Researcher Says Pandemic Will Have "Drastic" Impact On Reservation Economies

Apr 16, 2020

 

Credit Wind River Hotel and Casino

The Eastern Shoshone and Northern Arapaho Tribes' casinos have been shut down for weeks due to the COVID-19 pandemic. And they're not alone. Across the country, more than 500 tribal gaming enterprises have closed their doors. That means an abrupt loss of revenue for tribal governments, which, unlike cities and states, don't have a tax base to fall back on.

Economist Joseph Kalt is with Harvard University's Project on American Indian Economic Development. In a letter this week, he and his research partners urged U.S. Treasury Secretary Steve Mnuchin to consider the needs of tribal nations while disbursing funds from the CARES Act. He told Wyoming Public Radio's Savannah Maher that without substantial aid from the federal government, the pandemic could set back more than 30 years of economic progress in Indian Country.

Savannah Maher: You say tribal gaming started to get serious in the 1980's. So how has that changed life in Indian Country over the last 40 years or so?

Joseph Kalt: Well, there's been a major impact of this economic activity finally coming to the reservations. A tremendous increase in jobs both for the Indians on the reservations as well as many non-Indians in the local communities. And the funds that come out of those casinos, as well as some other tribal businesses outside the gaming industry, those are the tax base for a tribal government. Tribes don't have the typical tax base that a state and local does. They depend upon their gaming revenues and other business revenues to fund their governments. As a result of that, we've seen a massive expansion across the country in the ability of tribes to deliver the whole range of basic public services that we expect any city, county or state to provide. And it's had a dramatic impact on the quality of people's lives.

SM: So how do casino closures impact tribes like the Northern Arapaho, here on Wind River, that fund part of their government with gaming revenue?

JK: In the case of Wind River, [the Eastern Shoshone and Northern Arapaho] are going to be like many other tribes. You shut the doors of that casino, and you basically are cutting off all your tax revenue. And so many tribes are now facing lay-offs, not just of the casino employees, but in the various programs that the revenues that the gambling business supports. So we're having people get unemployed, both Indian and non-Indian, in large numbers across the country. Second, you're having to in many cases cut way back or shut down basic programs ranging from health clinics to housing support to education programs. And then lastly, we're seeing tribes either having to dip into some assets, rainy day funds if they've been able to build them up over the last many years. Or tribes are going into debt to try to hang on to the employees and keep their pensions and keep the insurance and so forth. So it's a really drastic situation because there's just been this abrupt cutoff in the flow of funds.

SM: But right now tribal casinos aren't eligible for loans through the federal Paycheck Protection Program, is that right?

JK: Yes, the rules that have been issued are, for reasons no one can quite understand in Indian Country- tribal gaming operations are shut out of, for example, the Small Business Administration kind of funding.

SM: So if federal aid isn't sufficient and if some of these tribal gaming enterprises do fail, what are the long term consequences of that?

JK: Well it varies from tribe-to-tribe. But almost all tribes have used substantial portions of their business earnings and plowed them back into rebuilding reservation towns:the schools, the libraries, the health clinics, the police departments, just about everything. And so the long term concern is that we run a risk, essentially, of reversing what's been about 30 years of slow but at least steady progress in economic development, in jobs creation, and the overall standard of living. So one big impact is that you go back to a time in which there's just no money, everything's falling apart, nobody's got a job. You know, the kind of place where the United States tribes were back in the 1960s] and early 1970s. The other thing is the regional impacts. Many regions-Riverton Wyoming, for example-depend a great deal on the money that's flowing in through that community because of the presence of the tribe, its government, its enterprises. So we would really be worrying about places like that suffering a kind of long, drawn out recession in their economies if and when this crisis persists over a long time.

SM: I sometimes hear from listeners who are sort of grumpy about tribal gaming, they don't think it's fair that tribes get to have these kinds of enterprises. And I wonder how you respond to that in a time like this.

JK: Sure. It is a common view, but it actually misunderstands the law of the United States. Actually, Wyoming, for example, has a special right to have gaming. The voters of Wyoming, tomorrow, could get it on the ballot and have gaming. Gaming rights are no more a special right for tribes than they are for the state of Wyoming, for the state of Montana, the state of California, the state of Nevada. Having said that, with all this economic activity, tremendous amounts of economic development are leading to tremendous tax revenues for the various states. When we look in Wyoming, our modeling suggests that Indian economic development, primarily the casinos, is generating on the order of about $12 million a year for the state of Wyoming and another $35 million in federal taxes. So, the tribes are, in fact, generating tax revenues as those workers go out and spend. And the result of that is a benefit to the state of Wyoming.

Have a question about this story? Contact the reporter, Savannah Maher, at smaher4@uwyo.edu.

Savannah is a Report For America corps member.