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See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/233570619 Casinos and Economic Well-Being: Evaluating the Alberta First Nations' Experience Article · May 2011 CITATIONS 6 READS 78 3 authors, including: Some of the authors of this publication are also working on these related projects: A qualitative examination of factors underlying transitions in problem gambling severity: Findings from the Leisure, Lifestyle, & Lifecycle Project View project Social & Economic Impacts of Gambling in Alberta (SEIGA) View project Yale Belanger University of Lethbridge 52 PUBLICATIONS 165 CITATIONS SEE PROFILE Robert Williams University of Lethbridge 101 PUBLICATIONS 3,050 CITATIONS SEE PROFILE All content following this page was uploaded by Yale Belanger on 16 December 2016. The user has requested enhancement of the downloaded file.

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Page 1: Casinos and Economic Well-Being: Evaluating the …...23 The Journal of Gambling Business and Economics (2011) Vol 5 No 1 pp 23-46 CASINOS AND ECONOMIC WELL-BEING: EVALUATING THE ALBERTA

See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/233570619

Casinos and Economic Well-Being: Evaluating the Alberta First Nations'

Experience

Article · May 2011

CITATIONS

6READS

78

3 authors, including:

Some of the authors of this publication are also working on these related projects:

A qualitative examination of factors underlying transitions in problem gambling severity: Findings from the Leisure, Lifestyle, & Lifecycle Project View project

Social & Economic Impacts of Gambling in Alberta (SEIGA) View project

Yale Belanger

University of Lethbridge

52 PUBLICATIONS   165 CITATIONS   

SEE PROFILE

Robert Williams

University of Lethbridge

101 PUBLICATIONS   3,050 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Yale Belanger on 16 December 2016.

The user has requested enhancement of the downloaded file.

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23

The Journal of Gambling Business and Economics (2011) Vol 5 No 1 pp 23-46

CASINOS AND ECONOMIC WELL-BEING:

EVALUATING THE ALBERTA FIRST NATIONS’ EXPERIENCE

Yale D. Belanger∗ Robert J. Williams Jennifer N. Arthur

Associate Professor Department of Native

American Studies, University of Lethbridge

Professor Faculty of Health

Sciences, University of Lethbridge

Faculty of Health Sciences, University

of Lethbridge

ABSTRACT

To date 17 First Nations have introduced casinos as an economic strategy

to help mitigate existing socio-economic disparities in the Canadian provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, while the provincial Nova Scotia First Nations operate ‘Video Lottery Terminal (VLT) palaces’ (i.e., no table games). Although the economic benefits of Native casinos in the United States are well documented, there is very little research to determine whether the same effects exist in Canada. The present research seeks to partly fill this void by evaluating the impact of the recent introduction of casinos to Alberta First Nation (i.e., reserve) communities. Findings show that there is significant variability in the economic benefits between communities. Nonetheless, it is clear that, in general, the introduction of casinos in Alberta has broad economic benefits to Alberta First Nations.

FIRST NATIONS’ CASINOS CONTRIBUTION TO ECONOMIC GROWTH

Described as “islands of poverty in a sea of wealth” (Anderson & Parker

2008, 641), reservations in the United States have been utilizing casinos for some time as an economic stimulus. As one researcher noted, “With little or no economy or tax base to fund essential services, Native Americans turned to gaming, through self-determination, to generate government revenue needed to fund these services and provide employment for tribal members” (Schaapf 2010, 381). In 2002 over half of tribal members in the contiguous 48 states

∗ Correspondence Address: Dr. Yale D. Belanger, Ph.D. Associate Professor, Department of Native American Studies, University of Lethbridge, 4401 University Dr, Lethbridge, Alberta, Canada T1K 3M4 (403) 382-7101 – w (403) 380-1855 - [email protected]

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THE JOURNAL OF GAMBLING BUSINESS AND ECONOMICS 2011, 5 1

24

belonged to tribes that operate a casino (Evans & Topoleski 2003). In 2008 Indian gaming revenues topped $26.7 billion with 233 Indian tribes operating 411 casinos, bingo halls, and pull-tab operations in 28 states (NIGA 2009).

Not surprisingly, a large proportion of the research literature on casino gambling concerns its effect on Native communities in the United States (Williams Rehm & Stevens 2011). These studies have found that there are usually significant employment and income gains (Anders 1996, Conner & Taggart 2009, Cozetto 1995, d’Hauteserre 1998, Evans & Topoleski 2003, Fenelon 2006, Gonzales 2003, Gonzales, Lyson & Mauser 2007, Kim 2006, Ninokawa 2006, Reagan & Gitter 2007, Spilde, Taylor & Grant 2002, Taylor 2009, Topoleski 2003, Wentz 2008, 2006); an increased infrastructure value (Anders 1996, Farrigan 2005, Ha & Ullmer 2007, Snyder 1999, Taylor & Kalt 2005); benefits for other non-gambling businesses (d’Hauteserre 1998, Snyder 1999); as well as improvements in general living conditions and/or public health (Cattelino 2008, Conner & Taggart 2009, d’Hauteserre 1998, Evans & Topoleski 2003, Momper & Dennis 2010, Ninokawa 2002, Spilde, Taylor & Grant 2002, Topoleski 2003). Increased territorial sovereignty and governing authority and influence over state politics have also been recorded (Mason 2001, 2000, Light & Rand, 2005). In general, the magnitude of these benefits are related to how economically successful the casino is.

