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Tribal Gaming: Casinos -- Winners and Losers

By Tu-Uyen Tran and Susanne Nadeau, Grand Forks Herald, N.D.
Knight Ridder/Tribune Business News

Oct. 16, 2005 - A thick, obscuring fog hung over the road to Thief River Falls late Thursday morning making part of the drive a bit of a challenge. But that was no deterrence to the dozens of visitors at the Seven Clans Casino near here.

June French, a Grafton, N.D., retiree, said she and three or four friends make the trip about three times a month, after which they'll make the seven-mile drive to Thief River Falls to do a bit of shopping.

Jim, a retiree from Grand Forks, said he and his wife gamble frequently here though, unlike French and friends, they usually head right home without stopping in town.

Many Thief River Falls business owners and officials think there are a few more Junes than Jims out there, which is to say they think the five-year-old casino has generally been a good thing for the town.

In Devils Lake, where the Spirit Lake Casino has been operating for nearly a decade, most business owners feel the same way.

Those experiences could prove a useful lesson for Grand Forks residents and their elected leaders as they debate the merits of an Indian casino the Turtle Mountain Band of Chippewa is proposing in town. Supporters say a casino would bring in new visitors, bolstering the local economy. Opponents say it'll only lead to more gambling addiction and could compete with existing businesses.

That said, there is really no easy way of calculating the impact of casinos on Devils Lake and Thief River Falls. No one has kept any statistics nor conducted any surveys. So it comes down to individual anecdotes.

Have businesses felt any impact? Have they noticed more tourists in town? Is charitable gambling suffering? Are there more gambling addicts?

The answers are surprisingly mute for a topic that can be rather controversial.

None of those interviewed, save casino operators, had particularly strong opinions. They reckon the casinos have helped, though not by a huge amount. Some said the casino hasn't made much of a difference, taking away in equal proportion to what it gives. One city official even said he often felt as if there wasn't a casino down the road.

Casino operators note that they are big employers, and many of their employees live in town. Since they often attract visitors from far away, that's money in the economy that wouldn't otherwise be there.

Still, there are a few significant differences between the proposed Grand Forks casino and those in Thief River Falls and Devils Lake. While the former would be all but within city limits, the latter are seven miles south of their respective host towns.

Seven Clans and Spirit Lake also are alcohol-free casinos, which might not be the case with the proposed casino, as Turtle Mountain is not a dry reservation.

Ed's Bait Shop south of Devils Lake would seem to be in just about the right place to take advantage of casino traffic. His store sits right on North Dakota Highway 20, the main route to the casino from Devils Lake and U.S. Highway 2.

Yet, co-owner Bill Sackenreuter couldn't really say the casino has been a boon for business. "We get a few odd sales here and there, but the buses don't stop in," he said. Sales pick up some when the casino runs a fishing tournament or concert events, he said.

When the buses do stop, their impact hasn't been especially impressive either.

The Super One supermarket in Thief River Falls gets about eight to 12 buses a weekend by manager Ross Dalzell's estimate. Those big buses carry a lot of customers, he said, but they don't buy much more than basics such as cheese and meat that are cheaper here than in Canada. It's not quite like someone stocking up on groceries for the week, he said.

That sort of assessment was one frequently heard from businesses. The casino makes a difference, they say, but it's a small one.

Even the few that say the casino has hurt them couldn't really say the pain has been very great.

Jim Scott, the manager at the Hartwood Motel in Thief River Falls, said he did see a decline after the casino's hotel opened, though he's not losing money now. "I never did any study on it or anything," he said, "but you got a good feeling on that. It's pretty much taken Canadian business away from us."

In the absence of known facts, resentment can take over.

"They can charge $10 for a king crab dinner, because they know they can make the money from that meal from the people who will put it into slots," said one Devils Lake business owner who didn't want his name published because some customers come from the reservation. "It's not fair to any local business to compete with them."

Some think the casino has had an essentially neutral impact because it has both helped and hurt.

At the C'Mon Inn down the road from Super One in Thief River Falls, manager Aaron Rumble said he's gotten some guests because of the casino, but he still regards it as a competitor. "There are times that they're sold out and they send us customers," he said. "Other nights, they're taking our customers."

In Devils Lake, Jonielle Soderstron, who owns Creative Impressions, said she sees business directly from the casino filling orders for shirts and jackets for different events or for workers there. But, she said, there are people in the community who spend money at the casino instead of in Devils Lake.

"It's a two-way street," she said. "It takes money out of the community, but it brings people to the community"

"I would say that we all benefit a little bit from it," she added.

Those involved in economic development were more positive. Their tone, though, suggests that some are kind of guessing that's the case.

The casinos "bring a lot of Canadian traffic down through this area," said Julie Olson, president of the Thief River Falls Chamber of Commerce. She doesn't have statistics, she said, but "they have to pass through Thief River Falls, so we get a lot of business for our restaurants and gas stations."

"You can only gamble and you can only go in the water park for so long," she said. "They look for something to do, and that's where the community can take advantage."

At the Devils Lake Chamber of Commerce, director Greg Otis said there are two things that the casino does for Devils Lake it brings jobs and entertainment.

"Our city would not be as strong economically or culturally if we did not have a casino," he said.

Businesses that are mulling a new location in town look at quality of life factors, he said. "Schools, libraries, roads, fishing or hunting even casinos play a part in that. People who are coming for industry want entertainment."

Both chambers of commerce count their casinos as members.

Mike Moore, the community development director for the city of Thief River Falls, said the fact that the casino is a big employer means it's helping. "They're providing a large number of jobs. A vast majority of them are shopping in town. That's got to come to the benefit of the local economy."

