How Do Native American Casinos Differ from Commercial Casinos?

New York entrance to the WinStar Casino

New York entrance to the WinStar CasinoNew York entrance to the WinStar Casino, one of the largest casinos in the world and a Native American venue.

Over 1,000 land-based casinos operate in the United States of America.

And most of these establishments are built on Native American lands.

Even though 18 states allow some form of land-based gambling, including horse racing and full-on commercial casinos, most gambling experiences in the USA are provided by Native American casinos.

Wondering what the differences are between those “Indian reservation” establishments and, say, the classic great commercial establishments in Las Vegas and Reno?

In terms of gaming experience you’re not likely to find many differences. A large Native American casino may offer hundreds of slot machine games, blackjack tables, roulette tables, a poker room, restaurants, and more.

But only the largest Native American casinos try to compete with the Las Vegas experience by offering luxury vacation amenities.

How Las Vegas Became the Capitol City of American Gambling

Las Vegas is a special place.

The area was named in the early 1800s by Mexican caravan workers who passed through on their way to California. The name means “the meadows”. The area was well-watered by springs and travelers considered it to be the best place to resupply before pushing on to California.

The first American presence in the valley was a secret fort established by the US government in 1844 in preparation for a war with Mexico. The fort was eventually abandoned and the area remained without a permanent settlement until the Paiute nation formally ceded Las Vegas to the United States and moved away.

The region was claimed as a ranch by Octavius Gass in 1865. His family retained Las Vegas Rancho until they sold the land to the San Pedro, Los Angeles, and Salt Lake Railroad in 1902. The modern city of Las Vegas was established by the railroad company and business started booming. The city was formally founded in 1905 and incorporated as part of Clark County, Nevada in 1911.

Ironically, Nevada was the last western state to make gambling illegal.

Gaming officially ended on October 1, 1910.

The city survived for the next twenty years despite the failure of the local railroads and prohibition. When President Herbert Hoover pushed through the Boulder Dam project, the city’s fortunes changed. Thousands of workers came to Las Vegas to help build the dam. Most of them were single men, and it didn’t take long for the Mafia to start providing entertainment.

Gambling, drinking, and showgirls appeared throughout the city, despite laws forbidding such activity. When the Federal government could no longer ignore the open crime, they built Boulder City for the dam workers.

But the State of Nevada saw the writing on the wall. They legalized gaming “at the local level”.

Caesar's Palace in Las VegasCaesar’s Palace in Las Vegas is one of the most iconic modern casinos in North America.

The first legal casino was licensed in 1931, and soon thereafter Fremont Street became the heart of downtown Las Vegas. More gaming establishments opened. The Federal government still forbade dam workers (the project had by now been renamed Hoover Dam) from visiting Las Vegas, but they found ways to sneak into the city anyway. After Hoover Dam was finished the construction workers left to find other jobs, but Boulder City and Las Vegas continued to thrive as tourists now started visiting the dam and Lake Mead. Local entrepreneurs began building better hotels and US highway 94 was extended south to Las Vegas.

During the Second World War the US Army established a new base near Las Vegas. This facility later became Nellis Air Force Base (the infamous “Area 51”). The Army forced Las Vegas to permanently end legal prostitution within the city limits.

Local hotelier Thomas Hull opened El Rancho Vegas on what would later become known as “The Strip”. El Rancho Vegas offered high quality rooms and a famous buffet.

Local hotels continued to spring up until mobsters Bugsy Siegel and Meyer Lansky funneled money through Mormon banks to build the Flamingo in 1946. The Flamingo emulated the popular venue style of the Galveston, TX high-class casinos. The spirit of modern Las Vegas was born.

From 1952 through 1957, more glitzy casinos were built through a combination of Mormon and Mafia investment, including the Sands, the Riviera, the Fremont, and others. Millions of people poured into the city every year to gamble, and some of the biggest names in show business began appearing on local venues. A Congressional investigation into illegal gambling across the country eventually forced the underground casinos in Galveston and Arkansas to close, but Las Vegas’ casinos were protected by Nevada’s gaming laws and a powerful U.S. Senator, Pat McCarran.

