Michigan Tribes Face Service Loss Among COVID-19 Casino Closures

FireKeepers Casino Hotel, one of the largest employers in Battle Creek, Michigan, has been closed since March 16. (Photo by Patman Droneography)

All 12 of the federally recognized Tribes in Michigan own and operate casinos, all of which are currently shuttered due to the global COVID-19 pandemic. The casinos operated by Michigan Tribes support services for Tribal members, and void of gaming revenues, Tribal service budgets are in trouble.

Bridge Michigan spoke to Frank Ettawageshik, executive director of the United Tribes of Michigan, who estimates that gaming contributions make up about half of government budgets for Michigan Tribes.

“The casinos provide the revenue that’s making up for woefully inadequate funding from the federal government,” Ettawageshik told Bridge.

Tribes initially entered the gaming market to make up for inadequate federal funding that was promised as part of their treaty obligations when the United States stripped away Native American lands. Because Tribes are unable to collect taxes, Tribes are tasked with finding other avenues to generate revenue.

“Federal funding for Native American programs across the government remains grossly inadequate to meet the most basic needs the federal government is obligated to provide. Native American program budgets generally remain a barely perceptible and decreasing percentage of agency budgets,” reads a 2018 report from the U.S. Commission on Civil Rights. “Since 2003, funding for Native American programs has mostly remained flat, and in the few cases where there have been increases, they have barely kept up with inflation or have actually resulted in decreased spending power.”

Tribes met that funding deficit head-on by asserting their sovereignty and entering the casino industry. The Seminole Tribe of Florida opened the first high-stakes bingo hall in 1979 after realizing that smoke shops were not generating enough revenue.

“Tax-free tobacco sales generated about $1.5 million for the Tribe in the early years. Seminole gaming, according to former chairman James Billie, started with a realization that reliance upon the Federal Government was no guarantee of sustainable Tribal independence, autonomy, and sovereignty. Federal recognition made the Seminole Tribe eligible for federal services and additional federal grant money, but as Billie stated, ‘[t]he United States wasn’t built on grants,’” reads The Seminole Tribe and the Origins of Indian Gaming by Matthew L.M. Fletcher. “Seminole nationhood would not be either. A year after the bingo hall opened, bingo revenue hit $1 million per month and smoke shop revenue, bolstered by the bingo business, reached $800,000 per month.”

Casino revenue supports a number of Tribal programs and infrastructure — from education to elder meals. Frank Cloutier, Tribal spokesman and former chief of the Saginaw Chippewa Indian Tribe in central Michigan, told the Bridge that gaming revenue makes up three-quarters of the Tribe’s budget. The Tribe’s Soaring Eagle Casino & Resort has been closed for seven weeks, which means some programs could be chopped.

“Most people hear about Tribal gaming and they think slot machines and blackjack tables,” Cloutier told the Bridge. “I’m talking about education. I’m talking about lunch programs for our youth. I’m talking about elder care, I’m talking about housing infrastructure, Tribal court, fire and police.”

Hannahville Indian Community owns and operates The Island Resort & Casino in the Upper Peninsula of Michigan and plans to begin phases of reopening on May 6 with slot machines, select to go food, select bars, bingo and retail. (Courtesy Hannahville Indian Community)

And casino revenue doesn’t only support Tribal programs; it goes to local communities as well.

Michigan Tribes agreed to pay 2 percent of casino winnings to their local communities, according to a 2018 report from the Michigan Gaming Control Board. Michigan casinos paid out more than $30 million dollars to local Michigan governments in 2018, the report states. 

Kathy George (Seneca), CEO of FireKeepers Casino Hotel, in Battle Creek, Michigan, previously shared with Native Business that the FireKeepers Local Revenue Sharing Board has provided nearly $200 million to the state, local governments and area schools since opening in 2009. “The Tribe is a wonderful partner to the community, and it really gives us a sense of purpose beyond just serving our guests. We’re serving a community,” George says. FireKeepers closed on March 16 due to the coronavirus pandemic, and has not yet set a date to reopen. 

READ MORE: A Genuinely Effective Leader: Kathy George, CEO, FireKeepers Casino Hotel

While, legally, Tribes could ignore Michigan Gov. Gretchen Whitmer’s stay-at-home order, which was recently extended through May 15, Michigan Tribes thus far have followed her mandate and kept non-essential businesses — including casinos — closed.

Without supplemental support from the Coronavirus Aid, Relief, and Economic Security (CARES) Act or online gaming, Tribal leaders are not sure how long they can remain closed.

“I hope and pray she [Whitmer] is completely aware of the negative impact” on Tribal communities, Cloutier told the Bridge. The Soaring Eagle Casino & Resort remains closed until further notice, and the Tribal council will be reviewing that status soon, Cloutier said, but “there could possibly be a point where we have no other alternative.”

Michigan lawmakers legalized online gaming in December 2019 and planned to have it up and running by 2021, but amid COVID-19 closures, Michigan Tribes are pushing to get it up and running sooner so that some form of business can continue even while gaming floors remain empty. 

A spokeswoman for the governor’s office told the Bridge that Whitmer is reviewing those requests.

Tribes are due a cut of the $8 billion CARES Act, signed into law March 27, but it’s currently held up in lawsuits in which Tribes say for-profit Alaska Native Corporations (ANCs) are not entitled to any of the funds. Judge Amit Mehta issued a temporary restraining order and preliminary injunction April 27 barring Steven Mnuchin, Secretary of the U.S. Department of the Treasury, from distributing any COVID-19 relief funds designated for Tribal governments to ANCs.

READ MORE: Preliminary Injunction: Treasury Cannot Disburse Any Tribal CARES Funding to ANCs

Late Friday, May 1, the U.S. Treasury said it “has not yet arrived at a determination as to the amounts to be paid to Tribal governments from the Coronavirus Relief Fund under Title V of the CARES Act.” 

All of this has left Michigan Tribal leaders wondering if economic diversification is the next logical step.

“Like so many things, if all your eggs are in one basket, then if something should happen to that area it kind of kills your ability to do anything else,” Tom Durkee, business development manager for the Michigan Economic Development Corp., told the Bridge.

The Nottawaseppi Huron Band of the Potawatomi has been successful in developing new income streams through its Waséyabek Development Company. The Southwest Michigan Tribe owns and operates the FireKeepers Casino Hotel, and WDC was formed to increase economic growth through non-gaming acquisitions. Most recently, NHBP partnered with the Gun Lake Tribe to acquire the historic McKay Tower in Grand Rapids, Michigan. The Tribe plans to develop the space into commercial, retail, office, event, and living spaces.

The Nottawaseppi Huron Band of the Potawatomi recently partnered with the Gun Lake Tribe to acquire the historic McKay Tower in Grand Rapids. (Courtesy Waséyabek Development Company / Facebook)

“This co-investment will be beneficial to our Tribal communities by providing new employment opportunities and resources to Tribal communities and downtown,” says the Waséyabek Development Company Facebook page.

While the Hannahville Indian Community relies on its Island Resort & Casino for revenue, it recently reassured Tribal members that per capita payments would not be interrupted because of the closure.

“Hannahville is in the position to make per cap payments because we strictly adhered to a financial plan for the last twenty years to control spending to save and invest our casino revenues for emergencies like these. The fact that we have the ability to continue making per capita payments despite the inability to game is a testament to this strategy,” reads a statement from Hannahville. “Tribal Council hopes that all Tribal members see the importance of maintaining this strategy for the benefit of our membership in the future.”