Regulatory Updates

Paying “Our Fair Share”

Darrell Moorehead
Darrell Moorehead

by Darrell Moorehead, Surveillance Coordinator
Lucky 7 Casino

California's governor, Arnold Schwarzenegger, is advocating Indian casinos in California "pay their fair share" with a 25percent tax on revenues. Compare this figure to the 8.84 percent tax corporations pay.

Schwarzenegger is attempting to seize onto what has become a major Indian resource. The majority of California's fifty-one Indian casinos would be overwhelmed by adding a large financial burden. These small casinos will be the real losers should a 25percent tax be imposed on all California Indian casinos.

Gaming revenues have changed Indian Country from some of the poorest areas, with only basic public services and astronomical unemployment rates, to self-supporting contributors to their surrounding communities. A typical example is Smith River Rancheria's Lucky 7 Casino.

Smith River Rancheria, where I am enrolled as a tribal member, had a total annual budget of sixty thousand dollars in 1995, the year before we started our casino. In January, 2005, the Rancheria donated $3,605 to assorted causes; activities for tribal members, local service organizations, local schools and cultural activities. The Smith River Rancheria also uses gaming revenues to provide support for our students pursuing post secondary education.

We also use gaming revenues to provide partial funding for our healthcare, a senior nutrition program serving all Native Americans in Del Norte County and Southwestern Oregon, and our How-On-Quet Hall Community Center, the new home for the Senior Nutrition Program. Significant amounts of gaming revenues aided in the purchase of land within and near the Rancheria reversing a trend of shrinking land base. This land is, and will, continue to be used for housing, head start programs and child care, a community center, administration facilities, a fuel mart, sewage disposal, and expansion of the casino facility. These kinds of community contributions can be found everywhere in Indian Country, but the greatest contributions are the jobs created on reservation land.

In 1998 California Indian casinos employed an estimated 14,500 California residents, 90percent of whom are non-Indians. When the multiplier affect is applied, an estimated 34,000 additional jobs have been created. Indian gaming is estimated to have reduced welfare payments by $50 million in California alone. This includes reductions of $21 million to tribal members and an additional $28.9 million to other former recipients.

Of the thousands employed with Indian casinos, all pay federal income tax. Native Americans who are not an enrolled member of the particular tribe where a casino is located and who do not reside within the boundaries of the Rancheria are also obligated to pay state income taxes. Indian gaming currently contributes approximately $120 million in California and local tax receipts annually, including $36.6 million in state personal income taxes, $23.6 million in state corporate income taxes, $48.6 million in state and local sales and use taxes, and $9 million in other taxes and payments in lieu of taxes.
The gaming tribes already have agreements (compacts) that fund the state's cost of regulating the casinos and share a substantial amount of the revenues with non-gaming tribes. Up to $1.3 million to each of the non-gaming tribes in the state.

A 1998 economic analysis stated direct expenditures by gaming patrons in turn led to subsequent rounds of activity for affected businesses who hire employees, purchase goods and services from local vendors, and undertake construction and maintenance projects. The total positive impact of Indian gaming on the output of final goods and services in California, both directly and indirectly, through subsequent rounds of spending, is estimated to equal approximately $4.4 billion. Seventy-four percent of Indian gaming customers surveyed indicated that if Indian gaming were not available in California they would go instead to a casino in Nevada, thereby reducing income, jobs, and tax receipts in California.

One hundred percent of the revenues from Indian gaming are a tax, because all of the profits are going to a tribal government, who in turn can only use these gaming revenues for purposes normally undertaken by governments.

Charitable contributions, jobs, reduction of welfare, and billions of dollars in business generated are all positive impacts of Indian gaming in California. On top of these benefits Governor Schwarzenegger wants to heap an additional 25% tax. Such a tax is not only unreasonable, but illegal. The "Indian Gaming Regulatory Act," while allowing gaming revenue funds for state regulatory expenses, expressly preserves tribal sovereignty for purposes of taxation. To foist such a burden upon Indian gaming as our "fair share" is unconscionable and another form of scapegoating.

Darrell Moorehead is Surveillance Coordinator for Lucky 7 Casino in Smith River, CA. He can be reached by calling (707) 487-5723 or email