In 1966 Howard Hughes moved to Las Vegas. He fell in love with the city and began buying properties, including hotels and casinos. He took control of the gaming industry from the mobs and turned it into a legitimate business.

Around the same time, Hank Greenspun, editor of the Las Vegas Sun, began a muck-raking campaign against the criminal activities in Las Vegas. Muck-raking journalism began in New York City in the late 1800s when progressive newspapers began documenting and editorializing against corruption, slum lords, and crime.

The gangsters did not go out without a fight, though. When the city of Las Vegas decided to annex the Strip to increase tax revenues, the remaining mobsters formed unincorporated Paradise, Nevada. Under Nevada law an incorporated city cannot annex an unincorporated city. The city of Paradise remains independent of Las Vegas to this day.

Still, as the years passed and more families visited Las Vegas the old criminal activities were gradually replaced by new corporate investments. Las Vegas hotels and casinos were built larger and with more amenities than ever.

By 1990 Las Vegas was no longer associated with organized crime in the minds and hearts of Americans. Instead it was seen as place where dreams can come true.

The Mirage opened in 1989, launching the megaresort phase of Las Vegas’ history. These huge hotel-casino-amusement venues define the city’s entertainment today. Magicians, musicians, and amazing performers of every type grace the stages of huge theaters.

The hotels on the Strip put on lavish street-side shows to wow the crowds as they walk from casino to casino. High quality restaurants have been built inside and around the hotels and casinos. Las Vegas has evolved into a safe modern entertainment venue that is often used as the setting in movies and television shows.

Native American Casinos Began Later

The story of Native American nations is both proud and sad. These amazing people lived in the Americas for thousands of years. Native Americans built great cities, empires, and trading networks long before Europeans began establishing colonies in the “New World”.

Despite hundreds of years of conflict, retreat, and great suffering, Native American culture survived into the 20th century.

But many Native American communities, though recognized as sovereign nations by the Federal government, struggled to thrive in spite of being ignored by commercial investment.

That began to change in the 1970s.

A Chippewa couple, Russell and Helen Bryan, contested a property tax bill from Itasca County in Minnesota. Because they lived on their tribal lands, the Bryans contended they were not subject to taxation by the state and county.

The Bryans lost their case in local and state courts, but the U.S. Supreme Court agreed to hear their plea. All nine justices ruled (Cf. Bryan v. Itasca County, 426 U.S. 373 in 1976) that states do not have the authority to tax Native American lands or to regulate activities on those lands.

Native American gambling began humbly in south Florida when the Seminole Tribe opened a bingo hall six days per week. State law only allowed bingo halls to be open for two days.

When the Broward County Sheriff arrested bingo hall employees, the tribe took their case to federal court.

The tribe won.

Another case was brought in the 1980s by Native Americans against California. In 1986 the Supreme Court ruled definitively that only Congress can regulate Native America gaming.

And in 1988 Congress passed the Indian Gaming Regulatory Act, which preserved sovereignty for the Native American tribes but required that they enter into compacts with states.

The law did not end all disputes between the First Nations and various states, but it allowed Native American gaming to flourish. Throughout the 1990s and 2000s hundreds of casinos and bingo halls were built across America on tribal lands. In less that 20 years Native American gaming revenue ballooned from an estimated $100 million in 1988 to more than $16 billion in 2006.

And as might be expected, some crime grew around all that money, too.

But unlike Las Vegas, where mob families made direct investments in the gaming industry, Native American gaming was tainted by a scandal with lobbyists who bribed members of Congress and overcharged the First Nations they represented.

Native American Gaming Industry Assets

By 2012, according to the National Indian Gaming Association, there were 460 Native American gaming establishments operated by 240 federally recognized local tribes.

The most important prerequisite for any Native American community to operate its own gaming establishments is that they be recognized by the federal government. This has led to some smaller groups pushing for federal recognition. Although the practice is questioned by some critics, it’s also viewed as long overdue recognition for marginalized Native American groups, many of whom were completely dispossessed in the 1800s and early 1900s without any compensation.

But not every Native American community wants to operate casinos and bingo halls. In fact, fewer than half of the 550 federally recognized tribes have turned to the gaming industry for economic opportunity.

