribe, we need to be at the table,” McGhee said.
Chris Jankowski, president of the RSLC, said none of the money was earmarked for Strange. He became president of the committee in 2011, and reviewed the Poarch Creek contributions and the donations to the Alabama Republican Party. The people involved with those transactions are no longer working for the committee, he said.
McGhee said he had no indication that Strange, whose anti-casino attacks on commercial competitors bode well for reservation businesses, would set his sights on tribal gambling after the campaign.
Strange, who said he didn’t get donations from the tribe, defeated King in the primary and won the 2010 general election, part of a Republican landslide that also saw the party take control of the state legislature. Aligned with new Republican Governor Robert Bentley, Strange also began raiding and closing private casinos.
Tracie Stevens, the Obama-nominated Indian gaming commission chairwoman, sent a letter in February 2011 to Bentley informing him that “Congress clearly intended that tribes should have every opportunity to take advantage of technology in the play of bingo,” and again defined the game as one in which players compete against each other and cover a certain set of numbers. “Tribes are not bound to state definitions of the game of bingo,” she wrote.
Strange continued the correspondence in April 2012 when he sent a warning shot at the tribal bingo houses. In a letter to the federal gaming commission, he wrote, “slot machines cannot be operated by a Native American tribe on land located in a state like Alabama that has not agreed to a compact with the tribe.” He added that the Poarch offer gambling “that approximates the same kind of slot machine gambling that one might find in Las Vegas or Atlantic City.”
As tensions increased between the tribes and Strange, McGregor reopened VictoryLand in December 2012. The attorney general raided it in February, again closing it down.
Today, green-and-white signs directing motorists to McGregor’s casino have been covered with duct tape, and plasterboard has been nailed across the entrances to what had been the home of 6,400 electronic bingo machines. A sign advertising a Cadillac giveaway is propped against a chair. The casino closed before someone could win the car.
“Anyone who says these are slot machines is either intellectually dishonest or ill-informed,” McGregor said on the casino floor, surrounded by empty chairs and unused electrical outlets.
In February, Strange decided to take the Indians to court. “The right of the states to make the decision has been taken out of our hands,” he said.
The Obama administration is helping to defend its authority -- and the Poarch Creek.
“Absent a tribal-state compact with the Poarch Band in which the tribe expressly agrees to state enforcement of state law, the tribe’s sovereign immunity bars the state from enforcing its law against the tribe,” said Assistant U.S. Attorney General Ignacia Moreno in a June filing in the U.S. District Court for the Middle District of Alabama, Northern Division.
For now, the raids on commercial casinos have helped the Poarch Creek enjoy a bigger gain in revenue than any other casino-owning tribe in the U.S., according to Casino City’s Indian Gaming Industry Report by Alan Meister, an economist with Arlington, Virginia-based Nathan Associates Inc. Poarch revenue rose 26 percent in 2011 from 2010, the report said. Meister declined to provide exact amounts, saying they were confidential.
The poverty rate among Native Americans in Alabama was 22 percent between 2007 and 2011, according to the U.S. Census Bureau’s American Community Survey. That’s better than the 31 percent of poor blacks and Hispanics in the state. About 12.4 percent of the white population was impoverished.
The tribe’s three casinos employ 1,800 people and generate enough profits to, among other ventures, build housing for the elderly; provide police, fire and sewer services to everyone in the area, not just those living on the reservation; and erect a multi-field athletic park and Olympic-sized swimming pool.
On the Atmore reservation, a two-story health clinic under construction will be the second-tallest building on the site, surpassed only by the 17-story casino-hotel at the next expressway exit.
To contact the reporter on this story: Jonathan D. Salant in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jeanne Cummings at email@example.com