Native U.S. Tribes Seek Federal Bailouts to Offset Casino Losses

Native U.S. Tribes Seek Federal Bailouts to Offset Casino Losses

The Mashantucket Pequot Tribal Nation, which owns the Foxwoods Resort Casino in southeastern Connecticut, is among federally recognized tribes that, although considered “sovereign nations,” are seeking increased revenues through grants from the U.S. government.

According to the Associated Press, the once billion-dollar Pequot casino empire has, in the past, distributed stipends of more than $100,000 annually to adult tribe members. Now, however, the Pequots join other gaming tribes, including nearby rival casino Mohegan Sun, in the pursuit of more federal aid. The pattern is getting the attention of those who opposed the law that allowed Indian tribes to develop casinos, since the law was promoted as one that would assist tribes in becoming financially self-reliant.

In 1988, Congress passed the Indian Gaming Regulatory Act (IGRA) which authorized casino gambling on Indian reservations and provided a regulatory and oversight framework for the industry in the form of the National Indian Gaming Commission (NIGC). The purpose of the law was to allow a means for tribes to become self-sufficient in developing their own economies.

”The whole purpose of the 1988 law which authorized Indian casinos was to help federally-recognized tribes raise money to run their governments by building casinos on their reservations,” said Robert Steele, a former Connecticut Congressman. ”I would argue strongly that federal money was meant for struggling tribes. Certainly the Mashantucket Pequots and the Mohegans couldn’t under any circumstances be put in that category.”

Nevertheless, as long as they have federal recognition, the tribes that own casinos are eligible for the same federal grants that are awarded to larger tribes in the western region of the U.S. where poverty and unemployment have been continually widespread. The federal grants, which do not require repayment, help tribes pay for health screenings, road maintenance, and environment preservation.

Mashantucket Pequot Tribal Nation spokesman Bill Satti said that his tribe “is proud of the work they do with the use of federal funds when it comes to assisting the region and fellow Native Americans.” Satti added that the federal funds have been used to support the tribe’s medical clinic and to repair roadways.

Thomas Weissmuller, who served as chief judge of the Pequot Tribal Court until 2011, said that the tribal council had distributed too much money to members and urged the tribe’s leaders to pursue more federal aid. Weissmuller said some leaders hesitated to do so, for fear that such a move would affect the tribe’s sovereignty. He himself was concerned about pursuing federal monies since most of the issues the tribe was dealing with were related to the casino, which is a commercial enterprise.

“A billion-dollar gaming enterprise should fully fund the tribal government,” said Weissmuller, who said that Pequot tribal chairman, Rodney Butler, encouraged him to apply for the federal grants. Weismuller added that he was ultimately forced out of his job by tribal leaders who charged that he did not have the best interests of the tribe at heart in other areas.

According to the U.S. Department of Interior Bureau of Indian Affairs, the relationship between federally recognized tribes and the U.S. is one between sovereigns, i.e., one government to another:

Tribes possess all powers of self-government except those relinquished under treaty with the United States, those that Congress has expressly extinguished, and those that federal courts have ruled are subject to existing federal law or are inconsistent with overriding national policies.  Tribes, therefore, possess the right to form their own governments; to make and enforce laws, both civil and criminal; to tax; to establish and determine membership (i.e., tribal citizenship); to license and regulate activities within their jurisdiction; to zone; and to exclude persons from tribal lands.

The Pequots began a financial downturn along with other businesses across the U.S. during the 2008 recession. In that year, however, Foxwoods had just completed a major expansion with the MGM Grand hotel and casino. In 2009, the tribe defaulted on debt exceeding $2 billion.

The Pequots have since ended member stipends, but have kept other benefits in place. Federal grants to the tribe, awarded through the Interior Department, increased from $1 million in 2008 to $2.7 million in 2011. Federal monies granted though Health and Human Services, rose from $1.7 million in 2008 to $1.9 million in 2012.

In January, Steven Thomas, the Pequots’ treasurer, and his brother Michael Thomas, a former tribal chairman, were indicted following an FBI investigation. The two men are accused of stealing a combined $800,000 in tribal money and federal grants.

The Mohegan tribe has also taken federal grants as they faced increasing gambling competition from neighboring states.

“It’s a sign of the times. Everybody is seeking grants,” said Mohegan chairman Bruce “Two Dogs” Bozsum. “There’s some that we qualify for and it helps us to keep everybody healthy and working. At the end of the day, why shouldn’t we apply for it? If we get approved, it’s always for a good cause, usually health or jobs created.

Another tribe that has been aggressively pursuing federal aid is the Saginaw Chippewa Indian Tribe, which owns the Soaring Eagle Casino and Resort in Michigan.

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