COLUMN ONE : Lady Luck Turns on Indians : When bingo brought prosperity to some tribes a decade ago, others quickly went into the business. Some added cards and slots. Amid regulatory confusion, the result too often has been failure and corruption.

The gamble on gambling has not paid off on this patch of Indian country.

Some still dream of a Las Vegas-style resort overlooking the St. Lawrence River, generating jobs and dollars that will bring economic security to a struggling reservation.

So far, however, the reality has been grim: civil war within the Mohawk community, a string of failed casinos and allegations of money-skimming, mob infiltration and bribery of a Bureau of Indian Affairs official.

“Corruption, violence, stress. To us that’s gambling’s result,” said Doug George, a tribal newspaper editor who was so infuriated by the casinos that he put aside his typewriter for a rifle. He wound up at the center of a nightlong gun battle with gambling supporters, a showdown that killed two tribe members and closed the casinos--and left George charged with murder.

With its bloodshed last year, the St. Regis reservation became the foremost casualty--but far from the only casualty--of an industry that in a decade has come to dominate tribal economies across the United States.

Gross revenue from Indian gambling is expected to reach $1 billion in 1991. With court decisions and a federal law giving tribes competitive advantages over charity-sponsored gambling, 150 of the nation’s 278 reservations now offer bingo, card rooms or--increasingly--slot machines.

The ventures have brought extraordinary success stories to some of the poorest people in America. At the Sycuan Reservation east of San Diego, on the rocky wasteland where the government dumped them, Indians have built homes rivaling those of any suburban subdivision; in Oklahoma, the Creeks use bingo proceeds to support a hospital, scholarships and a ranch; tribes in Minnesota and Wisconsin, once a welfare drain on surrounding communities, now hire their non-Indian neighbors.

For most tribes, however, the alluring promise of gambling has not been realized--it has been an occasional source of jobs and trickle of profits. And for others, the gamble has been a losing one:

* Many tribes have been left with empty gambling halls, often after confrontations with unscrupulous outside investors who use payoffs and front men to get their foot in the door, then skim the profits.

* Despite government reassurances that organized crime poses little threat to Indian gambling, a series of case studies and FBI wiretaps document the mob’s targeting of tribal games. Thousands of pages of wiretap reports show cooperation among mob families in several cities during a campaign to infiltrate one reservation.

* While California has produced several showplaces of the industry, half a dozen Indian bingo halls sit vacant in this state alone. Two California tribal leaders have been murdered--both crimes are unsolved--after complaining that Indians were not getting a fair share of the profits. At least three halls have fallen into the hands of organized crime, and a dozen tribes have become embroiled in bitter lawsuits with non-Indian managers.

* Indian gambling has suffered from schizophrenic government oversight, ranging from relentless crackdowns to hands-off policies. A 1988 federal law created a commission to remove oversight duties from an understaffed Bureau of Indian Affairs and finally provide clear guidelines for the fledgling industry. Three years after passage of the Indian Gaming Regulatory Act, however, the new commission still has no regulations.

Today, confusion reigns from coast to coast.

Not sure where to turn for guidance, tribes push to expand, their bingo halls giving way to full-fledged casinos. Law enforcement agencies, uncertain of their authority, keep their distance. Charities and tourist areas clamor to open casinos like the Indians.

From California to Connecticut, from Washington to Wisconsin, in courts and state legislatures, a battle is brewing over the future of Indian gambling.

Just a year ago, it looked as if the Mohawks were an aberration, a defiant tribe whose rogue casinos and bloody confrontations bore little resemblance to the seemingly innocuous bingo halls on reservations elsewhere.

But now a veteran chief on the St. Regis Mohawk Tribal Council says simply: “We were way out there on the cutting edge.”

The Seminoles opened the door in 1979, launching a kind of bingo far different from the game played in church basements.

Citing the exemption of reservations from state civil regulations, the tribe ignored Florida’s jackpot limit of $100, offering prizes of $10,000 or more in warehouse-sized halls.