Casinos do appear to come at some cost for Aboriginal people, such as increased crime (Evans & Topoleski 2003). Some studies also find concerns with how the provision and participation in commercial gambling was potentially changing traditional Aboriginal culture, values, and beliefs (Belanger 2002, Fenelon 2006, Peacock, Day & Peacock 1999, Wetzel 2006), related to the fact that gambling in North American indigenous cultures has always had spiritual/ceremonial/social meaning, in contrast to the commercial/recreational orientation of western casinos (Williams, Stevens & Nixon 2011). On the other hand, a few studies have reported enhanced cultural identity as a result of introducing such a successful commercial venture (d’Hauteserre 1998), and that casino profits have helped preserve and promote Aboriginal culture (Ninokawa 2002). In general, there is division of opinion about this enterprise, with social conflict and tribal factionalism not being uncommon (Baron 1998, Belanger 2011b, 2006, Gonzales 2003, Hornung 1991, Johansen 1993). Interestingly, there is virtually no inquiry of whether the introduction of local casinos has exacerbated what are already high levels of problem gambling in Aboriginal communities which are estimated to be three to four times higher than in non-Aboriginal communities (Belanger 2010, Williams, Stevens & Nixon 2011).

One of the general findings of a comprehensive analysis of the 492 existing socioeconomic impact studies of gambling is that it is very difficult to generalize about the impacts of gambling from one jurisdiction to another, as these impacts vary as a function of pre-existing availability and exposure to gambling, the patronage origin of the gamblers, how gambling revenue is distributed, and baseline levels of community impoverishment (Williams,

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CASINOS AND ECONOMIC WELL-BEING: EVALUATING THE ALBERTA FIRST NATIONS’ EXPERIENCE

25

Rehm & Stevens 2011). Thus, the purpose of the present paper is to investigate whether the findings from the existing research on Native casinos in the United States generalizes to Canada. Canadian researchers remain reliant on anecdotal and scattered academic evidence demonstrating gambling’s positive impacts on First Nation communities, although some recent studies have improved our collective understanding of these phenomena (e.g., Belanger 2011a, 2006). The present paper draws upon findings from a broader study of the social and economic impacts of gambling in Alberta (Williams, Belanger & Arthur 2011). More specifically, the particular variables examined with respect to First Nations communities are:

1. Direct Employment as a result of new gambling facilities or types of

gambling (i.e., number of new employees; wages; residency; comparison to previous employment status to determine extent to which these jobs are ‘new’ rather than just shifted from other industries).

2. Direct Revenue as a result of this new form of gambling. 3. Disbursement of Direct Revenue 4. Infrastructure Investment made by casinos and other major venues. 5. Infrastructure Costs to municipal, First Nation, and provincial

governments (i.e., road development and maintenance, utilities (power, water, sewage), fire services, police services).

ESTABLISHING THE FIRST NATIONS CASINO INDUSTRY IN ALBERTA

At the dawn of the 1990s U.S. tribal gaming was fostering marked

economic improvement in several American Indian reservations. First Nations leaders in Canada took notice and began promoting casinos as the economic activity needed to generate the revenue required to fashion sustainable economies and improve First Nation’s well being (Belanger 2006). First Nations in Alberta strategically pursued casinos to improve their poor socio-economic conditions, something the United Nations (U.N.) identified as substandard based on its Human Development Index (HDI). The U.N. in 1996 ranked Canada the number one country in which to live, while identifying that registered Indian males living in Alberta had an HDI of .806; whereas females were listed at .770. This placed the former just ahead of males in the developing countries Costa Rica and Trinidad and Tobago, whereas registered Indian females fell into the medium human development category just ahead of females in Malaysia and Columbia (United Nations 1999). This confirmed casino advocates’ claims that First Nation communities were developing along third-world lines, and that federal Indian policies ineffectively promoted reserve economic development. Casinos were consequently promoted as a catalyst to aid First Nation’s socio-economic development, not unlike how provincial officials promoted gambling (Belanger 2006).

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Alberta First Nations entry into the provincial gaming industry dates to 1993. That year Alberta granted the Tsuu T’ina First Nation (southwest of Calgary), and the Enoch Cree First Nation (west of Edmonton) licenses to each hold one super bingo with jackpots exceeding $10,000. The Tsuu T’ina profited $100,000 leading to calls for the creation of an independent First Nations Gaming Commission (Stewart 1993). First Nations leaders quickly developed a provisional policy model that initially ensured all bands would benefit equally from any reserve casino developments. They also sponsored a Chiefs’ Summit in November 1993 attended by several provincial ministers and officials, the Minister of Indian and Northern Affairs Canada (INAC), and all provincial First Nations chiefs. Little came from the meeting, and a second Summit was held in March 1995. It was here that the Minister of Family and Social Services, Mike Cardinal, encouraged First Nations leaders to “take a leading role” to determine “if a casino industry will exist.” If this support was not sufficient, he added, “I think Native leaders should propose what they’d like to see in Alberta and then we’ll negotiate” (Edmonton Journal 1995).

The third Summit held in November 1995 led to the ‘Understanding on First Nations-Canada Relations’ signed by federal Minister of Indian Affairs Ron Irwin and the Chiefs of Alberta, to which recently elected Premier Ralph Klein and Minister Cardinal later added their signatures. The agreement was surprising, considering that two months earlier the First Nations Gaming Congress, representing all Alberta First Nations, had demanded $100 million from the provincial government to halt casino construction projects. Later that December Tsuu T’ina band members voted 73% in favour of casino development prompting a January 1996 meeting between Premier Klein, Alberta Lotteries Review Committee chair Judy Gordon, Chief Roy Whitney, and the Tsuu T’ina band council. Here all parties agreed that final arrangements about “casino size, location, construction dates, and revenue-sharing possibilities still needed to be discussed” (Calgary Herald 1996, A6).

