Expectations of Indian Reservation Gaming: Entrepreneurial activity within a context of...

The Indian Gaming Regulatory Act of 1988 (IGRA) was inspired by a desire to increase tribal employment and educational opportunities, thus reducing the chronic poverty of reservations while maintaining a degree of tribal self-governance. Research indicates some short-term benefits. Reservations with casino gaming have increased tribal employment, reduced tribal welfare rolls, increased children's educational levels (Vinje, 1996; Blackwell, 2001), and in a few cases, such as the Foxwoods Resort and Casino of the Mashantucket Pequot tribe in Connecticut, have made tribal members wealthy (Eisler, 2001). The long-term economic benefits of Indian casinos, however, are still hotly debated within both the tribal structure and the community of academic researchers (e.g., Harvey, 1996; Mezey, 1996).

One important point of debate is whether or not tribal casinos will lead to greater participation in the private sector by tribal members. This is a specific objective of the IGRA, what Earnest Stevens, Jr., Chairman of the National Indian Gaming Association, refers to as the "second wave" of reservation economic activity (Stevens, 2001). Unfortunately, little scholarly research has been done to explore this issue, either theoretically or empirically. It is this expectation of entrepreneurial "spin-off" activity from Indian casinos that is the focus of this article.

The aspect of entrepreneurial activity most pertinent to Indian tribes is adaptability, the desire and ability to respond productively to changed circumstances, both opportunities and threats - in this case, those offered by casino gaming. With particular attention to this issue of adaptability, the form of the opportunity provided by reservation gaming is considered and the traditional economic context of Indian reservations is reviewed. Gaming activity to date is then assessed in a small interview sample, looking for evidence of tribal adaptability. Next are speculated the historic context of patterns and motivations of past successes and failures of tribal adaptation to Schumpeterian-type economic disturbances. Finally, tribal opportunity in the role of export earnings in a regional growth model is considered and it is concluded that tribes should give more attention to political adaptability. The perspective is that of Southern California tribes with comparisons to Arizona tribes.

Indian Reservation Gaming

The Indian Gaming Regulatory Act of 1988 establishes two political/legal points: first, it acknowledges the right of Indian tribes to offer reservation-based gaming to the public, and second, it passes to the state governments the full responsibility to authorize and regulate the activity. It classifies gambling into three classes:

Class I: Social games of chance

Class II: Bingo and card games that do not bet against the establishment

Class III: Casino-style card games and other games of chance that bet against the establishment, slot machines, and horse racing.

The IGRA permits any tribe to offer with no restrictions all Class I games, with no restrictions all Class II games that are offered anywhere in the state or that are approved by the National Indian Gaming Commission, and any Class III games that are offered anywhere in the state or that are agreed to in a "compact" with the state (LAO, 1998). The types of games permitted vary greatly across the states. Some states, such as Nevada have legalized a wide range of gaming and casino activities, while other states, such as Utah, prohibit all forms of gambling. California, like many states, falls in between these two extremes. California law allows all Class I games without regulation and all Class II games with permission and regulation from the state. But among Class III games, the California constitution allows only horse racing and specifically prohibits slot machines and all card games that bet against the establishment, referred to in the state constitution as "Nevada and Atlantic City" style games (LAO, 1998).

Tribal gaming in California began with Class II games only. Gaming tribes quickly started to agitate for the more lucrative Class III gaming compacts, however, and the issue was repeatedly brought into the courts. Some tribes began to offer a full compliment of Class III games in open defiance of California law, citing the fact that "federal law provides federal authorities with the exclusive jurisdiction to prosecute any violations of state gambling laws on Indian lands" (LAO, 1998). In March, 2000 the voters of California approved Proposition 1A, a tribal sponsored initiative which radically expanded the nature and scope of Nevada and Atlantic City style games that could be offered by Indian casinos. The most important issue related to the nature, number, and design of slot machines; the primary source of revenue in most tribal casinos. Soon after the passage of Proposition 1A, some sixty new projects were proposed; some in the $300 million range. In California, of the one hundred and nine federally recognized Indian tribal bands, currently about sixty-two have negotiated gaming compacts with the state, and projections are that by 2005 annual wagering revenues for tribal casino gaming in California will rival that of Nevada (Deer, 2001).

