The State of Indian Economic Development

Article Index

A complex tale to be told

by Rob Capriccioso
News From Indian Country

Judging by mainstream media accounts alone, one might be led to believe that most tribes have profitable casinos and many Native Americans are getting richer by the second as white people pour their shiny coins and tokens into Indian-owned slot machines across the nation.

But the cursory casino press coverage that tribes and American Indians often receive is missing a full and dramatic story regarding the complexities of Indian casino development, while neglecting complicated political and cultural considerations and paying little more than lip service to vast pathways tribes have forged toward economic success. Most unjustly, according to many researchers of Indian economic development, the coverage to date has created widespread false impressions about the real income levels of the average Indian.

“I think, as of late, the mainstream media has just not done a very good job,” says Manley A. Begay, Jr., Co-Director of the Harvard Project on American Indian Economic Development and a leading tribal economic researcher at the University of Arizona. “So much emphasis has been on the notion that Native people are doing very well because of gaming. There’s just a tremendous amount of emphasis on gaming and the success of gaming.”

“Maybe we’d be better off if the press ignored us altogether,” jokes Ron Cornish, a research specialist with the Center for American Indian Economic Development.

U.S. Census data tells a much more complete story. Incomes on reservations after adjusting for inflation actually declined during the decade of the 1980s when newspapers like The Detroit Free Press started to pay widespread attention to gaming growth (for a time in the later 80s through the 90s, the paper’s most substantial coverage of Indian issues were largely relegated to a casino section).

Average Indian household incomes grew over the 1990s – and huge national publications, like TIME, jumped on that information – but by the end of the decade the average on-reservation Indian citizen still had per capita income of less than $8,000, compared to more than $21,500 for the average U.S. resident. On-reservation Native American residents remained, on average, the economically poorest identifiable group in America.

The latest Census numbers, from 2000, reported that 39 percent of on-reservation American Indians were living below the poverty line—higher than any other group and four times the rate for the average American. Unemployment among gaming tribes stood at 21 percent in 2000 and at 23 percent for non-gaming tribes. The unemployment rate for the U.S. population as a whole was recorded at 6 percent.

Despite those harsh realities, however, there is good news, too. “The story today of economic development in Indian Country is one of rapidly growing economies among both gaming and non-gaming tribes,” Joseph Kalt, a professor of international political economy at Harvard University, writes in the new book The State of the Native Nations (Oxford University Press). “…Indian nations are taking hold of self-determination and making the most of it.”

Gaming In Perspective

Several researchers interviewed for this article said it’s crucial for state and federal policy makers – as well as the general public – to understand that the development of tribal gaming starting in the 1980s has by no means been a magic bullet in curbing extreme poverty among American Indians.

Begay frames the story this way: “Despite growing vigorously, Indian gaming has not grown evenly. There are substantial disparities in facilities’ sizes and success.”

The variation was readily apparent in 1995 when the General Accounting Office (GAO) conducted a detailed study of Indian gaming, finding that Indian casinos made $4.5 billion in revenue, compared with non-Indian casino industry revenue of $50 billion. Indian casino net income totaled approximately $1.9 billion. The top 13 percent of the casinos studied by the GAO accounted for 59 percent of the total revenue and more than half of the net revenue generated by the casinos in the study.

And the variation, it seems, has only grown more pronounced. As of mid-2006, according to research gathered by the National Indian Gaming Association, 224 of the 561 federally recognized tribes operated gaming enterprises with a tiny fraction of gaming operations accounting for the majority of the total revenue generated by Indian casinos. In fact, out of the 367 tribal facilities in operation in 2004, the 15 largest accounted for more than 37 percent of total Indian gaming revenues. The 55 largest tribal facilities accounted nearly 70 percent of total Indian gaming revenues.

At the same time, the First Nations Development Institute (FNDI) estimates that Indian Country faces between $17.65 and $56.5 billion in annual capital needs for basic infrastructure, community facilities, housing, and enterprise development. “Economic development in Indian Country needs capital not simply to bring tribes on par with off-reservation communities’ level of annual investment, but to address historic backlogs in areas such as educational attainment, poor health, and crime,” writes Kalt. “Accordingly, FNDI’s projections of Indian Country’s capital needs are conservative.”

Many tribes’ gaming operations are relatively small and located in remote areas with low populations. Ninety-four facilities had annual revenues of less than $3 million in 2004, and the smallest 219 operations accounted for only 8 percent of total Indian gaming revenues.

Still, while casinos have by no means been a cure all to end poverty, make no mistake: They have led to amazing economic growth and even prosperity in some instances.

“The biggest tribal economic strides, without a doubt, have been in the area of gaming,” says Cornish, who was formerly a business educator at Sinte Gleska University.