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QUESTION: What is the Difference in Gambling at Indian Reservations and Regular Casinos?
ANSWER: In the world of brick-and-mortar gambling, there are traditional casinos and then there are Indian reservation casinos (or Indian Casinos). At first glance, the two might not seem much different, but scratch beneath the surface and you’ll find a whole host of distinctions.
Knowing the difference in gambling at Indian reservations casinos and regular casinos might not make much difference to your bankroll, but it should provide you with a greater understanding of how the industry works. And for those who take their gaming seriously, every scrap of information is valuable on some level.
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Distinctions between Traditional and Native American Gambling
The items listed below are some of the most notable differences between gambling in Las Vegas and at a Native American casino. The next time you decide to go on a gaming road trip, give both locations a try and see if you can spot additional variations.
Location – The most fundamental difference is related to location. As the name would indicate, Indian reservation casinos are always located on lands set aside by the government for the use of specific Native American tribes. Regular casinos, meanwhile, can exist on any other property.
The total geographical area of reservation land equals 2.3% of the total area of the United States. Some tribes have multiple reservations allotted to them, while around 200 of the nation’s 550+ recognized Indian tribes have no land at all.
Revenue – While Las Vegas and Atlantic City would hate to admit it, the annual revenue from casinos on Indian reservations exceeds the combined totals for gaming in both cities. In 2009, for example, Native American locations pulled in $26.5 billion across 28 states.
Selection of Games – Most reservation casinos offer the same games as their competition. Some states have different laws though, so you might not find certain table games in a particular casino, for example. Or the way the slot machines work might vary. (See our post about Class II and Class III slot machines for more details about that.)
Payback Percentage – This is the biggest difference between gambling at regular casinos and Indian reservations. In many states (Connecticut is a notable exception), Native American -Indian- casinos are not required to report their payback percentages, which means the number could be decidedly unfriendly to the player. However, any Indian reservation casino manager will tell you that their rates are on a par with the competition, and there may be some truth to that. After all, a lower payback percentage on slots and other electronic games means fewer winners. Over time, a casino with a reputation for paying out less will begin to lose business. Whether they offer a 75% or 90% payback, the casino is still going to turn a profit.
Size – When it comes to the overall size of a brick-and-mortar gaming establishment, the folks in Atlantic City, Reno, and Las Vegas have a hard time competing with casinos built on Indian lands. Much of this has to do with location, as regular casinos have to build in cities that are already filled with everything from residential housing to shopping malls. Indian land is more wide open, which makes it easier to allot massive tracts of land for construction.
Today, the second largest casino in the United States is the Foxwoods Resort Casino on the Mashantucket Pequot Indian Reservation in Ledyard, Connecticut. It has over 6,300 slot machines, 380 table games, and the biggest bingo hall on the planet. The largest U.S. casino (WinStar World Casino in Thackerville, Oklahoma) is owned by the Chickasaw Nation of Oklahoma, although it is not located on an Indian reservation.
Legality – While traditional land-based casinos are subject to all state and federal laws, a 1979 Supreme Court decision ruled that states could not regulate activities on Indian reservations or tax their occupants. This was bolstered by a 1987 decision that said casino activities could not be state regulated as long as the type of gambling offered was legal in the state.
The law was further defined by the Indian Gambling Regulatory Act, which requires Indian tribes to consult the state before offering casino gaming. In the case of an impasse, the Secretary of the Interior is called upon to mediate and make an eventual ruling.
The revenue from casinos on Indian reservations is meant to be spent on charitable ventures and tribal government operations. In some cases, however, the profits eventually find their way into the hands of tribal members, although you can count on the state and federal government getting their cut.
Cultural Considerations – While traditional casinos offer a wide variety of themes, visitors to gambling locations on reservations should expect a certain Native American flair to the décor. This isn’t always true, of course, but tribal leaders tend to be proud of their heritage and make every effort to provide displays and exhibits to educate their customers. At the very least, some basic decorations in the Native American tradition can usually be spotted in certain locations throughout the establishment.
Other cultural issues sometimes relate to traditional Indian beliefs and superstitions. An interesting example occurred when the Fire Rock Navajo Casino was under construction in New Mexico. Numerous problems led some to believe that the endeavor was being cursed by skin-walkers, magical practitioners adept at turning into animals and generally behaving in a sinister fashion. The construction continued, however, and the CEO of the casino later assured visitors that various blessings had been performed to ward off evil. Despite possible efforts from the forces of evil, the casino is still in operation.
Management – While you might suppose that casinos on Indian reservations are managed by members of the tribe, you would be wrong in many cases. In this way, gambling at Indian reservations isn’t much different than regular casinos, as they want to bring in experts who can squeeze every ounce of profit out of the business. For example, Harrah’s manages one such location in North Carolina, and Donald Trump once tried his hand at managing a reservation casino in California.
Next time someone is wondering about the differences in playing at Indian Casinos and regular casinos you’ll be able to provide an appropriate and informed answer. Armed with this knowledge, serious players can then make a determination about the best place to play.
CASINOS: Sovereignty keeps financial reports from state, public
November 24, 20033
By GUY KOVNER THE PRESS DEMOCRAT
© The Press Democrat
Patrons at California Indian casinos are pouring about $130 million a day into 52,600 slot machines. How much they are reaping in return and whether the payoff is better across the state line in Nevada is one of the central issues in the competition for the gambling dollar.
Nevada pays almost 95 cents of every dollar dropped into slots back to players, and it must account for every nickel in reports to the state. California has no such records, leaving gamblers at the state's 54 tribal casinos guessing and state policy-makers in the dark.
Indian casinos are located on sovereign territory, with most rules and enforcement handled by the tribes themselves. Their financial reports go to a federal agency, which doesn't share the details with the state or the public.