A significant feature of the IGRA is that the compact with the state government that permits Class III gaming is between the tribe as a quasi-sovereign entity and the state. Thus the casino must be owned in common by the tribe, and the issue arises of the position of individual members of the tribe in relation to the ownership and distribution of profits generated by the casino. The IGRA requires that all profits resulting from casino operations be used for tribal purposes, but, given the size of the revenue potential of many Indian casinos and given the small size of many of the tribal bands involved, the question is whether the proceeds will be used for economic development, both tribal and individual, or whether the proceeds will go to personal consumption. It has been reported that some tribal directors of Indian casinos arc paid annual salaries in excess of one million dollars (Flanagan & Samuelson, 1997) and that payouts to individual tribal members can approach a half million dollars per year (Brosnan, 1996).

Historical Land Tenure and Wealth Acquisition

The colonization of Southern California is considered to have started in 1769 when the Spanish government established military garrisons and authorized a string of Catholic missions stretching up and down the California coast. Present in Southern California at this time were several tribes with an estimated total pre-colonial population of 25,000. Each tribe was broken into a number of "bands," each band being a distinct socio-political landowning entity occupying a certain geographical area, typically a connected series of semi-fertile valleys and their water sources. The band, the primary territorial unit, was controlled by a social, political, economic, and religious hierarchy of shamans assisted by a council. Historically these civil chieftain positions were inherited and passed from generation to generation within an extended family (Shipek, 1982; Viejas Native American Band, 1995). In essence, the leadership structure of Southern California Indian tribes was a unity of civil and religious hierarchy, which could, as necessary, also make war against neighboring tribes as a military hierarchy.

Pre-Colonial Land Tenure and Wealth Acquisition Customs among Traditional Horticulturists

Tribes in Southern California employed a system of individual, family, and tribal property rights that were typical of a traditional horticulturist society. Individual band members typically owned a diversified portfolio of farm fields, grazing lands, and shelters. Tribal members improved and irrigated their most fertile land and managed other critical resources, such as water supplies, livestock, and building materials for their economic and social activities. In general, the available technology and labor force existent at that time was fully exploited in order to achieve maximum productivity of the land for their personal use (e.g., Shipek, 1987, pp. 10-14). This was somewhat necessary, since pre-colonial Southern California tribes had a relatively high population density for that time, ranging up to seven people per square mile, and good farming land was relatively scarce (Shipek, 1982).

In addition to private ownership of land, each band also had "tribal" lands held in common under the loose control of the tribal band-leader. Tribal lands would typically be used for various religious and social activities such as burial grounds, religious ceremonies, and sacred retreats. Some tribal land was also set aside for common grazing. Any band member without rent could typically use tribal grazing lands, and the full "profit" of an individual's use of the tribal land would stay with that individual. The tribal leader might occasionally exercise control to lessen various "free-rider" problems, such as overgrazing on tribal lands (Shipek, 1982; 1987).

Land tenure concepts in pre-colonial Southern California were, in fact, similar to many rural colonial New England farming communities at the time. The best land was viewed in the context of individual ownership, and could be improved, sold, leased, or inherited, while the community retained some control over other land, which could either be used for the community good, or occasionally, as a temporary loaned asset for individuals. Similar juxtaposed communal and proprietary land tenure concepts have also been identified in other pre-colonial, cultivated farming societies throughout the world (e.g., Rock, 2000).

Not surprisingly, the Southern California tribes viewed wealth within the context of land ownership, and those assets needed to productively utilize the land such as livestock and improvements. Like the land itself, other land-oriented assets, such as agricultural tools, were also individually owned and accumulated. Typically, grown male children would leave their parents lodging, then clear, cultivate and improve new land, thus gaining "homestead" ownership in their own land. The youngest son, who supported his parents in their old age, would then inherit the father's land. This nexus between wealth and land is fairly typical in subsistence farming communities world-wide (Dale, 1997).

Given the opportunity for differences in land choice, land development and land accumulation, clear disparities of wealth were evident within pre-colonial Southern California tribal society. Band leaders and shamans, and their families, would typically control larger tracts of the best land, the "middle class" survived by farming their own personal land, and other band members, however, barely subsisted. Wealthier tribal members owned slaves, and hired migrant workers (landless tribal band members and other-tribe outcasts) to work their land (Shipek, 1987, p. 16). Band leaders taxed other members, most often in terms of labor; they provided a crude system of welfare by assisting needy tribal band members, punished criminals (including banishment and executions) and could call upon the tribal band to make war upon neighboring tribes. This social, political, and economic structure was rather typical of traditional horticulturist societies in a pattern that varied little across America at the time, and at one time or another, has been seen in most parts of the world, including pre-feudal Europe.