Alberta announced a provincial First Nations gaming policy in 1997, despite the fact that First Nations groups were minimally consulted during its formation. The new policy permitted the construction and operation of four casinos on First Nation reserves. With the exception of being located on reserves, the First Nations casinos were expected to operate under the same charity model with regards to the distribution of revenues (i.e., a significant portion going to the Alberta Lottery Fund rather than being retained by the First Nation community). First Nation leaders were stunned, especially those negotiating with provincial officials. Enoch and Louis Bull First Nations, for example, both had plans in place to develop large destination-type casinos, and ended their relationships with a Las Vegas developer when informed of the planned First Nations model. Their leaders reasoned that the established Alberta ‘charity model’ would hinder the developer and the First Nations’ ability to produce the revenues needed to justify the initial capital investment. Tsuu T’ina officials also temporarily halted their casino plans.

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CASINOS AND ECONOMIC WELL-BEING: EVALUATING THE ALBERTA FIRST NATIONS’ EXPERIENCE

27

Enoch Chief Ron Morin challenged the province to revamp the revenue model to increase the First Nations share. “If you take a look at what First Nations had when we came into this province,” Morin opined, “all of the oil and gas that has been produced, the revenues that non-First Nations people have got, those haven’t been totally shared with us.” He cryptically added, “I don’t think I have to give a history lesson in Canada as to what First Nations agreed to share” (Arnold 1996:A7). Several First Nations threatened to ignore the proposed First Nations gaming policy by simply building and operating their own casinos and bingo halls. Enoch officials struck a deal with a new corporate partner (Edmonton Journal 2000, A14). Very little action on this front occurred, although in late 1999 it appeared that the First Nations casino process would be indefinitely stalled after a 20-month moratorium on all provincial casino construction was imposed. The release of the ‘moratorium report’ in 2001 contained 61 recommendations leading to the creation of new gaming policies intended to “reflect this government’s continued commitment to maintaining the unique charitable gaming model of this province” (Alberta 2001).

Provincial officials announced the final First Nations Gaming Policy in 2001 that permitted reserve casino construction; however, First Nations were expected to register as charities prior to the release of gambling revenues, ensuring provincial control of their distribution. The First Nations Gaming Policy also stipulated that successful First Nations hire an independent operator to manage casino operations, thus removing all responsibility for daily business operations from First Nations leaders. The revenue sharing formula declared that 30% of slot machine revenue be divided between the casino operator and the host First Nation charity. The remaining 70% was to be divided between existing lottery programs (i.e., Alberta Lottery Fund was assigned 30%), and the proposed First Nation Development Fund (FNDF) to benefit provincial First Nations, which was assigned 40%. A systematic eight-step application process was established, thereby ensuring controlled and managed growth of the provincial First Nation’s casino industry. By 2006 seven First Nations had applied to the AGLC according to the same terms and conditions established for charitable casinos. Not unlike the mainstream process the eight-step First Nations model considers various criteria, ranging from site selection, to community support as well as practical business plans taking into consideration alternative viewpoints. These rules were imposed to satiate local fears about perceived inevitable increases in gambling-related crime and societal breakdown.

After close to 13 years battling for the right to operate reserve casinos, and decades seeking out an appropriate revenue-generator to combat socio-economic disparities, the River Cree Resort and Casino located at the Enoch Cree Nation, just west of Edmonton, opened October 26, 2006 followed by the Cold Lake First Nations’ Casino Dene (September 26, 2007) and the Tsuu T’ina First Nations’ Grey Eagle Casino on the west side of Calgary (December 19, 2007). On January 31 2008 the Eagle River Casino and Travel

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Plaza opened in Whitecourt and on June 10 2008 the Stoney Nakoda Casino opened in Morley.

FIRST NATIONS CASINOS AND ECONOMIC WELL-BEING The first step in a socioeconomic impact analysis of gambling is to

document how much money is actually being expended and received, as this serves as a rough guide of the potential magnitude of these impacts (especially the economic ones). The primary source of data used to estimate this are the First Nation Development Fund online reports that lists the details of all First Nations Development Fund (FNDF) disbursements (2006-2010).

First Nations casinos are licenced and regulated by the AGLC in the same way as traditional Casinos, and must conform to the same regulations, including the payback percentages on the various gambling games, and regulations with respect to labour unions. However, there are some important differences. For one, First Nations casinos must operate on reserve land, and the First Nations casino is also not obliged to provide ‘casino events’ to outside charity groups. Rather, the host First Nation creates its own ‘charity’ and becomes the exclusive charity providing a continuous 364-day ‘charity event’. Thus, table game revenues are divided evenly between the host First Nation and its corporate partners. Finally, slot revenue is distributed differently. The host First Nation community is designated as the charity provider and receives 15% of gross slot revenue with another 15% given to the casino operator/corporate partner.

Of the 70% of slot revenue that goes to the Alberta Lottery Fund, 40% is directed to the First Nations Development Fund (FNDF), which provides grants to Alberta First Nations groups for economic, social and community development projects. Three-quarters of this 40% is reserved for the First Nation that hosts the casino, and 25% is available to the 39 other Alberta First Nations. This minimally includes urban (non-reserve) Aboriginal populations, but not Métis and Inuit populations. These latter groups are eligible to apply to the Alberta Lottery Fund for grants similar to other non-First Nations community/charity groups. The 75% allocation to the host First Nation was agreed upon, in part to assist First Nations to repay the initial project investment as well as to provide the needed infrastructure upgrades. Of the 25% allocated to the other First Nations that do not host casinos, half (i.e., 12.5%) is divided equally among the 39 First Nations groups. The other 12.5% is also divided among the 39 other First Nations groups, but in this case, proportionally according to population. This revenue distribution is displayed in Figure 1.