Native American groups also invest in other industries, including the arts, publishing, tourism, and manufacturing.

Their retention and development of cultural traditions and practices has nonetheless influenced Native American gaming in interesting ways.

How Native American Casinos Differ from Commercial Casinos

I believe that to understand how these “Indian casinos” differ from the typical commercial casinos you should look at the history of both industries.

Although similar to each other, they are not directly related to each other.

Both gaming industries obviously share some common traits. They create jobs, for example, in their local communities. When casinos began closing in Atlantic City, NJ in the late 2000s because of the Great Recession, more than 10,000 people lost their jobs. The loss of gaming industry venues was a devastating blow to the Atlantic City economy and those of nearby communities. By the same token, some tribal groups would suffer economic crisis if they were forced to close their gaming establishments.

Legalized gaming has a great economic impact for communities that support it. Travelers seek out gaming venues and spend money both on gambling and other activities. Restaurants, hotels, and other forms of entertainment generally benefit from gaming tourism. Local governments also earn additional tax revenues, even if it’s only sales tax on products sold outside the gaming venues.

Even so, there are distinct differences between the Native American and commercial casinos.

Here are just a few of the prominent differences:

1 – Venue Locations

Fewer than half of all states allow gaming of any type. In many states, the ONLY casinos or bingo halls you can find are located on Native American lands. What may surprise you to learn, though, is that not every federally recognized tribe has its own lands.

One reason more tribes don’t invest in gaming resources is that about 200 of them don’t have the land upon which to build casinos.

Other nations, however, may have multiple reservations. Some tribes may operate as many as half a dozen gaming establishments spread across their communities’ lands. They are often placed close to major state and federal highways and may be the only significant destinations of interest to tourists in their areas.

2 – Gaming Classifications

One consequence of the Indian Gaming Regulatory Act was the differentiation between the types of games that could be offered in commercial casinos and Native American casinos.

The most well-known distinction the law made was between Class II and Class III gaming machines. The ways these games determine their final results are significantly different.

In a commercial casino, the slot games must determine results by randomly spinning virtual or physical wheels.

In Native American (or Class II) slot games only a single random number is used to determine the final result of the game; the “slot” action is simulated. Class II slot games are tied to live electronic bingo games that produce the random results.

Because they’re bound by Tribal-State Compacts, some Native American casinos may not offer the exact same games you’ll find in other, nearby states. Each tribe’s casino managers also decide what games they’ll offer. Virtually all casino operators now rely on gaming industry trade shows to learn about new games and technologies available to their industries.

Even though Class II games generate results in a subtly different way from Class III games, the odds of winning aren’t much different in a Native American casino and a commercial casino.

3 – Who Works at Local Casinos?

Although Native American gaming companies do hire people from outside their communities, they generally give preference to their own tribe members. This makes sense; the communities turned to gaming to improve their economic prospects. The casinos and bingo halls created much-needed jobs.

But don’t assume that everyone who works at the local Native American gaming establishment is a member of the tribe. There is another way that members of the community benefit from the casino.

4 – Who Profits?

While commercial casinos are owned by corporations whose shareholders buy and sell stocks, Native American gaming establishments are owned by the tribes. Each Native American nation decides how the profits are used to benefit their community. Some tribes issue monthly or annual checks to their members. They are not stockholders in the sense that they can sell their shares in the tribe’s industries. They are members of a special social collective. This is, in fact, similar to the way many North American tribes shared resources equally for thousands of years.

5 – Total Revenue

Although modern legal commercial gambling originated in and drove the growth of Las Vegas, according to the most recent data Native American gambling drives far more revenue than commercial gambling.

The Native American gambling industry now generates over $30 billion in annual revenues.

By contrast, recent estimates suggest that legal commercial gambling in the United States still generates less than $4 billion in annual revenues.

6 – Venue Size

You will find some small commercial casinos in virtually every state that supports legalized gambling. Some of these parlors are quite small, perhaps consisting of no more than a row of slot machines at a truck stop.

But, of course, the commercial gambling industry is dominated by the megaresorts that provide their guests with thousands of games.