In the mid-to-late 1700s on the Great Plains, well away from California, a modification of the traditional pattern occurred. Some previously marginal horticulturist and hunter-gatherer tribes adopted two European innovations, the domesticated horse and the firearm, and became nomadic hunter tribes, harvesting large herds of buffalo. Since the horse, not land, was the dominant asset for these tribes, wealth accumulation was primarily viewed in terms of the number of horses owned (Roe, 1955; Foreman, 1970, Lurie, 1986) and, to a certain extent, the number of slaves and wives who would tend to the horse herds and tan buffalo hides (Bailey, 1966).

Colonization and the Legal Land Tenure Concepts of Southern California Reservations

The colonizing effects of first the Spanish government, then the Mexican government, then the American government, had dramatic and profound effects upon the Southern California Indian tribal way of life. Under the Spanish government, Franciscan friars converted the local Indians to Catholicism utilizing the mission system. Local natives were brought onto the mission land for a short period of time, converted to Christianity, fed and housed, taught modern European agricultural and land management techniques, provided labor to improve the mission property, and then rotated back to their tribal lands. The major intrusion into tribal lands, however, occurred after the Mexican independence from Spain in 1821. By 1834 the Franciscan mission lands were secularized by the Mexican government and placed under the control of private individuals called "mayordomos." Soon afterward, the Mexican government started granting the most productive land to powerful families as rancheros. Although the Mexican government considered mission Indians to be Mexican citizens, often these rancheros included whole Indian villages and tribal lands. Under the ranchero system many Southern California Indians were displaced from their ancestral tribal lands and/or used as forced labor on the rancheros.

The United States gained control of Southern California with the signing of the 1848 Treaty of Guadalupe Hidalgo. Under this treaty citizens of Mexico in the California territory became citizens of the United States, and all property rights were to be honored. In 1849 the Department of the Interior was created and gathered all supervisory power over Indian affairs within the Bureau of Indian Affairs (BIA). By 1865, with the close of the Civil War, increasing numbers of settlers entered Southern California looking for good farmland, and pressure on local Indian land holdings increased. Up to 1910, in a long and confusing series of presidential executive orders, congressional acts, judicial decisions, and actions of both well meaning and self-serving private individuals and BIA agents, a collection of reservations was established for the Southern California Indians. Some of these reservations included tribal lands, other reservations were set aside some distance from a tribe's ancestral lands, other reservations were established for homeless and itinerant Indians, and still others were purchased in various land deals through the 1930s.

The modern relationship between land tenure and the reservation system was formally established with the General Allotment Act of 1887, otherwise known as the Dawes Act, and later with the 1934 Indian Reorganization Act. With these Congressional actions, and various other judicial decisions, over time U.S. Indian reservations, in general, developed a mosaic system of four different land tenures: fee simple (privately owned land), individual trust, tribal trust, and federal trust. Southern California reservation land tenures are primarily a combination of individual and tribal trust-land. Individual-trust land on the reservation was typically granted to an individual as "personal property" for a homestead and subsistence farming. These lands could be improved, leased, or inherited among tribal family members. Tribal-trust land, however, is considered tribal land for the common good and managed by the elected tribal council.

Currently, there are over 100 Indian reservations in Southern California, with acreage ranging from over 30,000 acres to less than 5 acres. Currently about 6,000 total identifiable members are on the tribal roles, with tribal band membership ranging from one family to over 500 individuals. A tribal band member is one that can trace a minimum of 1/8 tribal blood. Also, an individual cannot be a member of two different tribal bands, and children with parents from two different tribes must typically choose their tribal membership upon adulthood. There is no requirement that the band member live on the reservation, and many live and work in the nearby cities. At the Borona Reservation, for example, there are an estimated 330 tribal band members, of which about 250 individuals actually reside on the reservation (Personal interview notes).

Much of the migration off of Southern California reservations occurred during the 1940s to the 1970s when small acreage farming became nonviable, and the dramatic growth of Southern California cities created more employment opportunities elsewhere. By 1980 over 80% of the remaining residents on Southern California reservations were on welfare and living in government subsidized housing (Viejas, 1995).

Overall, the modern Southern California Indian reservation can best be thought of as an economic clan with extended familial ties contained within a geographically defined and legally protected region. As in many areas of the world, the modern "clan" is a combination of historical and customary "pre-colonial" land tenure and wealth acquisition concepts overlaid with a "post-colonial" legal system of land tenure; in this case the reservation trust-system. At first analysis, at least in the case of the Southern California mission tribes, it appears that the legal reservation land tenure structure of both individual and tribal trust lands parallels to a great extent the historical and customary land and wealth acquisition process of prc-colonial times - with the exception of one important characteristic, the economics of individual land as an equity-based asset.

