Indian Casinos: Wheel of Misfortune — Who Gets the Money? (Part 1)

December 16, 2002

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IN YOUR FACE. For sheer audacity, it's hard to beat the shared vision of a Florida developer and an Oklahoma Indian tribe to build a casino in Kansas. The developer is Alan Ginsburg, who heads North American Sports Management (Noram), which has already cut casino development deals with tribes in five states. The tribe is the 3,900-member Wyandotte tribe of Oklahoma, which has a reservation in the state's northeast corner. Oklahoma prohibits Las Vegas—style casinos, and that is why the Wyandottes want a satellite reservation in Kansas, which does permit big-time gaming.

Because the tribe's ancestors lived in Kansas in the 19th century, it had little trouble persuading the BIA to place in trust an abandoned Masonic temple next to an Indian cemetery in downtown Kansas City, Kans., just across the street from city hall. That makes the old lodge and the small parcel around it eligible for Indian gaming.

Not that the Wyandottes and Ginsburg wanted to build a casino there. But they certainly got the authorities' attention. What they really wanted was a large tract somewhere in the metropolitan area. When negotiations stalled, the tribe moved temporary buildings onto the downtown property and threatened to open a minicasino. They also filed a lawsuit against 1,300 property owners in a nearby industrial district, charging that they are occupying land improperly taken from the tribe 200 years ago.

The Wyandottes' not-so-subtle pressure apparently worked. Local officials agreed to let the tribe build a casino and hotel on a 52-acre parcel on Wyandotte County's western edge. U.S. Representative Dennis Moore, the area's Democratic Congressman, has introduced legislation to bless the deal in Congress, thus bypassing the BIA. If approved, the tribe would then have three reservations—in two states.

NO TRIBE, NO PROBLEM. The casino envisioned by the Lytton Band of Pomo Indians is poised to become one of the most profitable in the country. Not bad for a clan of Indians that not long ago had neither a tribe nor a reservation.

In the early '50s the Lyttons consisted of two extended families, the Steeles and the Myerses, who were the sole occupants of a 50-acre reservation for homeless Indians north of Healdsburg, Calif. The families sometimes feuded, but they ultimately shared a common dream: they wanted to be landowners, not tenants on a reservation. In 1952 John and Dolores Myers wrote the BIA asking "to secure a patent fee or a deed to this property." The Steeles sent a similar letter: they, too, wanted the reservation land deeded to them personally.

For the next several years, the families wrote more letters to the bureau—and to members of Congress—pleading their case. Finally, in 1961, after a congressional act paved the way for reservation land to be divided among individual members of tribes, they got their wish and the BIA signed the property over to them. Within two years the families had sold off every parcel.

Two decades later, when high-stakes bingo halls were sprouting up across the state, the Lytton descendants decided to re-form and secure federal recognition, which is needed to own a casino. They bypassed the traditional regulatory process and piggybacked on a lawsuit filed by a group of Northern California Indians who claimed the Federal Government had improperly terminated their tribes in the 1960s. When a judge ruled in the group's favor in 1991, the Lyttons were also formally recognized.

Obtaining reservation land on which to build the casino was even easier. Sam Katz, a Philadelphia financier who has arranged multimillion-dollar financing packages for sports stadiums from Denver to Miami, has become the Lyttons' guardian angel. Katz and his partners found and bought a 10-acre parcel of land for a casino amid the graying stores and modest homes of San Pablo on the East Bay, a 25-minute drive from San Francisco. You might call it a "gaming reservation" because the Lyttons do not intend to live there. Katz has acquired a second piece of property—near Windsor, 60 miles away—for the tribe's "residential" reservation. As Katz told TIME, "We've paid all the expenses of applying for and putting their applications into the Bureau of Indian Affairs for both pieces of property, which involved extensive environmental surveys and traffic surveys and archaeological surveys and historical surveys and you name it." Katz has done much more: he has also paid for tribal government staff, for the tribe's leases on property and equipment, and for its public affairs activities. He has paid its legal expenses and hired lobbyists, consultants and advisers.

So when it became clear that the petitions might languish at the BIA, the Lyttons and their backers had everything in place to take a new tack. They approached George Miller, longtime Congressman from the East Bay, whose district includes San Pablo. The ranking Democrat on the House Resources Committee, Miller did what only a senior member of Congress could: he plugged a three-sentence amendment into an unrelated bill that gave the Lyttons their reservation. Later, there would be outrage over the amendment. Frank Wolf, a Republican Congressman from Virginia, called it a disgrace. But for 200 Lyttons and their backers, it's an American success story.

— With reporting by Laura Karmatz and research by Joan Levinstein, Mitch Frank and Nadia Mustafa

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