Here were rows of long tables filled with 1,200 bingo players, some studying a dozen cards at once through clouds of smoke; the caller on a stage, like a show-biz figure, teasing out the next number--”N thirty-onnne”--as the mixer spit out a Ping-Pong-sized ball; uniformed workers roaming the aisles hawking soft drinks, burgers and $1 paper pull-tabs, an instant-win game; and finally cheers--and groans--when someone shouted the magic word, “Bingo!”

“It’s a lot better than selling trinkets by the side of the road,” a Seminole leader declared as profits poured in.

There were predictable challenges by local authorities. But when a federal appeals court upheld the games in 1982, the message was heard by Indians nationwide.

Of 30 reservations in Michigan, Minnesota and Wisconsin, 29 opened bingo halls. The North Carolina Cherokees drew 4,000 people to a converted textile mill with occasional $1-million jackpots.

Some prominent tribes did not join the rush, including the 127,000-strong Cherokee Nation of Oklahoma. “Don’t believe gaming will be your salvation,” its leader cautioned.

But these holdouts had oil or gas, or tribal ranches, poultry farms or electronics plants. On many reservations, the only natural resource was sagebrush. The most common alternative development proposal? A waste dump.

“What choice do we have?” asked Leon Banegas, working in the gambling hall at the Barona Reservation outside San Diego. “Why should we work picking through trash when we can be utilizing this?”

No one would have expected the Mohawks to approach gambling exactly like other tribes. They had been known for determined independence from the time of the Revolutionary War, when many sided with the British, then fled toward Canada after the Colonies prevailed.

Here they wound up on 28,000 acres straddling the international border, a scenic mix of marshland, wind-swept fields and wooded hills, many overlooking the broad St. Lawrence.

Two centuries later, their blockade of a bridge over the river set off the Indian power movement of the 1960s, culminating in the takeover of California’s Alcatraz Island, a protest led by a Mohawk.

“The Indians here are a lot different than the ones out West,” a local prosecutor noted after gambling started at St. Regis. “They didn’t get their asses kicked.”

Guilford White was the Mohawk who saw possibilities in what the Seminoles had begun.

An old-fashioned, make-a-buck businessman, he had little use for fellow Indians who warned that gambling might compromise traditional life on the ancestral lands. To him, this was “green-grass, blue-sky bull . . . phony Indians braids-and-beads bull.”

White, 51, believed the average guy--Indians no exception--merely wanted “a nice car and a nice home, two TVs, that kind of thing.” He was confident St. Regis would back any enterprise that brought jobs and money.

For generations, the 8,000 residents had survived largely through one perilous trade, the men going off to the cities to toil as ironworkers atop skyscrapers. There were only a few small businesses on the reserve, a gas station, cigarette stands and the like. Two-thirds of the adults were without jobs or underemployed, according to one survey.

So others listened as White unveiled his plan in 1983:

He’d put a bingo hall behind Basil Cook’s truck stop on New York 37, which runs through the U.S. half of the reserve. It would be White and Cook’s private business, but they would give 51% of the profit to the tribal council governing the U.S. side.

There was one problem. Neither they nor the tribe had $1 million to build such a place. And you couldn’t get a bank loan for reservation projects--Indian land can’t be foreclosed.

Seeking advice, White said, he called a development officer in the Bureau of Indian Affair’s Maryland-based office that is responsible for the East Coast.

Days later, he said, the BIA’s Thomas J. Burden called back to report, “I’ve got some investors for you.”

At a meeting in Washington, White said, Burden introduced him to a dapper, gray-haired Las Vegas man, Emmett F. Munley, who had experience in gambling going back to the 1960s in the Netherlands Antilles.

“Munley told us he had run casinos . . . all kinds of stuff,” White recalled, and Burden vouched that he was “aboveboard.”

What he didn’t know then, White said, was that Munley, 63, had twice failed to get a license from the Nevada Gaming Control Board. One member questioned his associations “with persons of questionable and unsavory reputation.”

In 1981, he was one of five investors proposing to turn a Laughlin hotel into a casino. But one of the partners drew raised eyebrows when he claimed that his father had given him $400,000 in a shoe box. Munley’s other partners, according to testimony at a board hearing, were Detroit men with ties to organized crime.

Only after Munley and the others sold their interests did the panel approve the hotel plan.