Although individual-trust lands "appear" privately owned, they are, however, still within the Indian trust and the rules and regulations established by the various laws. However, it is argued that there are substantial costs associated with this important asset, and that these costs will ultimately affect the nature of entrepreneurial behavior within the reservation system. Individual-trust lands come with high transaction costs. First, title cannot be transferred; thus while individual trust-land can be mortgaged; it cannot be used as collateral. The "collateral" for loans, etc., therefore becomes an "assignment of income" rather than the deed itself. Second, the jurisdictional issues associated with loan defaults or other claims on individual-trust land are poorly defined, and are often settled in tribal courts rather than in normal civil courts. Third, through several generations of inheritance, distantly related tribal members now fractionally own many of the individual-trust lands. It often becomes difficult, if not impossible, to gain consensus between fractional owners. Fourth, much of the individual-trust land is currently in various stages uf civil and tribal litigation, as mure and mure cases are Oled related to individual property rights, inheritance, and divorce. And fifth, much of the individual-trust land, originally designated for small family farming, is now considered sub-optimal in size for modern development. These increased transactions costs inevitably lead to a greater cost of capital being associated with this individual asset.

Methodology

Nine different Southern California tribal bands were investigated in detail, with extensive visits to each reservation and personal interviews with tribal members, tribal leaders, and casino managers; forty-five total unstructured interviews were conducted, five from each band. Five of the reservations had gaming compact agreements and had established substantial casino type gaming. The remaining four bands did not have gaming at the time of the study and were used as a paired comparison with the gaming reservations. The tribal bands interviewed sometimes displayed a desire for privacy that tended toward defensive secrecy. Because of the difficulty of gaining access to tribal information, the tribal names associated with the individual data were kept confidential, as was the identity of any person interviewed. The Southern California sample, however, includes the Barona, Viejas, Sycuan, and PaIa bands, among others. The average size of the Southern California reservation sample was about 400 tribal members, with little variation between gaming and non-gaming bands.

As an additional source of comparison information, four tribal bands with casino gaming from the State of Arizona were investigated; these included the tribal bands of Tonto Apache, Fort McDowell, Yavapai-Prescott Apache Nation, and Tohono O'odham Nation. This provides an interesting comparison of Southern California Mission Indians, the first to be introduced to a colonial type land-tenure system, with a sample of the last to be introduced to the reservation system. For the Arizona sample, interviews were only done with the tribal leader in charge of economic development. The average size of the Tonto, Fort McDowell, and the Yavapai-Prescott bands were similar to the Southern California sample; the Tohono O'odham Nation, however, has over 20,000 tribal members in 72 villages spread over 2.86 million acres and really presents a different set of economic circumstances.

The visits to the reservations and casinos permitted assessment of the size of the casino, the number and variety of games offered, the size and characteristics of the crowds, and ths amount and quality of entertainment and other attractions. Familiarity with the area permitted assessment of ease of access, distance to population concentrations, presence of hotels, retail outlets, and entertainment. Interviews were sought with tribal casino managers and with directors of development. Interviews were also conducted with officials of relevant government agencies including the California Indian Gaming Commission, the National Indian Gaming Commission, and the National Center for American Indian Enterprise Development, and, particularly, the Bureau of Indian Affairs. BIA officials were interviewed at the California and Arizona regional offices and at the Tribal Gaming Affairs Department.

The unstructured interviews ranged in subject matter across three basic areas of interest, the place of the casino in the relations between the tribe on one hand and society and the state government on the other, the economic expectations of tribal members to the operation of the casino, and the role of the casino in the economic development of the tribe. None of the interviewees from any of the tribes would talk openly about the revenues and profits of the casinos nor would the interviewees from the BIA, who consistently deferred to the privacy of the tribe. All interviewees, however, were willing to talk to some degree about both tribal and individual expectations of economic and entrepreneurial activity.

Findings

Visits to the Southern California casinos revealed that they were of moderate size and appeared to be operating at something less than full capacity. The clientele appeared to be middle aged and were exclusively day-trippers because the casinos did not as yet have hotels on the reservation or even in the immediate area, unlike the Las Vegas model of a cluster of large hotels that incorporate the casino into the lobby of the hotel. The reservation casinos were rather isolated, with few supporting retail or service establishments in the immediate area, but they were all within more or less convenient driving distance of the suburbs of a major metropolitan area.

Interviews with the BIA and other government agencies revealed the priorities placed on economic development activities by prevailing political opinion as expressed in the IGRA and emphasized the resulting regulatory constraints put on the use of casino proceeds. The highest priorities are to improve education and to increase employment, and the second highest priority is to stimulate economic development, including the encouragement of both tribal owned ventures and individual ventures of tribal members. All expenditures of gaming proceeds are allocated to five categories: 1) tribal operations, government, and programs, 2) promotion of tribal economic development, 3) general welfare of tribe and tribal members, 4) donations to charitable organizations, and 5) assistance to the operations of local governments.