Casino operators make that case, as well. Even if their guests don't end up spending money in town, their employees do.

The Spirit Lake Casino, for example, has 450 employees. About 80 percent of them are tribal members living in the reservation just south of Devils Lake.

"Most of the money people earn at the casino is spent elsewhere," said former Spirit Lake tribal chairman Skip Longie. "The majority of things, fuel, heating electricity, clothing, furniture, you name it, is purchased off the reservation."

And that's likely to be in Devils Lake, the nearest retail center.

On top of this, Longie said the casino could be a stepping stone into other businesses. "I think the casino has provided us with great opportunities, but that may not last," he said. "We need to diversify those businesses that are supplemented by the casino, once they are off the ground, things will be more stable."

At the Seven Clans Casino, general manager Jeff Jasperson said his business should be seen in the same league as the other major employers in the area. "We're one of the largest employers in the area," he said, "about the scale of Arctic Cat and Digi-Key."

In fact, entry-level wages at the casino are about the same as theirs, and the benefits are arguably better, he said.

The Seven Clans Casino employs more than 600, about half of whom are tribal members who make the one hour commute from the Red Lake reservation. The remainder are locals from surrounding communities, such as Thief River Falls, St. Hilaire and Middle River, Minn.

Besides providing employment, the casino also is integrating into the community, Jasperson said. It donates money to the Fire Department, he said, and pays taxes on 350 acres of land, dispelling the myth that casinos pay no taxes. That's only the case on the three acres of trust land the tribe owns, he said.

"We're fellow business people," he said.

The loudest voices protesting the proposed Grand Forks casino have been charitable gaming interests who see casinos as direct competitors.

A case in point is the bingo hall that the North Dakota Association for the Disabled, or NDAD, operated in Devils Lake until 2004. Ron Gibbens, the group's president, blamed the casino.

"Once the new casino was built, we lost business and we weren't able to stay open," he said. Tribal casinos, he said, have been "devastating" for charitable gaming.

It's a little more complicated than that, according to Keith Lauer, North Dakota gaming division director.

There hasn't been a significant decrease in money spent in charitable gaming in the 12 years that Indian casinos have been opened, he said. Spending on charitable gaming peaked just before tribal casinos opened, and since then, there has been about a 10 percent drop to $268 million in 2005, he said.

"Of course, some of that has been transferred to tribal gaming, but there also is a shift in what is interesting gamers," he said. Indian casinos offer slot machines, he said, and that probably appeals more to bingo and pull-tab players.

Those games also have tended to be more profitable than other gaming options open to charities. "With bingo, you can design the games for a specific payout," he said. "Other games (such as 21) don't pay out as much based on the audience," he said.

"Overall, charitable gaming still is a healthy industry as far as I'm concerned. We still continue to lead the nation on per capita spending on charitable gaming, it fluctuates between us and Alaska," he said.

In Minnesota, charities face a bigger hurdle because they're limited to pull-tabs and bingo. Yet, Thief River Falls charities say they haven't been hurt at all by the casino.

Dave Forsberg, the gaming manager at the Veterans of Foreign Wars, said there was some impact at the beginning when the casino offered bingo but "it wasn't that big." Today, he said, "our gambling is as good as it used to be. Maybe it's even better."

It might be that the VFW hasn't suffered because the casino is dry and is far enough out of town that most people won't make the trip, he said. On the other hand, the VFW occasionally gets the casino gambler coming in to get a drink.

A gaming manager at a bar that offers pull-tabs said she's not even sure if the casino has had an impact. "When they first opened, I think it did." She said she didn't want her name published because her boss might get angry. He resents that he has to pay the gambling tax but the casino doesn't, she said.

Since the casinos opened in Devils Lake and Thief River Falls, Lisa Vig said she's had a few more clients from those areas, but not a huge increase. Vig runs the gambling addiction program for Lutheran Social Services in Fargo and Grand Forks.

"It always takes a while for a problem to develop," she said.

Devils Lake almost has had a decade and Thief River Falls half that.

Typically, a gambling addict becomes that way because he or she uses gambling as a way to avoid problems, she said, and repeating such activities make them feel more socially acceptable. Eventually, she said, the addict will start to have financial problems and that's when the addict or a concerned friend or family member calls.

One thing about casinos, though, she said, is they have slot machines, which are more dangerous to gambling addicts because it takes less time to win or lose, so more money can be spent in a short time. It's a lot like pull-tabs, she said, except it's newer and addicts often switch games to attempt to control their gambling.

Lonnie Olson, the state's attorney in Devils Lake, said he can think of two cases in the last two years in which individuals prosecuted for embezzling thousands of dollars admitted to gambling problems associated with the casino.

In one case, casino employees alerted the state's attorney's office because of the amount of money one person was spending at the casino.

"She was taking money from her employer, writing checks to herself that she then spent at the casino," Olson said. "One of the first indicators was that the victim was having problems financially, which was unusual for his type of business."

But he's not noticed an increase embezzling or repeat non-sufficient funds checks circulating through.

"When you spend all of your paycheck at the casino, you don't have the paycheck to cover all your other expenses," he said, "but this happens whether there is a casino or not. It happens with gaming tribal or charitable."

Vig, too, was reluctant to draw a line between casinos and charitable gaming.

She gets equal number of clients, she said, from casinos and charitable gaming and their level of financial distress is the same. What's important, she said, is preparation in case there's a problem. When the North Dakota state lottery went into effect, she said, some funds were set aside for addiction treatment.

"Gambling is gambling," she said. "It doesn't matter if it's at a casino or at the Holiday Inn."

By Tu-Uyen Tran and Susanne Nadeau


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Copyright (c) 2005, Grand Forks Herald, N.D.

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