When he sought a license in June, 1983, for a Las Vegas casino, Munley again wound up withdrawing.

He experienced no such obstacles, however, when he looked beyond his home state to a new type of gambling--on Indian land. “The rewards are great,” he said, “if you’re in a good location and you know what you’re doing.”

On July 24, 1984, he signed a bingo contract with the St. Regis Mohawk Tribal Council. He would have 68% of the stock in the hall there.

Years later documents would surface showing how, just weeks earlier, he had treated a special guest to an all-expense-paid trip to Las Vegas--Thomas Burden of the BIA.

Whereas Nevada has broad discretion to disqualify would-be casino tycoons, only one ground--a felony conviction--barred anyone from running a bingo hall on Indian land.

In addition, the BIA took a hands-off stance during the formative years of Indian gambling.

The new industry seemed living proof of then-President Ronald Reagan’s contention that private enterprise was the way to lift poor people by their bootstraps. Few touted the faith more than Interior Secretary James Watt, who oversaw the BIA. “Mr. Watt doesn’t want the big hand of Big Brother stepping in to tell the Indians what to do,” an aide explained at the time.

Accordingly, BIA files reveal a July 20, 1984, memo from headquarters to the regional directors, who under century-old legislation were supposed to approve all contracts with outsiders “for services relative to (Indian) lands.”

The memo said such oversight would not extend to bingo. Noting “legality uncertainties” surrounding Indian games--the Supreme Court had not ruled on them--the memo said bingo contracts would be reviewed only “in cases where tribes request approval.”

The laissez-faire stance delighted tribal leaders, who were forever resisting government encroachment on their sovereignty.

But the practical effect was that federal authorities, until a reversal of policy two years later, scrutinized few of the deals bringing gambling to nearly half the nation’s reservations.

“Throughout Indian country,” an Oneida named Shayhyu’hati’ observed, “Indian governments are being hustled by gaming experts, consultants and attorneys into . . . various forms of gaming schemes that will ‘make them wealthy.’ ”

Many of the outsiders were adept at tricks of the all-cash businesses, men such as James L. Williams, a reputed Florida organized crime associate eventually convicted of skimming $329,000 from low-dollar charity bingo. When high-stakes games began on Indian land, he approached tribes in New Mexico and Oklahoma and briefly took over bingo on California’s Jackson Rancheria, in Gold Rush country.

Stewart Siegel admitted cheating the Barona tribe when managing its hall, steering jackpots to paid “shills” in the crowd. He compared Indian gambling to Cuba several decades ago, when the mob ran casinos there: “It’s wide open at this point. There are no regulations, no controls.”

The Mohawk Bingo Palace was the size of a football field. With brown aluminum walls and an entryway of logs, it had room for 1,700 players, many bused from Ottawa and Montreal. Reflecting his Vegas roots, Emmett Munley promoted bingo as entertainment, installing a glass booth in which winners of one game grabbed air-blown cash as lights flashed and the crowd roared.

As Guilford White had predicted, most tribe members welcomed the venture, which created 180 jobs. To people such as Winnie Jacobs, who worked in “the cage” selling $25 packs of bingo cards, it wasn’t a question of taking a stand on gambling. She was “pro-eating.”

Yet not everyone cheered the June, 1985, opening. Picketing outside were gambling opponents--the “Antis,” they were dubbed.

Tumultuous politics are common on reservations, with clans battling over everything from leadership positions to sewer hookups. But divisions went far beyond that.

There were three tribal councils: one elected on the U.S. side, another on the Canadian side and a set of traditional “longhouse” chiefs, appointed by family clans. Then there was the militant Warriors Society, whose members--many Vietnam veterans--recognized none of the councils.

The Antis were a loose coalition of Canadians who rejected a bingo proposal and traditionalists who feared that the noise, traffic and influx of strangers would make it impossible to maintain their homeland as a sanctuary for Indian culture. They didn’t want their children to grow up in a community dominated by glittering gambling halls promising get-rich-quick rewards.

But one tribe member had a pointed concern--that St. Regis was dealing with an outsider “without knowing who he was.”

For years, Doug George, now 36, would ask the same questions of tribal gambling: Who was really profiting? Where was the financing coming from?