The host First Nation ‘charity’ employs registered gaming workers to operate certain staffing positions in the casino. The charity’s human resource person or on-site manager hires these individuals, thereby minimizing band council influence during the hiring process. A volunteer board of directors

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CASINOS AND ECONOMIC WELL-BEING: EVALUATING THE ALBERTA FIRST NATIONS’ EXPERIENCE

29

guides each charity, which administers the equivalent of a grant program in that it vets applications for expenditures of this ‘charity revenue’ and monitors the implementation of grants it awards. Figure 1: Revenue Distribution from Slot Machines in First Nations’ Casinos.

* The 3 Stoney tribes (Chiniki, Bearspaw, and Wesley) are considered one Host First Nation.

The First Nation Development Fund is not unlike traditional trust funds managed by the federal government for the benefit of ‘Indians’: the Province of Alberta (specifically the Ministry of Aboriginal Relations) holds the monies in trust for the respective First Nations, and owes these monies only ‘notionally’ (e.g., Neu & Therrien 2003). Aboriginal Relations will release these funds only when a First Nation satisfies program officers’ expectations that they will be expended for First Nations use and provide a benefit consistent with the purpose of the fund. Every FNDF grant application must include a Band Council Resolution, which is required to initiate, authorize or approve transactions under the Indian Act. FNDF grant recipients must also report annually how the money was used. For example, FNDF monies cannot be used to finance the development or acquisition of a casino or dedicated gaming facility, or gaming equipment. They also cannot be used for operating costs, debt servicing costs, or repair and maintenance costs associated with any gaming activity. Individual payment distributions of FNDF monies are also not permissible.

Among the measures in place to ensure accountability, the Government of Alberta and/or the Alberta Auditor General are permitted to conduct audits to ensure compliance with the FNDF Grant Agreement and First Nations Gaming Policy. The Government of Alberta also has the ability to suspend the agreement and discontinue FNDF grants for non-compliance. Finally, the

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CASINOS AND ECONOMIC WELL-BEING: EVALUATING THE ALBERTA FIRST NATIONS’ EXPERIENCE

31

Table 1 provides a sense of community needs. As can be seen, housing and infrastructure constitutes the largest single area receiving funding. It is also important to recognize that applications are regularly denied. To date approximately 13% of accumulated charity funds remain undistributed.

Table 1: First Nations ‘Charity’ Gambling Revenue Allocations (2006 – 2010)

2007-2008 2008-2009 Total Housing & Infrastructure $7,498,000 $21,056,000 $28,545,000

Education $1,099,000 $6,236,000 $7,335,000 Debt Retirement $3,519,000 $4,088,000 $7,607,000

Charity Worker Wages & Expenses $1,492,000 $3,802,000 $5,294,000 Cultural Events/Historical

Resources/Religion $422,000 $3,135,000 $3,557,000

Life Skills Training $1,052,000 $2,932,000 $3,984,000 Aid of the

Distressed/Children/Youth/Adults in Care

$320,000 $2,463,000 $2,783,000

Facility $6,343,000 $1,814,000 $8,157,000 Administrative Costs $829,000 $1,643,000 $2,472,000

Wages, Salaries, Fees for Services, & Honorariums $1,167,000 $1,449,000 $2,616,000

Sports $62,000 $1,223,000 $1,295,000 Addictions Treatment $351,000 $939,000 $1,290,000

Community Safety Programs $394,000 $333,000 $727,000 Elders $5,000 $168,000 $173,000

Donations within Alberta $21,000 $49,000 $70,000 Emergency Funds $278,000 $0 $278,000

Equipment $20,000 $0 $20,000 Total $24,863,000 $51,340,000 $76,203,000

ALBERTA LOTTERY FUND

The Alberta Lottery Fund to 2011 has received $284,322,077 from First

Nations casino operations that is subsequently used to fund provincial ministries and charitable grants (Table 2). Thus, the First Nations casinos are in part driving provincial development despite the fact that the First Nations casinos were touted as means to aid First Nations development. To 2011, First Nations casinos have channeled 121.6 times more money to the ALF (Wild Rose Foundation) than First Nations and Aboriginal and Métis organizations collectively drew from it over almost a decade. Indeed, First Nations

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contribution to the ALF in total has amounted to 17.2% of the overall contributions to the fund since 2006.

Table 2: First Nations Contribution to Alberta Lottery Fund (2006-2011)

Year Alberta Lottery Fund

First Nation Contribution to Alberta Lottery

Fund

FN % Contribution

2010-2011 $235,698,855 $77,115,292 32.7% 2009-2010 $303,479,980 $78,625,871 25.9% 2008-2009 $443,898,329 $76,150,505 17.6% 2007-2008 $452,613,659 $42,306,742 9.3% 2006-2007 $215,062,997 $10,123,667 4.7%

Source: AGLC, Alberta Lottery Fund: Who Benefits? As of 1 April 2011.

FIRST NATIONS DEVELOPMENT FUND

Gambling revenue began to be deposited into the FNDF beginning in

fiscal 2006/2007, with these amounts steadily increasing up to the present time (Figure 3). However, coincident with the general decrease and/or flattening of Alberta gambling revenue in 2009, the 2009/2010 deposits to the FNDF was only marginally larger than 2008/2009, and it dropped by roughly 1.9% in 2010/2011. Since 2006, the FNDF has been allocated a total of $379,096,100 for distribution to First Nations community development projects.

Figure 3: First Nations Development Fund (FNDF) Revenue.

