Indians Have Found a Bonanza in the Casino Business

Rising like a mirage in the lush forests of Connecticut is the largest, most profitable gambling palace in the Western Hemisphere.

Foxwoods Resort Casino houses 314,000 square feet of wagering space and sucks in sums approaching $1 billion a year from unlucky gamblers in a market that includes Boston and New York.

The 23-story casino and hotel complex is not the brainchild of any Las Vegas or Atlantic City tycoon. Rather, it is the astonishing triumph of one of America’s tiniest Indian tribes, the Mashantucket Pequots, whose total numbers, including children, approach 550.

No other tribe has hit it so big, nor does any stand as a more striking symbol of the spectacular emergence of Indian tribes as casino barons and political players.

In just a decade, more than 100 of the nation’s 554 recognized tribes have entered the gambling business. They now run well over 200 casinos, bingo halls and other gaming venues in 28 states. Even more establishments may be on the way, especially in California, where voters this fall gave California tribes the authority to operate slot machines.

The $100-million battle over Proposition 5 was the costliest state ballot campaign in the nation’s history. Provided it survives court challenges, the state’s 40 gambling tribes may soon rake in $1 billion annually in slot revenues.

Tribal gambling halls still represent only 13% of the $50-billion-a-year gambling industry, mainly because most are located far from major population centers. But with traditional gambling cities becoming overbuilt, Indian gambling is now the fastest-growing segment of the market, says Matt Connor, editor of Indian Gaming Business, a quarterly publication that tracks the industry.

Two landmark court cases created the market in the late 1980s by protecting Indian sovereignty. For most tribes, “the new buffalo,” as gambling came to be called, did not bring great riches, paying only for basic necessities on impoverished reservations.

However, a small number of tribes have become financial and political titans.

There is no better example than the Mashantucket Pequots, who started by opening a modest bingo hall on their 1,400-acre Connecticut reservation. In 1990, with plans to build a 40,000-square-foot casino, they searched literally to the ends of the earth for financing, securing a high-interest loan from casino owners in Malaysia.

The Foxwoods casino opened in 1992, overcoming a court challenge by the state. Later, the tribe shrewdly negotiated a deal to bring in slot machines by guaranteeing the state, its former adversary, at least $100 million annually in revenues from the machines.

Since then, Foxwoods has expanded several times, thanks to the money dropped by its 45,000 daily visitors.

With the growth of Foxwoods, the Pequot tribe also has become gambling’s biggest single campaign contributor in Washington, D.C., dwarfing such huge casino interests as the Mirage, Harrah’s and Hilton, according to figures compiled by the nonprofit group Common Cause.

Between 1988 and 1996, the small tribe donated $974,625 in so-called soft money to the Democratic Party and, to a lesser extent, the Republicans.

“The tribe . . . is participating in the system as virtually everyone else does,” says Pequot spokesman Bruce MacDonald, adding: “We’ve tapped into a market and we run a good operation.”