Looking almost like a yuppie with his shaggy hair, metal-frame glasses and prized Soviet hockey team jersey, he was the tribe’s angry intellectual.

As a student at Syracuse University, he led a campaign to abolish an insulting football mascot, a man in Indian headdress and war paint who went whooping around the field. Returning to the “res,” he quickly took over two tribal newspapers, signing editorials with his Mohawk name, Kanentiio, “Handsome Pine.”

Later, when Indian gambling entered a new phase, burgeoning beyond bingo, his papers would warn: “The great values of our Nations are being threatened.”

The go-ahead was given Feb. 25, 1987, when the U.S. Supreme Court finally had its say.

Ruling on a case involving a Cabazon reservation outside Palm Springs--where Indians opened a poker parlor in addition to bingo--the court said tribes could offer high-stakes versions of any type of gambling permitted in their state.

How could California claim moral opposition to off-track betting, for instance, if it was allowed at county fairs?

The significance was greatest in 14 states where nonprofit groups were allowed to hold “Las Vegas nights,” raising funds with blackjack, roulette and the like. Indians there could offer any of those games--without the same limits on bets or hours of operation.

Overnight, planning began for full tribal casinos. In Connecticut, the Mashantucket Pequot tribe envisioned a facility, with atrium and waterfall, designed to gross $80 million a year. In Nevada, Munley was part of a group backing a 1,000-acre gambling resort on the Ft. Mohave Reservation, along the Colorado River.

But St. Regis had not waited for the Supreme Court.

Casinos already were popping up along New York 37: Tony’s Vegas International, the French Riviera, Golden Arrow, Silver Dollar and Bear’s Den, which featured its namesake animal, stuffed, in a glass display case.

Elsewhere, tribal governments were partners in the enterprises. At St. Regis, individual Mohawks claimed them as private businesses.

They also ignored the court guidelines. While New York clearly prohibited slot machines, the lucrative devices were the mainstay at St. Regis.

“I’m practicing my sovereignty, doing as I damn well please on my land,” declared Anthony (Tony) Laughing, the proprietor of Tony’s, where 100 slots greeted patrons inside the door. Then came blackjack, poker, craps, roulette and a sports book, all running 24 hours.

Insisting that Indians should be able to “make our own laws,” Laughing portrayed himself as heir to the Mohawks’ proud heritage of independence. Indeed, whereas most Indian gambling was financed by non-Indians, he boasted that he had built his place on his own, using $700,000 earned “buttlegging,” smuggling cigarettes into Canada.

He became something of a folk hero as Indians around the country heard how The Strip grew to include two bingo parlors and five casinos, drawing thousands of bettors daily. The handle at Tony’s alone was estimated at $1 million a week. Outside Nevada and Atlantic City, it was the greatest concentration of gambling in America. “The spirit of revolution,” one California Indian leader called it.

As the crowds grew, however, so did tensions. Warriors were hired as security guards by several casinos. Blood-red graffiti appeared on streets, fuel tanks and a warehouse: “Let Us Live in Peace” and “Gambling Will Die,” but also, “Antis Will Die” and “Warriors 1.”

Doug George was growing frustrated. It irked him that casino kingpins, such as Laughing, presented gambling as an exercise in Indian self-sufficiency. To him, this was hypocrisy.

As he saw it, only a few Mohawks were getting rich--one flaunted it, driving about in a black limousine. “They have never cared for one elder, educated one child, built one home,” he said.

What’s more, he suspected the casinos had “secret non-Indian backers.”

But such suspicions were hard to prove. He tried to find out how they were getting slot machines, for example, and even obtained a shipping notice. Still, he couldn’t trace the source of the devices. “The company it listed,” he said, “turned out to be a New Jersey post office box.”

The first specific allegation of wrongdoing on The Strip came not from him, or any Anti. It came from White, the tribe’s pioneering gambler.

In May, 1989, White accused Emmett Munley of skimming from the Mohawk Bingo Palace. Backed by several Warriors, he kicked out the non-Indian bingo manager hired by Munley.

It wasn’t that bingo was a flop. Hardly. It grossed $9 million annually, White said, and contributed about $30,000 monthly to the American-side tribal council. The money helped keep the Tribal Hall running.