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the Tsuu T’ina Nation (Grey Eagle Casino) being the main beneficiaries (Figure 4). This is almost certainly due to the fact that the River Cree Casino is just outside of Edmonton (pop. 1,034,945) and the Grey Eagle Casino is just outside of Calgary (pop. 1,296,000), whereas the other three casinos are located in what would better be described as rural areas. FNDF REVENUE AS A PROPORTION OF TOTAL REVENUE

The primary source of First Nations revenue has traditionally been federal

government payments through Indian and Northern Affairs Canada (INAC). The funding formula calculates individual First Nations funding levels based on populations.1 In the case of these five host communities, these monies represent a significant portion of their overall revenue. For example, Enoch’s Table 3: FNDF Contributions to `Host` First Nations as a Percentage of their Federal Payments.

1 Because there is no stipulation about what percentage of INAC funding that bands should provide to off-reserve residents, in most cases these monies are spent exclusively on reserves to the detriment of off-reserve members.

Federal Contribution FNDF

FNDF as % of Federal

Contribution

Alexis Nakota Sioux Nation

2006-07 $13,478,803 $75,080 0.6% 2007-08 $13,478,803 $1,068,945 7.9% 2008-09 $11,663,635 $5,404,206 46.3% Totals $38,621,241 $6,548,231 16.9%

Yearly Average $12,873,747 $2,182,744

Cold Lake First Nation

2006-07 $6,958,787 $80,073 1.2% 2007-08 $5,888,471 $2,187,136 37.1% 2008-09 $6,625,634 $4,527,365 68.3% Totals $19,472,892 $6,794,574 34.9%

Yearly Average $6,490,964 $2,264,858

Enoch Cree First Nation #440

2006-07 $8,930,213 $10,665,047 119.4% 2007-08 $10,404,587 $30,808,226 296.1% 2008-09 $11,593,508 $35,147,872 303.2% Totals $30,928,308 $76,621,145 247.7%

Yearly Average $10,309,436 $25,540,382

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FNDF disbursement of $35 million in 2008/2009 was 303% more than its INAC’s budgetary allocation (Table 3). Similarly Tsuu T’ina received more than $28 million, which was 142% more than its INAC budget. Despite lower than expected returns, gambling revenues also contribute noticeably to the Alexis Nakota Sioux Nation’s and the Cold Lake First Nations’ overall budget. The Stoney Nakoda Resort was not operational long enough for inclusion in this list, nor are its INAC allocations available online. In total, FNDF funding represented 83.3% of the 4 communities’ collective allocation. Not surprisingly, the percentage of revenue accounted for by the FNDF is much less for non-host communities. During the same time period, 21 First Nations for which complete data sets were available received over $24 million in FNDF revenues, which averaged out to approximately $384,683 annually per community. Some smaller communities such as Smith’s Landing First Nation supplemented their INAC budgets by 26% and 43% in 2007/08 and 2008/09 respectively. Fort McKay, Heart Lake and the Athabasca Chipewyan First Nation also experienced double-digit gains. However, on average, the FNDF supplemented non-host First Nations INAC budgets by only 2.3%.

FIRST NATION DEVELOPMENT FUND DISBURSEMENTS

First Nations Development Fund project allocations fall into 17

categories. As seen in Table 4, non-gaming related Debt Retirement (42%) has constituted the largest portion of FNDF project disbursements since 2006. Almost all of this debt reduction (98.8%) has gone to reduce non-gaming related First Nation debt incurred to build the casinos. Where First Nations have to pay debt first, that is by the design or choice of the First Nation. The Cold Lake First Nations and the Stoney Nation largely used their own money and/or borrowed funds, whereas the other 3 First Nations had outside

Tsuu Tìna Nation

2006-07 $20,698,584 0 0.00% 2007-08 $22,401,884 $8,246,214 36.8% 2008-09 $20,067,719 $28,572,460 142.5% Totals $63,168,187 $36,818,674 58.3%

Yearly Average $21,056,062 $12,279,558

Total (4 Host First Nations) $152,190,628 $126,782,624 83.3%

Yearly Average $12,682,552 $10,565,219

Total (21 Non-Host FNs) $1,056,942,912 $24,235,068 2.3%

Yearly Average $16,776,872 $384,684

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investors. The Alexis Nakota Sioux Nation owes $21.4 million as its 40% portion of the project debt. Including the 2009-2010 disbursement of $4,856,963, the total amount available to reduce its non-gaming related debt to date amounts to $11,405,194, according to FNDF guidelines. The Enoch Cree Nation must repay an undisclosed debt to Paragon Gaming, and has accumulated roughly $114 million toward this end. Facility Costs at 17% and Housing and Infrastructure Costs at 15% represent the next largest categories. Facility costs are for repairs or new construction on band owned buildings and facilities. Housing and infrastructure costs are the costs associated with constructing new band housing and improving infrastructure such as water sanitation upgrades and road paving. Combined these complementary categories amounted to $88,676,099, or roughly one-third of FNDF disbursements between 2006/2010. Infrastructure and housing are priority issues on most First Nation communities. Earlier it was documented that housing projects was the number one allocation from charitable gambling proceeds, representing 28% of disbursements since 2006.

