Tribal Casinos Facing Financial Hardship

Harvard University researchers have urged the federal government to support the nation’s tribes after the casinos they rely on continue to remain shut down. The calls came just days before the Small Business Association (SBA) approved of granting funds to help support struggling small casinos.

Diagram of economic recession on graph.

Many tribal nations whose economies rely on gaming are struggling after the casino shutdown has wiped out nearly all of their income. ©Mediamodifier/Pixabay

According to a letter sent by Harvard officials, tribal governments are set to lose billions of dollars after their most reliable sources of income have been halted by the coronavirus outbreak. The report asked that governments offer unrestricted financial aid during the crisis to ensure the communities’ survival.

The letter addressed to Treasury Secretary Steven Mnuchin highlighted a number of concerning effects on tribal groups that the shutdowns have caused so far. These include the mass firing of employees, the canceling of employees’ health insurance, and an increase in debt to cover expenses.

“The COVID-19 crisis poses an immediate threat to three decades of improvement in economic conditions across Indian Country. Prior to the total shutdown of their casinos, tribes’ gaming enterprises alone were channeling more than $12.5 billion per year into tribal government programs.”Researchers, Harvard Project on American Indian Economic Development

Many tribes are generally self-reliant when it comes to the funding of their government services including law enforcement, education, and health. The structure of tribal societies has made it impossible for tribes to rely on income taxes solely for revenues, and instead rely on funds generated by industries such as casinos.

Joseph P. Kalt, the co-director of the Harvard Project on American Indian Economic Development recently explained how the coronavirus has stopped most tribal enterprises from generating revenue. It is the researchers’ fear that the virus could have irreversible impacts on tribal communities if the federal government refuses to act.

Kalt estimates that tribal enterprises including casinos account for the employment of around 1 million people. Of these, roughly 200,000 of the workers are Native American, proving that the losses of tribal casinos affect non-tribal communities as well as the tribes.

If tribes had continued to be cut off from government support, the tribal regions could see a loss of roughly $127 billion in government funds to spend on goods and services. More than 1 million jobs would also be lost, as well as more than $49 billion in wages and benefits for employees.

These numbers are quite alarming considering that less than half of Native American tribes own casinos. At the time of the letter’s writing, $8 billion of the CARES Acts $2.2 trillion had been set aside for tribes. However, this has recently been increased after the SBA agreed to help small casinos.

Casinos to Receive a Helping Hand

After weeks of lobbying from the American Gaming Association (AGA), the SBA has agreed to update its eligibility requirements for small casinos seeking aid through the federal government’s Paycheck Protection Program (PPP). Previously, casinos were barred from receiving the payments which were created to help businesses retain employees during the shutdown.

The SBA has said that casino businesses would no longer be left out as long as they were reporting legal gaming revenues. Bill Miller, the president of the AGA, expressed his gratitude to the federal administration, in particular for recognizing the need to support tribal gaming industry employees.

The news has been welcomed by many tribal leaders, including Donovan White, chairman of the Sisseton Wahpeton Oyate tribal nation. White highlighted that every job saved by the PPP revisions count. “Indian gaming is our top job creator,” White said, adding that it was essential to help tribal governments care for their communities.

Rob Williams, the general manager of the tribal Fort Belknap Casino, expressed that the funds will help cover some essential expenses including utilities and payrolls. However, he stopped short of saying the funds would save the casino, with an estimated $220,000 of needed revenues lost.

The Fort Belknap Casino near the Canadian border employs 21 workers and generates roughly $600,000 annually for a number of tribal groups on a nearby reservation. As February to May is the most profitable time of year, more than half of annual revenues could be lost.

There are 574 federally recognized tribes in the USA. In total, tribal gaming operators have asked the federal government for an $18 billion relief package in order to keep their businesses from folding. Last year, tribal gaming companies generated $17.7 billion in local, state, and federal taxes.

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