But White said that amount--and the profits he got as Munley’s partner--should have been higher. He accused Munley of reducing the net by an accounting trick--padding expenses.

White said he pored over the books and found $186,000 deducted for travel, for instance, and another $120,000 for accounting.

He charged in nearby Franklin County Superior Court that the bingo operation had been “bilked by (Munley) by whatever means have been available.”

The allegation came in response to Munley’s own suit--still pending--seeking to get back the bingo. Munley called his Indian partners “misguided, greedy individuals” trying to break a contract.

Allowing the Mohawks to kick him out would set a dangerous precedent, his attorney said. It would destroy Munley’s “similar business opportunities in other parts of the country.”

Munley had opened a second bingo hall on a Choctaw reservation in Oklahoma and approached tribes in Wisconsin and Washington. He sold his interest in the big Nevada project, however, after a partner, former Lt. Gov. Bob Cashell, learned of his past difficulties in the state and announced, “I do not want to be associated with him.”

So Munley did not need additional problems. But now, in the midst of the dispute over the Bingo Palace, White was making a new allegation: that Munley had “gone around bragging” of paying the BIA’s Burden $12,000 to set him up with the tribe.

Weeks later, the civil war began.

First, a crowd of Antis massed at Tony’s and began smashing slot machines, setting off a near riot. The next month, 200 New York state troopers and FBI agents seized slots along The Strip, armed with arrest warrants for Laughing and 11 others.

Warriors, some wearing masks and carrying automatic weapons, responded by blocking roads to keep the lawmen out.

Fearing another Wounded Knee, where authorities shot it out with South Dakota Indians, the police stayed away.

New slots were trucked in. The gambling continued.

In the spring of 1990, as winter snows melted and peak gambling season approached, dozens of Antis set up their own roadblocks to stop bettors--using buses, hay bales and spiked boards--only to see them smashed by larger crowds of Warriors and other gambling supporters.

Gunfire echoed in the evenings. Fire claimed a cultural center on the Canadian side, where George had his cluttered newspaper office.

George appealed for Gov. Mario Cuomo and even President Bush to intervene, to no avail. “I guess it will take someone getting killed,” he said.

The fateful confrontation occurred as the Antis, outnumbered and overpowered, began fleeing the reservation. George was packing when his brother phoned, imploring him to join a group making a final stand on River Road, at the international border.

When he arrived, another Anti gave him a semiautomatic rifle. “I had to put aside my job, which says you don’t do things like that, pick up a rifle,” George said.

The Warriors were massed over a hill. The shoot-out in the early morning darkness of May 1 sounded like war, witnesses said.

“We couldn’t see anybody. But we realized that by picking up a rifle and pointing it at a human being, the potential for taking human life was very, very high,” George said. “When I opened fire, it was with the awareness that someone could be hit.”

At dawn, two Mohawks lay dead, one on each side.

The next day police from Canada and New York were at every intersection, holding shotguns, wearing flak jackets, searching cars, warming hands over fires.

Much as George had predicted, death stopped the gambling.

Two weeks later, he was jailed on suspicion of second-degree murder. Police said another Anti linked him to the gun that killed one of the men.

Eventually, authorities dropped the case when their witness recanted his statement, claiming it was coerced.

But that took six months, enough time to push George into the background at St. Regis. He had no way of knowing that, during the same period in different parts of the country, two investigations were quietly substantiating some of his worst suspicions.

One was by the Office of the Inspector General in Washington, launched by White’s allegation that Munley had bribed his way onto the reservation.

According to the agency’s report, obtained under the Freedom of Information Act, Munley denied any wrongdoing, telling investigators his former Mohawk partner “cooked up” the charge.

Burden, by then retired from the BIA, also said he never took a dime. At first, he denied ever meeting Munley.

“However, he recanted his denial,” the report said, “. . . when questioned about accepting from Munley an all-expense-paid trip to Las Vegas.”

Burden admitted that Munley invited him and his wife to a prizefight between Thomas Hearns and Roberto Duran just before the Mohawks voted on the bingo contract.