The first category includes two of the three political priorities, employment and education, and the second category includes the third priority, economic development. Personal stipends are included in the third category. Before any personal payouts can be made, tribal accounts must be submitted to the BIA and where they are carefully audited. The BIA states that strict controls are placed on the distribution of cash payments to individuals and that reports of tribal members receiving excessively large payments are exaggerated. To be allowed to make personal payouts or to make contributions to the fourth and fifth categories, the tribe must document to the BIA significant accomplishments in the first two categories and thereby provide evidence of commitment to the purpose of IGRA.

According to the BIA, most gaming tribes are currently contributing almost exclusively to the first category, heavy spending on education and tribal infrastructure. Contributions to education include schools and libraries; contributions to tribal infrastructure include health care clinics, governmental offices and reservation housing. A number of tribes have been encouraged to make contributions to categories four and five, notably donations to state universities and payments to local governments to help defray casino induced costs (BIA interviews).

In contrast, most of the tribes are just beginning to contribute to tribal economic development and the support of entrepreneurial activity. The following table summarizes our findings for individual start-ups.

There are four primary sources of opportunity from tribal gaming for the individual entrepreneur: 1) participation in the gaming supply chain, 2) off-reservation businesses, 3) providing intermediate or retail products/services to other tribal members, and 4) retailing to casino visitors. With respect to the gaming supply chain, such as slot machine repair or casino construction, tribal participation was almost non-existent. Almost all of these activities were contracted to non-Indian suppliers. Two reasons are offered as explanation; many of the supply chain operations are either very technical in nature, which cannot be supplied by the reservation population, or there are substantial scale economies involved, such as in the case of construction. Similarly there were no entrepreneurial efforts reported that were off-reservation; however, it should be noted that several tribal councils were making substantial off-reservation investments with casino revenues, such as in real estate. With respect to entrepreneurial activity within the tribal community, a small percentage of the reported start-ups were in this area - however, these tended to be very "micro" in scale, such as painting houses or selling prepared food to other tribal members. Not surprisingly, distance to market appears to be an important moderator; most of the Apache reservations are further away from population centers than are the California reservations and a higher incident of intra-tribal start-ups were reported for the Arizona reservations (37% of start-ups and 24% of reported start-up employment) versus the Southern California gaming reservations (27% of start-ups and 15% of reported start-up employment).

The vast majority of individual entrepreneurial efforts, and 100%) of the tribal efforts, were focused on the casino visitor market. Again, most of the individual efforts were somewhat small in scale, such as opening a retail tobacco store in a newly build tribal outlet center, producing Indian crafts for a casino gift shop, establishing a hunting and fishing guide business, etc. All of the tribal entrepreneurial start-up efforts beyond the casino itself could also be considered retail in nature but on a much larger scale, such as tribal owned retail malls, tribal owned campgrounds and RV parks, tribal owned convenience stores and gas stations, and tribal owned motels, as well as several plans for large-scale tribal owned, managed, and developed resort and golf complexes adjacent to the casinos. For the nongaming tribes, a significantly lower incidence of start-ups was noted.

It is interesting to note that, in contrast to the Southern California gaming bands, more of the tribal activity in the Arizona sample appears to be directed toward encouraging individual entrepreneurial behavior on the reservation. All four bands have active and growing small business development programs funded by casino operations providing direct loans, loan guarantees, and consulting and support services. One band claims to have supported twelve active new ventures, another claims four, and a third claims to have "a number of them" and to be looking to support more. Several of the tribal development officers pointed out that the number is particularly impressive given the relatively small number of adult tribal members. The Tohono O'odham small business development fund is reported to have funded over 150 tribal members to assist in "launching and operating private businesses," and to help "bring as many of our people home to the reservation as possible." (Personal interview notes) In effect, these casino-funded programs, as well as peer lending programs such as the Lakota Fund, are innovative attempts to address some of the capital accumulation limitations of the modern reservation-based land-tenure system. While the Southern California gaming bands had similar programs on the books to stimulate individual entrepreneurial activity, they did not appear to be nearly as active as the Arizona tribes examined.

This study suggests that, to date, for the gaming tribes examined, most of the entrepreneurial and business activity is at the tribal level, with little evidence of widespread individual entrepreneurial activity outside of a few retail operations and very small clusters of intermediate services to other tribal members. It is, however, important to note that the incidence of individual entrepreneurial behavior was more evident at gaming versus non-gaming locations. These micro intermediate intra-tribal, or "second-wave" business efforts may, in fact, provide a basis for longer-term diversification of the tribal economy.

