The Proposed Navajo Gaming Pact

February 16, 2014 — Leave a comment

The three gaming casinos on the Navajo Reservation have created badly-needed jobs on the reservation. But a proposed gaming compact negotiated by the Governor’s office extending and expanding gaming on the Navajo reservation should not be approved by the Legislature unless it expressly permits the approval by the State of online gaming. In 2011, the U.S. Justice Department declared that online gaming did not violate federal law. Nevada, Delaware and New Jersey have since authorized online gaming and eight other states have it under consideration. Many expect it to be adopted across the country. If New Mexico approved online gaming, the state could gain badly needed revenues. While the wisdom of expanding gaming in New Mexico is certainly debatable, the state has other options, given that online gaming could have a potentially devastating effect on tribal casinos. For example, the state could offer the gaming tribes a deal under which it would agree not to authorize online gaming if the tribes agreed to badly-needed updates to their gaming compacts. These updates would include:

  • Increased revenue sharing to replace the revenue lost by not authorizing online gaming.
  • More comprehensive regulatory oversight. The LFC staff reports it currently is not possible to determine if tribal casinos are in compliance with their compacts.  
  • Shortening the inexplicably long terms of the compacts. Many casinos have been operating since 2001 or earlier and most of the current compacts are dated 2007. But they won’t expire for another 24 years. Arizona’s gaming compacts are much shorter. 
  • Limit the deployment of so-called Class II gaming machines on which tribes are not required to share revenue. Originally, Class II gaming meant bingo games. But now tribal casinos are increasingly deploying so-called Class II bingo gaming machines that look and play like slot machines except that no revenue from these machines is shared with the state. In 2012, the Navajo Nation opened a casino devoted exclusively to Class II gaming machines that does not share revenues with the state.
  • Require, as Arizona does, that gaming tribes share some of their revenues with non-gaming tribes not so fortunate as to be located on interstate highways.
  • Require the tribal casinos to compensate local governments for the emergency services provided to them. 
  • Resolve the controversial “free play” promotions where casinos entice gamblers by letting them pay for free but if the gambler wins, the winnings are used to reduce the “net win” shared with the state.
  • Perhaps most importantly, the programs of assistance to problem gamblers that casinos are required to be provide must be enhanced. The state must be allowed to assess the extent of problem gaming, gauge the effectiveness of the treatment gaming tribes are providing and make sure enough resources are devoted to treatment.   

There is good reason to believe that problem gambling in New Mexico is far more serious problem than we now believe. A series of articles on problem gambling recently appeared in Oregon’s leading newspaper, The Oregonian. The state of Oregon contracted for an extensive study of problem gambling in that state. The study concluded that most of the revenues from the state’s licensed slot and poker machines come from just a sliver of players who lose thousands of dollars yearly, primarily from slot and video poker gaming machines. The study found that problem gamblers typically remained at slot and poker gaming machines until their wallets were empty. Past studies of problem gambling have reached similar conclusions. A recent book by an MIT scientist details how math experts and neuroscientists were hired by by gaming machine manufacturers to create whole new generations of electronic slots meant to attract younger customers used to playing arcade-style video games. The idea, says the author, is to lull players into a sense that they’re winning even as they lose 60-90% of the money they put in these machines. The newspaper reports that new gaming machines will soon be available in Oregon, and likely in New Mexico, that are designed to be even more addictive than those now in use. It’s important for New Mexico to discover whether the scope of problem gaming in New Mexico is similar to that of Oregon. The New Mexico Council on Problem Gaming, designated by the gaming casinos and racinos to carry out their obligations to assist problem gamblers, chooses not to disclose the number of problem gamblers that have contacted it. However, its most recent annual report states that 72 percent of problem gamblers who have contacted NMCPG primarily use slot machines. These gamblers averaged 21 hours per week at casinos and they had average gambling debts of $11,600. The NMCPG also reports that in 2012 tribal casinos and racinos provided a total of only $212,000 to NMCPG to treat problem gamblers, one-eighth of what is spent in Arizona for treatment. Whatever happens with the proposed Navajo compact, the decision whether to authorize online gaming does not have to be made now. That question will, however, become a moot point if the Legislature approves the Navajo compact without assurance that future approval of online gaming is permissible and does not relieve the Navajo casinos of the obligation to share revenues with the State.

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