The Need for Indian Country to Diversify Beyond Gaming

Gabe’s practice Galanda Broadman focuses on complex, multi-party litigation and crisis management, representing Tribal governments, businesses and citizens. (Courtesy Gabe Galanda)

Gabe Galanda has been sounding the horn on the need for Tribes to diversify beyond gaming for more than a decade. While gaming revenues have grown year over year since 2010, the increases have been marginal, with the increase in revenue from 2016 to 2017 coming in at just 3.9 percent for a total of $32.4 billion, according to the National Indian Gaming Commission’s (NIGA) Fiscal Year 2017 Gross Gaming Revenue report.

Galanda is a partner at Galanda Broadman, an American Indian owned law firm dedicated to advancing Tribal legal rights and Indian business interests. He’s been published more than 100 times and has been interviewed and quoted by mainstream and international news outlets like the New York Times, the Wall Street Journal, The Guardian, and Le Monde.

In short, he knows this issue well and has been following it for a long time.

NIGA’s FY2017 revenues are calculated from the independently audited financial statements of 494 gaming operations, owned by 242 federally recognized Tribes, according to a press release announcing the report results.

“Gaming is the only industry that has brought economic prosperity across Indian country,” Galanda told Native Business Magazine. “But Indian gaming is not forever. While gaming is still on the rise, it will stagnate at some point and will then start to taper off.”

Galanda says that a combination of increased competition and generational shifts forebode trouble on the horizon. As Tribes see an increase in commercial and state-driven gaming activity, coupled with the recent Supreme Court ruling that legalized sports betting, Tribes can no longer trust that Tribal lands will continue to be among the few places where consumers can find gaming options.

Tribes active in gaming are also dealing with a generational shift as millennials are less drawn to Vegas-style gaming than previous generations have been, choosing gaming options on smartphone and game consoles instead of those found in casinos.

“This isn’t going to start happening tomorrow,” he said. “It’s not something that’s going to happen in the short-term, but it is going to happen in the mid- or long-term.”

According to a report in Axios, the recent Supreme Court ruling means that “many tribes risk losing their exclusive gaming rights within states, which could lead to significant revenue losses.”

In order to not find themselves behind the 8-ball when gaming revenues start to decline, Galanda says Tribes need to start diversifying their economies sooner rather than later.

“The question is not if gaming revenues will start to decrease, but when,” he said. “Tribes need to start doing an inventory of what makes them a Tribe and what industries make the most sense for a diversified economy.”

Unlike gaming, there is no other industry that can be a panacea for Tribes’ economic needs. Some Tribes may thus find the answers in industries like renewable energy or fossil fuel development. Others may find that hospitality or technology make the most sense. The important thing, though, is that Tribes should start taking an inventory of their assets, including physical capital, human capital, land, and resources.

“They have to do that inventory and think beyond their current cash flow,” he said. “It is very rare that one industry will serve the needs of all 573 Tribes.”

In 2011, Galanda initially published “The Business Case for Private Investment and Development in Indian Country,” which he revised in 2012 and presented at the 12th Annual Native Nations Law Symposium. In that paper, he wrote that “The inevitable legalization of Internet gaming and, in some jurisdictions, commercial land-based gaming, will eventually put a major dent in Indian Country’s bottom line.”

“Where Tribes bring a staggering array of tangibles like land and location, and intangibles like sovereignty, relaxed red tape and tax exemption, their corporate business partners bring proven industry expertise and new capital to the reservation,” he wrote. “Whether though a joint venture between a Tribe and a non-Indian business, a Tribal land lease to a non-Tribal company, or a tax credit investment […] there are an abundance of very advantageous reservation development deals for Corporate America to symbiotically explore with Tribes at this time in our nation’s history. The time is now for Tribes to leverage these advantages to create new economic and job opportunities on their reservations.”