Discussion

The pressure of the modern global economy on traditional tribal culture can be argued to be an example of an extended Schumpeterian type "disturbance" of micro-economies once in equilibrium. If traditional tribal economic activity can be said to constitute a micro-economy, then the pre-colonial Indian economies can be seen to be economies in equilibrium, albeit at a very low level with low labor productivity, low output, and virtually zero capital formation. The intrusion of European economic methods into these primitive economies caused severe and ongoing disruption, but the Schumpeterian thesis holds that such disruptions are necessary to stimulate economic growth and development. Schumpeter argues that an economy can continue indefinitely in equilibrium unless the equilibrium is disturbed by some exogenous factor that calls for an innovative adaptation, and the motivation for adaptation is then the struggle to survive (Schumpeter, 1983).

The tribal economies have been struggling for an extended period of time with the need to adapt these disturbances to their traditional economies and history reveals that past innovative responses have been unsuccessful or at best partially successful. Tribal histories of subsistence horticulturists vary across the American continent, but all are similar in that the tribe's survival was threatened by its inability to adapt to the economic trading methods intruding from Europe.

On the Great Plains, but not in California, the economic disturbance elicited a truly creative innovation. Based upon a partial adoption of European technology, some, but not all, previously horticulturist and foot-based hunter-gatherer tribes evolved into horse-based, wide-ranging nomadic tribes. The partial nature of the nomad adaptability is instructive and can be seen in limitations in both their adopted tools of production, the horse and the firearm, and in their innovations in economic method, the buffalo harvest and the extortionate raid. The science of horse breeding, for example, was never adopted from the Europeans. Horses were viewed as "self-perpetuating, self-repairing, and essentially self-maintaining" (Holder, 1970, p. 111), with some tribes even viewing their horses as an additional food source. So constant raiding was necessary to continually replenish horse herds. The problem presented by firearms was even worse. They were crucial to success in both buffalo hunting and raiding, but "the gun immediately brought a close relationship with a permanent source of supply, ultimately European. . .The man with the gun was at the mercy of the European" (Holder, 1970, p. 114).

The economic methods developed were also flawed and consisted of the harvest of buffalo and the raid on the static horticulturists for the purpose of extorting wealth. The flaw lay in the fact that buffalo harvesting and extortionate raiding did not create additional wealth but only reallocated it, so that an increase in tribal income required bigger buffalo harvests and more raids. Buffalo herds were never viewed as an asset to be maintained and renewed, but instead were continually over-harvested (accelerated in later years by Europeans). Likewise, the raid showed itself to be so lucrative that the nomads continually stepped up raiding until the static horticiilturalists were destroyed. Within a hundred years of their initially successful innovation, the nomadic hunter tribes faced a significantly changed economic environment of no more buffalo to harvest and no more horticulturalists to raid. When they directed their raiding skills to the recently arrived European settler, they found a far less cooperative target.

The effort of the nomadic hunters should nevertheless be appreciated to be the major economic innovation that it was. The horse and firearm innovations freed the adopting tribes from the geography of the river valleys and the low output of primitive farming and permitted them to exploit the higher value output of buffalo herds and raids on the static horticulturists. This adaptability gave these tribes the ability to flourish and grow during the period of decline of the remaining tribal horticulturists.

The different responses to the European disturbance might be considered in light of the attitudes to land tenure and wealth acquisition by the two cultures. The horticulturists were governed by an extreme class stratification that was unshakably rigid and that drew all wealth upward into the hands of the upper class. Labor was sedentary, and warfare was low status, avoided by the upper class, and not a route to success for commoners. A ritualistic fertility religion dictated permissible methods of production and locked the land up in an unproductive system that discouraged capital formation. The nomadic hunters in contrast had a leadership system that rewarded individual initiative and provided unlimited status mobility. Wealth acquisition was encouraged and rewarded and was pursued with aggression. There were few territorial ties, and land tenure was loose with no traditional limitations to viewing land as a capital asset. Holder (1970) concludes his comparative study of the two cultures with the conclusion that the horticulturists did not adapt because "even in the face of severe stresses it was to the complete disadvantage of those in high places to institute a nomadic existence. Those elements of the villages, the commoner men, who might be advantaged in becoming nomads were in the least favorable position to implement their wishes in the face of the weight of tradition and authority" (Holder, 1970, p. 142).