Some of the best-known Native American gaming resorts are highly competitive at the top tier of resort entertainment.

The three largest world-class Native American casinos are:

The WinStar Casino & Resort in Thackerville, OK
The Foxwoods Casino & Resort in Mashantucket, CT
The Mohegan Sun (which operates casinos in three states).

These venues boast thousands of slot machine games, hundreds of table games, and tons of extra attractions including shows, restaurants, and luxurious settings.

7 – Cultural Influence

Although any commercial casino may incorporate Native American themes and artwork into their displays, every Native American venue I’ve visited has favored its own cultural heritage. These casinos and bingo halls display a range of native artistic traditions from subtle architectural touches to lavish displays of art and interior decoration.

When you visit a Native American gaming resort you should expect to immerse yourself in a modern expression of local talent and interesting cultural displays. They are tasteful and not gaudy.

Sure, Caesar’s Palace is an amazing place to visit.

But if I had to choose strictly between only visiting Native American or commercial casinos again for the rest of my life, the Native Americans get my vote. There are so many diverse traditions most people will never be able to see them all.

Surprising Things I Learned about Native American Casinos and Commercial Casinos

These two industries share some similarities. Naturally they have common interests in promoting gambling and related entertainment activities. Both industries work hard to make their venues safe, family-friendly environments (although children are typically not permitted near the games even in Native American casinos).

But there’s more than meets the eye in the symbiotic relationship between the two industries.

Both Industries Employ Professional Casino Managers

Remember how I said non-tribe members may work at casinos?

One area where opportunities exist for people who are not Native Americans is in casino management. There’s a great need for experienced floor managers, accountants, and other positions.

And what is surprising to learn is that some Native American casinos are operated by the corporations that own commercial casinos. It makes sense; corporate America looks for cost effective ways to manage large-scale operations. The commercial casino industry also had more experience in complying with gambling laws than the Native American casino industry.

Payback Percentage Varies in Both Industries

Payback percentage is that range of theoretical returns to players that people use to judge casinos by. Payback percentages tend to be similar among casinos within a given community but may differ from city to city.

For example, commercial gambling reviews often suggest that you’ll tend to see better payback percentages in Las Vegas than in Reno.

Why is that?

It’s just whatever the market will support.

Casinos can and do set the theoretical return to player on their slot games.

But because these games are now controlled by regulated computer chips, the process of adjusting the games is complicated and time-consuming. Casinos don’t like taking productive games off the floor. They also know that players often use their winnings to play more games.

So each region that has several gaming establishments experiences a market-driven trend toward a certain range of playback percentages. You’ll find occasional establishments that experiment with extreme percentages outside their local norms, but regular patrons soon learn where their money lasts longest.

Conclusion

Asking how “Indian reservation casinos” differ from the commercial casinos in Nevada and other states is a natural question. People who may only know one type of casino industry from their local gaming experience may wonder how the “other” industry differs.

As with any industry that has spread from different roots and adapted to multiple regional and cultural needs, there are clear distinctions between sub-groups within that industry. In fact, I cannot do full justice to the rich and robust Native American gaming experience in one blog post.

It would be fair to say there are different regional Native American gaming industries. Some states are home to dozens of Native American casinos and there are no (legal) commercial gaming venues. Without competition from the big commercial companies the tribes are free to develop their own styles in architecture, presentation, and game selection.

Local populations may also have their own preferences for gaming. You know, the reason e don’t have huge horse racing tracks in every state is that the states that allow horse races are home to populations of people who love that kind of entertainment. If enough people want to a enjoy a type of entertainment, they’ll try to find a way to make it legal.

Although I don’t condone any type of entertainment that is cruel and harmful to the participants (such as animal fighting), I think the growth of Native American gaming illustrates my point. These casinos don’t succeed because they’re protected by federal law. They succeed because the people who live nearby want to enjoy these games and other amenities offered by the casinos.

What is most amazing about these different industries is that many First Nations found a way to live peacefully with non-Natives in mutually beneficial economic cooperation. Perhaps it is even fitting that many outside communities have come to depend on these venues to generate tourism revenue and local jobs (outside the gaming industry).

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