WampaGate

What Is a Tribe To Do?

The house always wins

By Peter Kenney

What is a tribe to do? This past week’s State House hearings on gambling in Massachusetts show all too clearly the dark side of casino gambling as it relates to Indian tribes. Historically the United States has first seized their lands, then destroyed their culture, and in a final act of disenfranchisement moved Indians from their native and natural places to far away so-called reservations. Now more than five hundred tribes of Indians native to the United State have been granted federal recognition. This recognition means that tribes become sovereign nations and it is as sovereign nations that the outside world, including states and the federal government, must deal with them.

The Federal Indian Gaming Regulatory Act gives to recognized tribes the ability to operate gaming enterprises on tribal lands. For some tribes this has already become a source of incredible economic return. For many years after its completion more than two decades ago the casino at Foxwoods in Ledyard, Connecticut, was the largest single gambling floor in the world and the  annual gross income for tribal gaming in this country exceeds the combined totals of Las Vegas and Reno, Nevada. Tribal gaming is not big business -- it is immense.

Greed -- an equal-opportunity perverter
But with money comes a host of problems. Greed is an equal-opportunity perverter. It makes kind men cruel, quiet men loud and decent men dishonest. Those who have always been on the crafty side of ethical, when offered the opportunity to feast at the tribal crap tables, become positively ingenious at interpreting laws and rules to their own advantage. Two outstanding examples of this are Sol Kirzner and Len Wolman (on right eith brother), both originally from South Africa, both billionaires, both gaming and real estate developers/operators and both now firmly in control of one of the two federally recognized tribes located in Massachusetts, the Mashpee Wampanoags. Kirzner is identified by reliable sources as a net billionaire. Can Wolman be far behind?

The Yaqui way
A few years ago an MIT-educated Yaqui Indian named Floyd Gallegos (on right), who works to help tribes across the nation by gaining for them grants and other help, introduced a real estate developer from Detroit, Herbert Strather, to the Mashpee Wampanoags. Gallegos is a longtime friend of another MIT-educated Indian, Jim Peters. Peters is Commissioner of Indian Affairs in Massachusetts. Strather began pouring cash into the tribe to fund its drive for federal recognition. When the recognition was achieved it became clear that Strather had a long-standing contract with the tribe to be its gaming partner. Strather has stated publicly that he is a philanthropist; that he injected $15 million into the Mashpee effort.

As a commenter writes below. "as long as Shawn Hendricks is the Chairman, Marshall is still running the show."The Marshall deals
All the while that Strather was involved with the tribe, rumblings were heard about dissatisfaction among tribe members about how the Strather faction conducted tribal business. Strather paid the tribe’s lawyers, lobbyists and public spokesman directly, and clearly controlled the actions of the tribal council, led by Glenn Marshall. It surprised few in the tribe when CapeCodToday.com first broke the news that Marshall had a criminal record and had lied about his military service. By the end of that week, local and even national press had picked up the story and Marshall was forced out of office. It was the felon Marshall who had made whatever deals Strather had with the tribe.

Kirzner from the beginning?
Now the Massachusetts legislature wants to know about the details of the agreements that the Kirzner/Wolman group had in Connecticut with the Mohegans. Strather has declared that he has sold his interest in the Mashpee gaming agreements to Kirzner so now Massachusetts may have to deal with this hard-driving opportunist. In fact, I am far from alone in believing that Kirzner was the true power and money behind the Mashpee effort from the beginning. At the time when Strather claimed to be pumping millions into the tribe, commercial and residential properties he had developed in the Detroit area were being foreclosed. Something just did not ring true.

Extraordinary conditions
Kirzner's maneuverings in his dealings with the Mohegan tribe at the Mohegan Sun Resort are a textbook example of what tribes should try to avoid. Under the terms of the Federal Indian Gaming Regulatory Act at least two things are expected to be done differently from what happened in Connecticut:

1. The tribe will receive a share of the profits from every dollar spent on its land associated with the gaming enterprise.

2. The tribe's investors may receive no more than 30 percent of the net profits.

Kirzner found loophole after loophole in these clear conditions at Mohegan Sun. First he exercised the “extraordinary conditions” clause in the Act and raised his take from 30 to 40 percent. It is known that this is what the Mashpee have already agreed to in their contract with him. Then, and more significantly, he excluded from the tribe’s part of the deal everything except the actual income from the casino and its gambling operations. This means that the tribe does not share in the profits from parking lots, stores and boutiques, restaurants, health clubs, golf courses and so on. Not only did Kirzner out-lawyer the Mohegans, he has already achieved similar victories over the Mashpee.

Killed bill
Furthermore, as if winning lopsided deals from the individual tribes is not enough, Kirzner even sabotaged U.S. congressional efforts to tighten the terms of the Indian Gaming Regulatory Act. Arizona senator John McCain introduced legislation that would reinforce tribal rights with investors but his bill was defeated last year and Kirzner was prominent among those paying the freight for the lobbying effort that killed the new bill. How ironic it is that Kirzner used money he gained from exploitive deals with a tribe to defeat a law that would protect tribes from...Sol Kirzner.

Adelson says it’s wrong
Kirzner also changed his designation from “manager,” under which term he would have had only a five-year ride with the tribe, to “consultant.” This allows him to receive 10 percent of the Mohegan Sun gaming profits every year until 2014. Last year he was paid $68 million under this arrangement. Estimates are that his total profit from Mohegan Sun will exceed $1 billion. Another major figure in the gambling world is Massachusetts native son Sheldon Adelson, now ranked as the third-richest man in the United States. Adelson owns the Sands and the Venetian in Las Vegas and has vast gaming and resort interests in Asia and elsewhere. Asked by legislators last week what he thought of the Kirzner deals in Connecticut Adelson said they were wrong and that they should not have happened. Adelson appeared at last week’s hearings because he has declared an interest in competing for a casino gaming license under Governor Deval Patrick’s proposed gaming legislation.

We should never lose sight of a few simple facts when we look at and think about the Mashpee casino situation:

1. Outside interests are clearly in control of tribal governance.

2. The Mashpee Wampanoags never posted a Request for Proposals to make potential partners compete for their casino profits.

3. The people who have agreements binding the Mashpee to them have taken at least one other tribe to the cleaners already and actively opposed efforts to make federal law more protective of Indian interests.

Kirzner said he wouldn’t but…
One last fact should remain in view when pondering the charming Sol Kirzner. In negotiations with officials in Rhode Island to obtain certain gaming privileges there, Kirzner gave his personal assurance that he would not interfere in any political process affecting other gaming issues in Rhode Island. Sol Kirzner personally told the governor of Rhode Island he would not interfere in the politics of gambling in Rhode Island. Last year he paid millions of dollars into lobbying efforts to kill a bill that would have legalized slot machine competition in Rhode Island. If he places so little value on his own word, how much value should anyone else place on his contract?

It would appear that Kirzner is walking proof of the old adage, "The house always wins."