Consider two of Schumpeter's principles of entrepreneurial development. First, an innovative response will not typically come from those currently in a position of dominance with something to lose (Schumpeter, 1983, p. 66). While Schumpeter was referring to dominant firms and industries, this principle also has meaning when applied to any dominant economic elite who benefits from tradition and authority. The tribal elites of the successful horticulturist tribes had a great deal of status, privilege, and wealth to lose and therefore did not have any motivation to adapt to changed circumstances, whereas the tribes that innovated and became nomadic hunters had been marginally successful horticulturists or hunter-gathers with weak social, political, and religious hierarchies. Second, the innovative response will typically draw the needed capital from the old combinations of resources (Schumpeter, 1983, p. 68). The horticulturists might have been discouraged from innovating by the shortage of capital in their subsistence economies. It is clear that the nomadic hunters got their necessary capital from the horticulturists by raiding. If the amount of capital in horticulturist economies was too small to permit transfer to other combinations of resources, the extraction of capital by the nomadic hunters must indeed have proven fatal.

Casino gaming presents to tribal economies a current disturbance whose impact will depend upon how each tribe responds to the two Schumpeterian principles; the ability to change in the face of the weight of tradition and authority and the ability to move available capital between uses. Concerning capital availability, tribal members will have access to gaming generated funds in four possible forms, 1) shared payments from casino revenues to all tribal members, 2) the labor market structure of preferential employment in the casino, 3) common funds made available to individual tribal members in the form of business loans or development grants, and 4) accumulated family-specific assets.

The first possible use of gaming funds, direct payments to tribal members, will always be a temptation since it is the most obvious and direct way to address the purpose of tribal gaming, the reduction of chronic poverty and welfare; but this would ultimately employ funds for personal consumption rather than personal investment. This is at odds with "commitment to the purpose of the IGRA," and is tightly controlled by the BIA. As concerns the second intervening variable, labor market structure, it is evident that there is ample and guaranteed employment opportunity in the casino for any tribal member that desires employment. However, while providing an opportunity for additional individual income, it may also create less economic necessity for individual entrepreneurial activity-thus at the sociological level, a less-marginalized sub-population (Hagen, 1962), or at the individual level, an absorption into the tribal bureaucracy of a previously "reluctant" entrepreneur (Galbraith & Latham, 1996). In fact, it was suggested many times during interviews with Southern California tribal members that this guaranteed employment in the casinos might hinder individual entrepreneurial behavior.

The third form of funds availability, the common fund for the purpose of business loans and grants is being openly discussed by all of the sample tribes and is being put into effect by several. However, this effort is only beginning as tribes seek to educate members in business methods, develop lending criteria, and establish the necessary funding pools. This is a promising course of action for the tribe and should be pursued given the problems associated with the fourth source of funds, that is, family-specific equity assets.

With respect to capital accumulation in terms of family-specific equity assets, one fundamental and critical barrier is identified. There is ample evidence in the entrepreneurial literature, for example, that most nascent entrepreneurs access the capital market with their personal equity assets, particularly with property holdings (e.g. Bates, 1997). However, as previously discussed, the overlaid post-colonial reservation tenure system has dramatically raised the cost of capital associated with individual-trust land. Under a more proprietary land-tenure system (and one that is, in fact, more similar to traditional horticulturist Indian culture and land-tenure principles) the inherent value of accumulated capital in the real estate near a tribal casino could be readily accessed by lease, sale, or loan collateralization by the individual owner for entrepreneurial purposes - however, this is not the case for the modern individual tribal member.

In effect, the potential for accumulating family-specific equity capital is severely limited by the modern reservation land-tenure structure and thus much of the reservation land sits underutilized as a capital resource for individual entrepreneurs. The increased cost of capital of individual land clearly inhibits individual entrepreneurs and shifts the focus to tribal-trust land. Here the cost of capital is less than that for individual-trust land (but still higher than fee simple land) because of both scale considerations (larger development potential versus sub-optimal individual land holdings) and reduced contracting costs (consensual tribal agreements versus fractional individual ownership). In effect, the accumulated equity capital in tribal-trust land can be more efficiently accessed. Not surprising, much of the entrepreneurial activities are tribal in nature, particularly for the Southern California gaming reservations.

A number of critical observations must also be kept in mind. First, although the specific form of "wealth" differs, for both the Southern California and Apache tribal bands in lhc current study there seems to be a customary tradition of individual and familial entrepreneurial behavior and wealth accumulation that dates back centuries. Second, the post-colonial reservation system overlaid a foreign land-tenure structure that clearly inhibited individual entrepreneurial activity, and, although probably unintentionally, encouraged a more communal tribal-wide economic viewpoint. And third, interviewees for both gaming and non-gaming Southern California bands listed, "all the true entrepreneurs within the tribe moved off the reservation" as the primary explanation for the low levels of individual entrepreneurial activity on the reservation, followed by other considerations such as opportunity and capital.