Burden didn’t see any conflict of interest. Munley paid his way, he said, “out of the goodness of his heart.”

Whatever prosecutors thought of such an explanation, there was nothing they could do. The investigation was not finished until Oct. 10, 1990, past the statute of limitation for bringing any charges.

Weeks later, Munley got good news from the BIA. On Oct. 30, the agency approved his latest contract to open an Indian bingo hall--on the Barona Reservation outside San Diego.

The second investigation, conducted by the FBI, focused on the trafficking in slot machines. Last Nov. 7, John E. Mascia and Pepper Hailey were arrested in Las Vegas for illegal interstate shipment of gambling devices. Mascia, 64, eventually pleaded guilty to one felony count, Hailey, 48, to a misdemeanor.

For more than a year, according to an affidavit filed in U.S. District Court, agents watched the transport of slots from a company called Casino Graphics.

Some went to the Bronx, for use in social clubs, and others to Upstate New York, to St. Regis. Mascia met three shipments, watching as machines were unloaded into one casino, the affidavit said.

The FBI identified him as “a reputed associate” of organized crime.

The description was punctuated by the unexpected discovery of another man--not a suspect himself--during Mascia’s arrest. With him was John Gotti Sr., the 84-year-old father of John Gotti, boss of New York’s most powerful crime family, the best-known mobster in America.

After the shoot-out, the tendency was to disassociate events at St. Regis from those on other reservations. “It certainly is not a reflection of Indian gambling in general,” said Joel Starr, a BIA attorney in Washington.

Since then, however, dozens of reservations have introduced slot-type gambling machines in states where they seemingly are prohibited. One reservation is Barona, where Munley installed 60 of the machines last December.

There has been one other raid on a reservation--in Northern California last February. Elsewhere, law enforcement agencies stay away, as they did for nearly a year at St. Regis. The reason now is not fear of confrontation, but confusion.

Sheriff’s departments, federal prosecutors and tribes themselves are awaiting guidance from the fledgling National Indian Gaming Commission. But it took 2 1/2 years for the Bush Administration merely to appoint three commissioners. The panel is still writing its regulations. In the meantime, “there are no controls,” said a BIA official in California.

On the American side of St. Regis, Chief L. Dave Jacobs worries that the Mohawks are falling behind other tribes. Although two bingo halls have reopened, to smaller crowds, the illegal casinos sit vacant. New York State Police continue to patrol the reserve.

Jacobs and other tribal officials are suing New York for the right to use slots again.

A man with a Ph.D. in industrial psychology, he is not blind to the problems that came with gambling, the “brother against brother” turmoil. But “economically speaking, it did wonders,” he said.

This time, he envisions “more substantial” casinos run by the tribe. No “dingy strip.” They might try for a “Marina Resort Casino on the St. Lawrence River.”

Doug George vows to “stop it again.”

“The problems that we’re experiencing are a lesson for any community, particularly Indian communities,” he said.

“I know for many (Indian) people in the West, it’s either (gambling) or nothing. What else do they have there? Rocks, cactus, Joshua trees?

“But it introduces elements we have shown no capacity to control. Unless you have your values together and know how this will be run--and with open bookkeeping and accounting--then they’re going to be duplicating what’s happened here.”

Indian America: Searching For Jackpots

Commercial gambling on Indian reservations has grown rapidly since the Seminoles opened the first high-stakes bingo hall in 1979. Half the nation’s tribes now offer some form of gambling, many expanding beyond bingo toward full-scale casinos.

Gambling on the Rise

YEAR NUMBER OF TRIBES GROSS REVENUE 1987 113 $255 million 1990 125 $400 million 1991 150 $1 billion

Indians: The Numbers Federally recognized tribes: 312 Number of reservations: 278 Native American Population: 1,959,234 Enrolled in Recognized Tribes: 1,082,439 Living on Reservations: 955,307 * Includes all who include themselves as American Indians in census

Source: Bureau of Indian Affairs, National Indian Gaming Assn., U.S. Census Indian Population

Here is a look at the states with the largest Indian populations, based on the 1990 Census.

California: 242,164 Arizona: 203,527 New Mexico: 134,355 Oklahoma: 252,420