Indian casinos should pay state more, study suggests

Tribe contends gaming halls' true taxes top $100 million

By LARRY SANDLER

of the Journal Sentinel staff

Thursday, February 14, 2002

A new study recommends more than tripling the amount that Indian casinos pay the state, from $24.6 million to $80 million or $90 million a year.

In the study released today for the Wisconsin Policy Research Institute, two University of Nevada-Las Vegas professors estimate gamblers are losing $1.1 billion a year in the 16 Wisconsin casinos. They say a business with $1.1 billion in sales would be paying $90 million a year in state and local taxes.

But tribal representatives say the casinos are actually paying more than $100 million a year to state, local and federal governments, including payments for municipal services and payroll taxes. They said it's not fair for the study to focus only on the amount they pay to the state when the business comparison includes local property taxes.

Still, payments are likely to be an issue when Wisconsin's 11 tribes and the state renegotiate the compacts that regulate the casinos. Those compacts are up for renewal next year. They would be renewed automatically on the same terms if not renegotiated.

Some tribes have launched an advertising blitz calling on the state to extend the compacts for longer than the five-year term of the current deals. A 30-year agreement would give the tribes the financial stability to negotiate $600 million in long-term financing for needed infrastructure improvements and economic development projects on their reservations, said Jeff Crawford, Potawatomi tribal attorney general.

If the state were willing to extend the term of the compacts, broaden the range of games that the casinos could offer and increase the amounts that gamblers could bet, the tribes would be willing to discuss higher payments to the state, Crawford said.

For its part, the state believes a case could be made for increasing tribal payments, said George Lightbourn, state secretary of administration. However, "we're not looking to solve our budget problems with gaming revenue," Lightbourn said, referring to the state's $1 billion deficit.

State officials have not decided how to respond to the tribes' request to open negotiations, Lightbourn said. However, the state will definitely want to renegotiate the compacts and would not simply let them be renewed for another five years, he said.

In their study, UNLV professors William Thompson and Robert Schmidt estimate that the amount of money wagered minus the amount of money won averages $200 a day, or $73,000 a year, for each of the casinos' 14,218 slot machines and $1,000 a day, or $365,000 a year, for each of the 267 blackjack tables. Actual figures are not public, the study says.

If those figures are accurate, the casinos are paying about 2% of their annual revenue to the state, Thompson and Schmidt say. By comparison, Indian casinos in other states pay 25% to Connecticut and New York, 8% to New Mexico, between 2% and 10% to Michigan and nothing to Minnesota, while California uses a complicated formula to set payments, the study says.

Crawford and Bobbi Webster, spokeswoman for the Oneida tribe, said the study's figures don't include what the tribes pay to local governments.

The Potawatomi alone pay $3.2 million each to the City of Milwaukee and Milwaukee County, in addition to the $6.4 million they pay the state, Crawford said. And if payroll taxes are added in, total payments by all tribes top $100 million, he said.

Thompson said payroll taxes shouldn't be included because they're mostly paid on behalf of individuals. He also said tribes in other states usually pay something to local governments in addition to what they pay the states.

However, Thompson conceded his figures were incomplete. He blamed that on the lack of public information about gaming revenue from the state and federal governments. But he also said he didn't request information from tribes or local governments.

Webster said the comparison with Connecticut was not fair because that state's tiny tribes don't have to support large reservation infrastructures. The Oneida have their own police force, fire department, schools and other services, Webster said.

Thompson and Schmidt also estimated that the casinos cost state and local governments $63 million in criminal justice costs and social costs from problem gamblers in such areas as unemployment pay, divorce court operations, welfare and therapy.

Webster and Crawford said the study didn't account for the casinos' positive benefits. Crawford said the tribes employ more than 20,000 people and donate generously to charities.

Copyright 2002 Journal Sentinel Inc. Note: This notice does not apply to those news items already copyrighted and received through wire services or other media
Provided by ProQuest Information and Learning Company. All rights Reserved.