Conclusion

It is early in the process of fully exploiting the potential offered to Indian tribes by reservation casino gaming. The pattern of tribal adaptation remains to be seen, but certain elements of the process can be considered from our historical survey of tribal wealth traditions and adaptive responses and from our sample of tribal activity to date. Expectations of tribal entrepreneurial activity have been considered through the theoretical lens of a Schumpeterian style economic development in response to external disturbance. But this model of change can be pushed only so far in describing the impact of Indian gaming, because most tribal economies have little structure and few established products or industries, and the disturbance does not bring new production methods, new markets, new materials, or new modes of organization in the manner of a true innovation (Schumpeter, 1983). Instead the impact of gaming might better be described as having the nature of a natural resource monopoly, as if the tribe discovered oil on the reservation. The initial economic effect would be, rather than a disturbance of traditional equilibrium, instead a sudden windfall flow of funds into the tribal economy.

The windfall flow of funds might be thought of as export earnings and gaming thought of as an export activity and compared to the role that the export base plays in the classical theory of regional growth. The export base model of regional growth argues that all regions grow because of export activities that bring wealth into the region. The region then grows as it builds a balanced economy on "residentiary" activities that support the export industries, typically services, retail, and manufactures of intermediate goods used by the export industries (i.e., North, 1955; Tiebout, 1956). In a healthy regional economy the residentiary activities can grow faster than the export activities and can come to represent a larger percentage of regional output. The IGRA, confirmed by the BIA, makes it clear that reservation gaming is primarily for the purpose of long-term economic growth and development and only secondarily for the purpose of short-term income enhancement. Consistent economic growth will require the development of residentiary activities and the construction of a balanced micro-economy, making the export base model appropriate to Indian gaming.

Windfall export earnings of the magnitude promised by reservation gaming would at first glance appear to be a solution to Indian problems of poverty, but there are two major concerns. The first is a concern with using natural resource monopoly rents as an export base. Experience has shown that natural resource earnings alone may provide a weak export base (Barker & Dunne, 1988). In a highly developed economy natural resource earnings can even cause an actual lowering of total income by so distorting local costs and exchange rates as to make the local economy less competitive; this is known as the "Dutch disease" (Kaldor, 1981) following the decline of the Dutch economy after the discovery of gas off the Dutch coast. It should be noted in this regard that a number of Indian reservations have in the past been favored with natural resource exports, such as petroleum and timber, without a notable impact on the development of a sustainable economy.

The Bureau of Indian Affairs makes it quite clear that the windfall from casino gaming is not expected to last very long as the public comes to be accepting of gaming and individual states are pressured to legalize casino styled gaming for non-Indian developers; ten to twenty years is the timeframe used by the BIA. Within this context, it is interesting to note that some of the popular press refers to Indian gaming as the "fat modern buffalo" (e.g., Zelio, 1994), an unfortunate metaphor given the consumptive demise of the buffalo. If, in fact, Indian gaming can avoid simply being harvested like a buffalo by purely consumptive behaviors, it may indeed provide a durable export base for the development of a tribal economy within the larger private sector economy.

The second major concern is with the political nature of Indian reservation gaming. Indian gaming is not a natural resource monopoly but instead is a monopoly granted by the government. The value of it lies in three conditions, 1) permitting gaming in a location in which it otherwise would not occur, 2) keeping competition from moving into the area, and 3) paying no taxes or fees. The maintenance of these three conditions is entirely a political effort, an activity that fits well within Baumol's (1990) definition of entrepreneurship as "the imaginative pursuit of position" (p. 909). Gaming tribes have been rather aggressive to date in their political activities and appear to be becoming more so. This may be necessary for them, because aggressive political/legal activity is beginning to appear in competition such as the proposed People's Gaming Act that would amend the state constitution to permit Las Vegas type gambling in several California cities (LAO, 2002).

The current survey has revealed some accomplishments thus far of the California and Arizona Indian gaming tribes in economic entrepreneurship. Within this context some of the important economic conditions underlying the nature and potential future of entrepreneurial "spin-offs" from reservation casino gaming were explored. In the political and legal arena, however, the entrepreneurial accomplishments of Indian tribes have been truly impressive. These successes, particularly with the passage of the tribal sponsored California's Proposition 1A in 2000, will certainly set the next stage of tribal economics, an economic process that is now a conflicting fusion of historical pre-colonial land tenure principles, a 19th century reservation system, and the modern economic power of casino gaming.