Table 4: FNDF Category Allocations (2006 – 2010)

Percentage Allocated Debt Retirement

(non-gaming related) 42%

Facility Costs 17% Housing and Infrastructure 15%

Administrative Costs 7% Community Development 4%

Community Safety Programs 3% Education 4% Equipment 2%

Cultural Events/Historical Resources/Religion 2%

Wages, Salaries, Honoraria 2% Other 2 2%

EMPLOYMENT AND INCOME

Original estimates suggested that the five First Nations casinos would

employ 1,340 people with an annual payroll of $37.8 million. Most First Nations indicated their preference to hire First Nations employees, while acknowledging that a shortage of casino professionals would require that non-

2 Like Skills Training, Addictions Treatment, Sports, Elders, Emergency Funds, Donations within Alberta, Aid of Distressed/Children/Youth/Adults in Care

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Native employees also be hired. The Enoch Cree Nation was the exception: it indicated that 125 First Nations individuals would be employed, representing only 17% of the work force (which included hotel and conference centre employment estimates). Some Alberta First Nation leaders pointed to the Saskatchewan Indian Gaming Authority (SIGA) as a model, where in 2009/2010 it reported that 63% of employees were Aboriginal (down from 73% in previous years).

In fiscal 2009/2010 the five First Nation’s casinos had a total 1,030 employees. It is difficult to obtain precise payroll information. It is known that the Grey Eagle Casino employ 500 for a payroll of $15 million and the Stoney Nakoda Casino employ 35 individuals for a payroll of $1.025 million. The average wage per individual in both cases was just under $30,000. Precise data was not available for the Enoch Cree Nation, the Alexis Nakota Sioux Nation and the Cold Lake First Nations. However, if we assume the average wage is similar, then it is possible to project total payroll, as seen in Table 5. Collectively, it is estimated that in fiscal 2009/2010 the five First Nations’ casinos payroll was $31,025,000. The total number of employees and total payroll fell below initial expectations. In total, current employee numbers represents 78% of initial projections, whereas the $31,025,000 payroll represents 82% of original projections. The River Cree Casino is the only facility that exceeded expectations.

Table 5: Employment in the Alberta First Nation Casinos

First Nation Casino # First Nation

FN Employees

Total Casino Employees

Known or Estimated

Payroll Enoch Cree River Cree 75 (25%) 300* $9,000,000 Tsuu T’ina Grey Eagle 80 (16%) 500 $15,000,000

Alexis Eagle River 21 (18%) 120 $3,600,000 Cold Lake Casino Dene N/A 80 $2,400,000

Stoney Stoney Nakoda 30 (100%) 30 $1,025,000

TOTAL 206 1030 $31,025,000 *Does not include an additional 500 employees in the hotel resort

The percentage of employees who are Aboriginal is also largely below

expectations (Table 5). The River Cree Casino and Resort employs a total of 800 people, 300 at the casino and 500 at the accompanying resort/hotel complex. News reports indicate that greater than 25% of resort employees are First Nations, from which we estimate a total of 200 people from which an estimated 100 reside at the Enoch Cree Nation. Extrapolating for casino employment, 75 employees (25%) would be Aboriginal descent. An estimated 16% of the 500 Grey Eagle Casino workers are Aboriginal individuals. The

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majority of these are from the Tsuu T’ina Nation, residing both on reserve and in Calgary.

Similar to most casinos, 70% of the Eagle River Casino (Alexis) staff is full-time and 30% part-time. Only 18% of the Eagle River Casino employees are Aboriginal. This may be due to the 100 km distance between the reserve community and the reserve casino site located adjacent to Whitecourt. However, the Alexis Nakota Sioux Nation does have an employee bus shuttling employees twice daily to the casino. The percentage of Aboriginal employees in the Casino Dene is unknown. Only the Stoney Nakoda casino has a preponderance of Aboriginal employees, which is purported to be 100%. If true, it counters the claim that it is necessary to hire non-Aboriginal individuals for the majority of casino positions. Another important issue is that because most of the employees are non-Aboriginal, most of the casino wages paid leave the First Nations community. Acknowledging the lack of Cold Lake First Nations data, the four host-First Nations identified draw approximately $5,321,000 in earnings out of a total payroll of $31,025,000, which is 17.2% of the aggregate annual payrolls. Although 84.4% of Aboriginal employee wages is estimated to return to the host-First Nations (i.e., a percentage of Aboriginal employees live off-reserve), annually an estimated $25,704,000 in wages leaves host-First Nation communities, the majority into the municipal Edmonton and Calgary economies.

A significant percentage of the five First Nation casino charities employ First Nations people, however. Out of the approximately 170 employees, 90% (155) are believed to be Aboriginal. With the exception of the Northern Isga Foundation at the Alexis Nakota Sioux Nation, information is not available documenting charity full-time versus part-time employment, and the percentage of First Nations employees who were also residents of the local First Nation community. The Northern Isga Foundation currently employs 19 individuals with an annual payroll estimated at $400,000 (NIF News, 2009). Using $20,000 as an average wage, it is projected that the total payroll for the First Nations charities is roughly $3.4 million, with the First Nations themselves retaining $3.1 million of these wages.

In total, in recent years it is believed that 155 (charity casino employees) plus 206 (casino employees) plus roughly 200 resort employees, are of Aboriginal heritage, for a total of 561 employees. To be clear, these 561 positions represent jobs that did not exist prior to the casino openings. Although prior employment status of these 561 individuals is not known, it can be expected that a portion of these individuals were unemployed or underemployed prior to their casino-related employment. Anecdotally, many of these people were said to represent the better skilled individuals in the communities who had been employed prior to the casino, thus potentially cannibalizing band administrations and local reserve businesses. Consistent with this is the fact that there is no evidence that these jobs significantly impacted overall employment levels within Alberta First Nations. According to the recently published Statistics Canada Aboriginal labour force analysis

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for 2008/2009, Alberta’s Aboriginal population experienced a 5.6% decline in employment rate, now listed at 69.5%. This represents the lowest rate for Aboriginal people in all the provinces. The provincial Aboriginal unemployment rate likewise rose by 5.8% to 12.9%. This period of time represented the end part of a recession. However, even so, Statistics Canada shows that the employment rate among the general population of Albertans fell by only 2.5%.