Tribal leaders say their casinos pay out as much as Nevada's. A Nevada gaming expert maintains the return is probably lower, but there is no independent verification for any claim.
'There's no way to know,' said Bill Thompson, gaming expert and professor of public administration at the University of Nevada, Las Vegas.
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Millions of gambler dollars are at stake because slots, from nickel-a-pull games to progressive machines with multimillion-dollar jackpots, account for the bulk of casino gaming revenues: 67 percent in Nevada; 80 percent to 90 percent in California.
Some Nevada gaming analysts say their state's 185,000 slots are more generous -- 'looser' in gaming parlance -- than California's, contending that stiff competition drives Nevada's odds in the player's favor.
Nevada casinos advertise as much as a 97 percent payback, with some machines set above 100 percent, Thompson said. Casinos advertise the rates to draw customers, and the 100 percent machines are scattered on the casino floor.
Nevada's Gaming Control Board polices casino advertising and constantly checks slot machine performance, said Joanie Jacka, administrative coordinator for the agency.
The state won't allow anyone to claim the 'loosest machines in town,' Jacka said, because individual casino payback rates aren't made public. Nevada reports slot payback by area, such as Las Vegas, Reno and Tahoe, and by type of machine, from 5 cent to $100 games. 'Our machines pay the most of any in the United States,' Thompson said.
Atlantic City slots return 91 percent to 92 percent to players, and New Jersey doesn't allow casinos to advertise their odds, he said.
In contrast, California's 54 casinos enjoy what Thompson calls a 'local monopoly,' sheltering them from competition and allowing a slot machine payback he estimates at 85 percent.
A tribal casino executive says there's no way the payoff could be poorer in the Golden State. 'You'd have a big empty room,' said Anthony Miranda, who runs the Pechanga Resort and Casino in Riverside County, one of California's largest gaming halls.
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Tribal casinos pay back an average of 95 percent to 96 percent, keeping only 4 percent or 5 percent and depending on high volume, meaning heavy play at the machines, to make a profit, Miranda said.
'If we had 80 percent payout games, our customers would be flocking to Nevada,' he said. Miranda declined to cite Pechanga's payback, but said it was 'comparable to Nevada.'
A computer chip in every machine controls the payback rate. In Nevada, state officials test the machines before and after they are placed on a casino floor, assuring they meet the state's 75 percent minimum payback. Competition forces casinos to sweeten the pot considerably.
The payback varies, from 93.8 percent last year on the Las Vegas Strip to 95.35 percent in Sparks, one of the best rates in the state, according to Nevada Gaming Control Board reports. Reno casinos paid back 95.02 percent; South Shore Lake Tahoe, 94.23 percent; and North Shore, 94.62 percent.
Payback rate improves with the stakes: Nevada's nickel slots returned 92 percent to players, while $25 machines paid back 96.7 percent.
Patrons dropped $115 billion into Nevada slots last year, and the casinos kept $6.3 billion, about 5.5 percent. Keeping another 1 percent of the total would have added more than $1 billion to the casinos' coffers.
California tribal casinos do not make public how much they are making and paying back from slot machines, but state officials and other experts say slot machines earn casinos $250 a day, or $13 million a day statewide. If that represents 10 percent of the money put in by players, assuming a 90 percent payback, then $130 million a day -- $47.5 billion a year -- is pouring into the machines.
Tribal casinos submit annual independent audits, including slot machine payout, to the National Indian Gaming Commission, a federal regulatory agency.
The agency doesn't share the financial data with states, said Greg Bergfeld, who works in the national commission's Sacramento office.
California casinos' slot payback rate is 'very competitive with Nevada,' he said.
'There is no verification,' said Cheryl Schmit, director of Stand Up for California, a gambling watchdog group.
The only statistics released by the national commission are tribal gaming revenues by region, including one region that essentially covers California. Gaming revenue for fiscal year 2002 in California was $3.6 billion, up 24 percent, or more than $700 million, from the previous year, according to the national commission.
Critics say the tribes are too conservative in calculating their revenues. The state says tribal gaming revenue is $5 billion to $6 billion a year.
River Rock Casino, which opened amid controversy last fall in Alexander Valley, offers a payback 'similar to those in Nevada,' said spokesman Dave Reiseman. He didn't cite a specific figure.
Inside the domed, tent-topped casino, bright lights flash, chimes ring and drums spin on 1,600 slot machines with names like 'Blazing 7,' 'Movie Star' and 'Winning for Dummies.' A 25-cent slot lists a $1,198 jackpot, while the $1-a-play progressive slot 'Megabucks' shows a jackpot of $7.8 million and counting upward right before players' eyes.
Two players said they think Nevada offers better odds.
'I think they pay better in Nevada,' said Pedro Fernandez of Santa Rosa, who said he puts about $50 in the slots on his visits to River Rock.
James King of Santa Rosa said he has 'done pretty well' at River Rock, including a recent $1,700 jackpot. But he used to go to Reno once a month 'and it always seems I did a little better there.'
Even if River Rock slots are less generous, King said there's a big difference in time and money between a four-hour, 170-mile drive over the Sierra to Reno and a 20-minute trip to Alexander Valley.
Convenience is a significant economic factor, which may erase the difference in slot payback between distant Nevada and casinos near a Californian's home, Thompson said.
No matter how high the payback, there's no guarantee a player will profit from pumping money into a machine. By continued playing -- a process known in gambling parlance as 'the grind' -- machines will usually take it all.
If the experience lasts long enough, it may not matter. 'People tend to put in all their money anyway -- they're just buying time,' Thompson said.
King said that when he hit the $1,700 jackpot, he left while he still had $1,200. 'In the long run you always end up losing more than you win,' he said.