Opinion: Tribes diversifying their economies

Monday, March 5, 2007  

"Many Native American business leaders share a suspicion that, one way or another, Congress and state governments are threatening what is in many regions an Indian gaming monopoly.

As Lance Morgan puts it, 'Gaming is an artificial market. There's no reason why the state couldn't put a casino closer to the region's major city, just as there's no reason that a state couldn't make gaming totally illegal.'

The Winnebago of Nebraska faced these issues early. Their casino, far from any major city, was never going to compete with Las Vegas, but the facility faced particular competition from casinos across the border in Iowa, which had legalized riverboat gambling around the same time as the tribe's WinnaVegas casino opened.

The Winnebago response was Ho-Chunk Inc. (Ho-Chunk is an alternate name for the tribe). The collection of companies brought the tribe $400,000 in revenue in its first year, 1995, but in the dozen years since then it has grown into today's $140 million conglomerate.

CEO Morgan is frank about the edge his company derives from its tribal status. As minority-owned businesses, tribal companies like Ho-Chunk are given special status in the bidding for federal contracts. According to Seattle attorney Galanda, there are other advantages as well, from tax deductions on production equipment to deferred or reduced US customs duties on imported goods to relaxed zoning laws. In many states, tribal businesses, because they are owned by sovereign governments, don't have to pay corporate income taxes or property tax, or charge sales tax on goods sold on tribal land.

'Like any business, we're trying to find ways that the tribe has advantages and exploit them,' says Morgan. 'Largely we're trading on a simple price advantage.'

In a sense, tribal governments bidding for business are simply doing what state and local governments do when they're competing with each other to be the site of a major manufacturing plant. Some American Indian tribes have even started to bill themselves as an outsourcing alternative to south and east Asian countries; they offer some of the financial benefits of sending work overseas with fewer logistical and political complications."

Get the Story:
Drake Bennett: Hedging their bets (The Boston Globe 3/4)

Relevant Links:
Ho-Chunk Inc. - http://www.hochunkinc.com
Winnebago Tribe - http://www.winnebagotribe.com

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