Employment figures for each First Nations community are not available, making it impossible to determine how casino openings affected local employment trends. Statistics Canada and Indian and Northern Affairs Canada (INAC) utilize Canadian census data, the latest year being 2006. Accordingly, since all of the First Nations casinos opened after 2006, we are unable to provide trends analyses. First Nations have also cited an inherent right to self-government to restrict Canadian surveyors from reserves. Furthermore, the Tsuu T’ina and the Enoch Cree Nations refused to participate in the 2006 federal census, and thus their community profiles lack vital data for employment, annual earnings, work force characteristics, or even gender and age. Considering these two communities host the largest casinos, and benefit significantly from the projects, the lack of complete (or any) data sets hinders our analysis.

ECONOMIC SPIN-OFFS

First Nations viewed casinos as catalysts for general economic

development. It is estimated that 31 new businesses opened on 12 First Nations directly attributable to FNDF funding during the period 2006-2010. Despite the small number of business start-ups, there is significant economic development planning currently underway. The Siksika and Bigstone Cree First Nations have plans to construct industrial parks to attract new businesses from FNDF. Others are using FNDF revenues to improve accounting systems, purchase buildings and real estate, build new and rehabilitate old business structures. Several have utilized the FNDF to conduct needs assessments and for corporate restructuring. With the exception of the Alexander First Nation tourist destination project (currently deferred), the poor state of reserve infrastructure means that most economic development plans were for the purpose of creating sufficient infrastructure, rather than to attract tourism. Tourism is believed to be something that may be ‘further down the road’.

INFRASTRUCTURE

First Nations have sole ownership of their respective casino, but the

AGLC requires that First Nations engage third-party managers to run the day-to-day operations. Thus, the revenue stream that goes to the owner is shared with this commercial partner, as per these agreements. Casino Dene cost $11 million to build in 2007; Eagle River cost $54 million in 2008; Grey Eagle

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cost $40 million in 2007; River Cree cost $178 million in 2006; and Stoney Nakoda Entertainment Resort cost $27 million in 2008 (Table 6). This represents a total of $310 million in capital investment for these First Nations communities. Much of this money originally derived from the First Nations communities themselves, and thus, does not represent added ‘wealth’ to the community. However, the FNDF is being used to pay off the bulk of the non-gaming debt incurred. Because the bulk of the FNDF does not derive from First Nations residents, these structures, when debt free, do represent significant added wealth to each of these communities. Each of these 5 casinos required some infrastructure upgrades. These costs were built into the above-reported cost of each casino project. Some of these details are as follows. It was reported that the Enoch Cree Nation spent $11 million in upgrades that ranged from improving road access to augmenting local water delivery systems. The Cold Lake First Nations renovated its proposed casino location, a former oil field complex. The expansion of a section of Highway 28 is currently being completed that the FNDF funded for $848,551. The Alexis Nakota Sioux Nation spends $500/day to truck water to its casino site after an internal study determined this to be more feasible than constructing the required physical infrastructure to tap into the municipal system. Wells were dug for tasks such as laundry, and sewage is handled on site. At Whitecourt a passenger bus was purchased to shuttle reserve residents the 100 km back and forth to work daily. For the most part, many of these ‘infrastructure costs’ also represent infrastructure investment, in that they are things that add to the basic infrastructure assets of the community.

Table 6: First Nation’s Casinos Investment and Ownership

First Nation Casino Name Investment Corporate Partner

Enoch Cree River Cree Resort & Casino

$178 million Paragon Gaming

Alexis Nakoda Eagle River Casino $54 million Paragon Gaming Tsuu T’ina Nation

Grey Eagle Casino $40 million Sonca Gaming

Stoney Nation Stoney Nakoda Resort $27 million No Partner

Cold Lake Casino Dene $11 million No Partner Each First Nation must cover the costs for essential services such as

emergency medical services or fire protection, by negotiating a municipal service agreement with the neighbouring municipality. Alexis Nakota Sioux Nation’s partner, Paragon Gaming, pays $90,000 annually for fire and ambulance services for the casino site. As of 2006 Enoch Cree Nation has been paying the city of Edmonton $1 million a year for fire and emergency services. Communities neighbouring the host-First Nations expressed fears that the casinos would lead to increased crime. A 2007 Criminal Intelligence

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Service of Alberta report entitled Report on Organized and Serious Crime confirmed “all 5 of the foregoing policing districts cite the construction of casino facilities on First Nation reserves”, adding that “experience has shown that the presence of casinos contributes to the need for policing” (Alberta, 2007, p.12). The AGLC responded by including as a condition for casino licensing that the host-First Nations adhere to recommendations produced by the Solicitor General following a policy analysis to determine if enhanced policing in each community was required. In each case the Solicitor General recommended each community obtain a minimum of 2 additional officers to assist in enforcement initiatives such as impaired driving, public disorder, drug enforcement, and gathering organized crime intelligence (Alberta, 2007). The Alexis Nakota Sioux Nation, the Stoney Nation, and the Cold Lake First Nations each purchased the services of 2 police officers, the Enoch First Nation purchased the services of 6 officers, and the Tsuu T’ina hired 4 additional officers, who are assigned to the Tsuu T’ina Nation Police Service. Each officer costs approximately $130,000. In total, assuming all officers would cost $130,000, the additional policing adds up to $2,080,000 annually. The Tsuu T’ina Nation also purchased two additional police cruisers for a total of $60,000.

