Dances with sharks; why the Indian gaming experiment's gone wrong.

• Author: Segal, David

Plastic garbage bags stand in as roofs; faucets along a dirt road serve as showers. A 12-year-old might call this a scout camp, but the Kickapoo tribe of Eagle Bend, Texas, calls it a nation--and it's clearly a nation in trouble. A quarter of the population is unemployed, more than half is illiterate, and much to the embarassment of tribal leaders, the signal corp in the community vegetable garden is marijuana.

By the looks of it, the Kickapoo reservation needs several basic things, including electricity, plumbing, and a school. But it wants only one thing: bingo, and step on it. "We're desperate for the money," says Julio Frausto, a tribal leader. And the Kickapoos are not the only ones. In the four years since Congress passed the Indian Gaming Act, which guaranteed tribes the right to run gambling enterprises on their reservations, more than a hundred tribes from North Dakota to Florida have gotten into the act, eager to translate blackjack and bingo into better education and opportunity.

But while the Kickapoo look to Las Vegas for inspiration, they might be wiser to the first glance a few hundred miles north, to Miami, Oklahoma.

When the leaders of the Seneca-Cayugas there hired Wayne Newton Enterprises to run their high-stakes bingo parlor in October 1990, they thought their troubles were behind them. The parlor had been shut down for several months after the tribe terminated its contract with a British management company that failed to turn a profit after running the hall for a year. But now they had a real Las Vegas concern working for them, and Wayne himself--half American Indian--came to the grand opening to give away the evening's big prizes. Sure, the tribe was asked to throw in $224,000 to help restart the operation--over and above the $300,000 it had already spent to guild the hall--but Wayne was going to ante up $125,000, he was sending his best people, and anyway, business during November was good. No worries.

By December, worries. On most nights the huge hall, with its mirrored ceilings and pastel interior, was packed with 1,400 players. But profits were nowhere to be found. Neither, for that matter, was Wayne's $125,000. In December 1991, Newton Enterprises' own ledger sheets reported a gross of $12.5 million for the year, improbably offset by enough expenses to leave a debt of $360,000, which the company asked the tribe to cover. For the whole year the Seneca-Cayugas received $13,000--barely a seventh of the salary of Newton Enterprises' on-site manager. The final outrage came in December, when two jackpot winners were unable to get their checks cashed at the bank. The tribe retaliated by surrounding the bingo hall with pick-up trucks while Newton's security forces barricaded themselve inside. After a tense five-day standoff, a federal judge ruled that the hall was to be returned to the tribe. The question of who will pay the hall's debt is now headed for arbitration.

Although tribes have always kept criminal and financial data to themselves, and while the government seems equally disinclined to discuss the subject of troubles in Indian gaming, there's a growing body of evidence that what happened to the Senecas is not unusual. Since high-stakes, Indian-owned bingo parlors made their first appearance in the late seventies, tribes with gaming operations have been beset by difficulties ranging from graft to fratricide. What Congress envisioned as a fast track out of poverty and unemployment for American Indians has evolved into a billion-dollar-a-year industry that has added precious little to social services on reservations throughout the country.

"If we get the money from bingo, we're going to set up a vocational training program," says Kickapoo administrator Frausto. "Even if thekids don't go to college, they'll have a trade." Perhaps. But they may also get more than they bargained for. In one extreme instance, the Mohawks of upstate New York split into pro-and anti-gambling factions and commenced a brief civil war because profits from their seven on-reservation halls were going exclusively to hall owners and their non-Indian management team. Two tribe members were left dead.

While it's easy--and partially correct--to blame American Indians for the unfolding gambling fiasco, the real culprit may be bureaucrats in Washington, D.C. After all, Indian gaming is an experiment that might convince even Milton Friedman that government regulation is in order: inexperienced, financially desperate Indians entering a slick and crime-infested business. But the Indians don't want help, and the commission the government created to regulate Indian gambling...