CONCLUSIONS

Gambling revenue generated by First Nations casinos has increased

annually from $13.5 million in 2006 to $104 million in fiscal 2009/2010, dropping to $102.8 million in fiscal 2010/2011. In total $379 million was allocated the FNDF in that time. With the exception of the five host communities, gambling represents a relatively small activity economically adding 2.3% above average First Nation band budgets. It does offer additional source revenues unavailable through federal programming. Generally speaking non-Aboriginal cash is underwriting the FNDF and the five First Nations casino operations, with the casinos acting as a conduit drawing in extra-community revenues partially reversing an historic trend whereby money leaked from First Nations to fuel neighbouring municipal economies. First Nation communities were the direct recipients of FNDF funding. However, the host communities are entitled to 81.8% of available funding (45% of the 55% allocated for First Nations use, not including the 15% Operator allocation; see Figure 1), leaving 39 First Nations to divide the remaining 18.2%. A significant overall portion (30%) is assigned to the provincial government totaling approximately $284 million since 2006. In comparison, the FNDF has doled out $94.7 million to 39 non-host First Nations during the same period. Held in trust by the provincial government FNDF monies once released are spent according to proscribed categories to assist community development.

The main impact of legal gambling on First Nation’s charities is that it facilitates the ongoing ability of these charities to provide the local services

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that the five host First Nations are engaged in. This, in turn, directly or indirectly benefits First Nations’ members. From 2006-2010 the five First Nations charities have amassed $103.5 million in revenues that have been directed to pre-determined community development initiatives. A significant percentage of the First Nation casino charities employ First Nations people. Out of the approximately 170 employees, 90% (155) are believed to be Aboriginal with a total payroll of roughly $3.4 million. First Nations and First Nations charities are the direct recipients and primary beneficiaries of the roughly $380 million in combined FNDF and charitable revenues collected from 2006-2010 (fiscal 2010/2011 was not included as the charitable funding numbers have not yet been made public). These collective benefits are primarily manifest in terms of enhanced First Nations infrastructure and community programming, and represent the most important and positive benefits of legalized gambling in Alberta.

Approximately 350 First Nations individuals are employed at First Nations casinos and casino charities out of a total of 1,200 employees at an annual estimated payroll of $34.5 million, from which First Nations employees make nearly $10.9 million. These 361 jobs represent jobs that did not exist prior to the casino openings, although it can be expected that a significant percentage of these individuals were employed or underemployed prior to their casino-related employment. There have been 31 new businesses opened on 12 First Nations directly attributable to FNDF funding. Despite the small number of business start-ups, there is significant economic development planning currently underway. The Siksika First Nation and the Bigstone Cree Nation have plans to construct industrial parks to attract new businesses from FNDF. Others are using FNDF revenues to improve accounting systems, purchase buildings and real estate, build new and rehabilitate old business structures. Several have utilized the FNDF to conduct needs assessments and for corporate restructuring. The leakage of more than $25 million in wages from the host First Nations, and the limited employment resulting from minimal business start-ups is problematic for every dollar lost is one dollar that is not able to circulate thereby generating local wealth.

Clearly gambling revenues have made housing and community infrastructure upgrades possible, both in terms of FNDF and charity funding. The high percentage serving these needs also demonstrates profound community needs for basic services. The best example of how the revenues lead to improved local housing is as Tsuu T’ina. In the first 7 months following the casino’s opening the band built 26 new homes with 10 more foundations in place, and it was expected that the housing wait list would dissolve within five years. Costs per 1,200-square-foot unit were between $250,000-$300,000, with Indian and Northern Affairs Canada providing $50,000 per unit under a federal housing grant program, capped at $7.5 million. Prior to the casino opening, there were 1,500 members in fewer than 250 homes (Komarnicki 2007). Contractors on the project are hiring almost exclusively band members as trades-people. Gambling revenues fund reserve

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road paving programs, to enhance Tsuu T’ina language programs, and to finance university educations. In April 2009, Tsuu T’ina officials announced that impressive returns would lead to gaming floor expansion and a hotel and entertainment complex within two years (CBCNews 2009). And the Tsuu T’ina council has approved construction of a new 16,000 square foot building to house the tribal police force. This is however a unique situation, as most First Nation beneficiaries profit minimally from the FNDF and the charitable gaming model.

For most First Nations infrastructure improvements have been generally minimal to date, as the bulk of the initial capital investments was directed at casino construction. Paying this aggregate debt has been taxing, but once the casinos are finally paid off the annual payments will be directed into the FNDF for First Nations’ use and benefit. The loss of revenues in the form of servicing fees that are paid to municipalities means First Nations are in part funding municipal operations from gambling revenues intended for First Nations development. Alberta has also imposed restrictive spending provisions making accessing FNDF and charity revenues difficult, while forcing First Nations to spend precious social capital preparing grant proposals. This is evident in that 13% of charitable revenues remain undistributed, in large part due to a complex bureaucracy guided by strict spending regulations. Perhaps most significant is the amount of gambling revenues Alberta extracts annually from First Nations. For example, the First Nations Gaming Policy currently demands 30% of First Nations slot machine revenues are turned over for provincial use. The Policy also assigns the host First Nations 81.8% of overall gambling revenues, meaning that the majority of First Nations benefit minimally when evaluating the distribution of gambling wealth provincially.

So, the question remains: is gambling the ‘white buffalo’ many initially anticipated? Considering that First Nations historically present lower socio-economic indicators compared to mainstream communities, the infusion of even minimal revenues is economically positive. The current provincial revenue distribution model is imperfect and could potentially contribute to exacerbate existing regional inequalities identified above. But the post-casino environment presents improved economic well-being indicators when compared to the pre-casino environment. With these caveats in place, we would conclude that provincial First Nations’ well-being has improved with the advent of reserve casinos.

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