Wealthiest tribes pay thousands in payments scorned by some communities

CRANDON — Mike Gruett’s earliest memories of the Forest County Potawatomi community include “crackerbox” houses, built among the trees. The tribe’s members were poor and kept to themselves.

Fast forward 30 years.

That same land features two-and-three-story houses arranged subdivision-style. Wide driveways hold cars, four-wheelers and a few motorized boats. And in nearby Crandon, tribal officials are valued players in the local business community.

The dramatic change is due to the tribe’s two successful casinos — especially the flagship Milwaukee Potawatomi Bingo Casino that generated about $226 million in profit in 2012. Half of that money went directly to 1,400 tribe members, including nearly 500 who live on tribal land in Forest County.

These per capita payments — profits dispensed evenly to enrolled tribe members — are among the perks of successful tribal gaming ventures. And Gruett’s business is one trickle-down beneficiary in north-central Wisconsin.

“I can honestly say most of the money they receive gets spent in the area,” said Gruett, who owns three Forest TV and Appliance stores in Crandon, Lakewood and Rhinelander and is president of the Forest County Chamber of Commerce.

The Potawatomi payments — about $80,000 per member in 2012 — are in a league of their own compared to other Wisconsin tribes.

Potawatomi officials declined to confirm or deny gaming revenue or per capita payment figures. The totals in this Gannett Wisconsin Media Investigative Team report are based on a 2012 federal audit of the tribe.

The next-highest payment in Wisconsin drops to about $12,000 annually to Ho-Chunk members.

Some of Wisconsin’s tribes pay out $500 to $2,000. Near the bottom of per capita payments is the Menominee Indian tribe, whose members received about $75 in 2012.

The wide difference in payments still generates heated debate in tribes nationwide, more than 25 years after the gaming industry took off. The main point of contention is whether tribal leaders should decide how to spend all gaming revenues, or simply return large percentages of revenue to individual members?

Most Wisconsin tribes can’t afford to make payments at the Potawatomi’s level.

Others don’t believe in the system on principle, implying that the annual checks are a root cause of drug and alcohol problems.

“It is a philosophical preference,” said Gavin Clarkson, an associate professor of finance at New Mexico State University who studies tribal finance and is a member of the Choctaw Nation of Oklahoma.

Clarkson said he’s not an advocate of per capita payments because the money is spent quickly and at off-reservation businesses instead of benefiting the tribe as a whole.

“That being said, there’s a lot of need and people depend on it,” he said.

Potawatomi officials say payments to each member are a benefit of wise management and reinvesting gaming money over the last 25 years.

But the tribe’s ability to provide that money likely will be harmed if Gov. Scott Walker approves the Menominee plan to build a casino at a shuttered dog track in Kenosha.

Tribe leaders agreed to calculate payments at 50 percent of gaming revenue, according to a 2012 audit. The Potawatomi predict another casino in southeastern Wisconsin will cut their revenue by 20 percent in Milwaukee, meaning less for members.

Cause or solution to problems?

Most Potawatomi reservation territory is located in Forest County, including their campus of government buildings featuring an administrative center built with all natural wood tones and cool metal trim.

The tribal buildings are a sharp contrast to downtown Crandon, which is lined with one- or two-story businesses.

Between its businesses and government, the tribe is the county’s top two employers. Forest County government is third.

“If you take a look at the Forest County area our members are located, not only is tribal government a significant part of the economy, members are buying houses, cars and shopping,” said Jeff Crawford, the tribe’s attorney general. “So it’s recycled into the local community. We think that’s a positive.”

The Menominee tribe has a different approach: part philosophical and part practical. Its leaders believe that even if the tribe could afford to do so, doling out large per capita payouts brings more harm than good.

Handing out large checks is too much of a temptation for younger members, said Gary Besaw, a tribal legislator with the Menominee. Besaw also is chairman of the Menominee’s effort to build a casino in Kenosha.

“To have that money is dangerous for immature people,” Besaw said. “You buy a big car, crash it, and say ‘Well that’s okay, I’ll go buy another.’ It’s easy to get in a cycle of partying or drugs. We don’t want that here.”

There is little consensus about the effect of per capita payments on employment and other economic conditions within tribes.

In a 2010 study, researchers found that Cherokee members who were young in 1996 when the North Carolina tribe began distributing gaming profits had fewer behavioral problems than members who grew up before per capita payouts.

As the payments grew to about $9,000 annually to members, high school dropout rates and crimes committed by Cherokee children and teens continued to decline.

Two years later, a study found evidence that increasing per capita payments could drag down the number of members working within three Michigan tribes.

Other research found signs that the higher payments go, the more trouble they can cause. Researchers at The Harvard Project on American Indian Economic Development wrote in 2008: “Where payments are modest, much of the money is spent on school clothes, paying off debts, Christmas presents for the kids, general living expenses, home repairs, and so forth. Funds may not be spent on building wealth, but they may not be flowing to personally or socially damaging alternatives either.”

The Menominee have pledged to spend gaming revenue on human and social services — including college scholarships — if their Kenosha proposal is approved. Walker has yet to make a decision on the project.

By its 10th year in operation, the Menominee predict the facility would add $300 million annually to the tribe’s revenue stream.

Political repercussions

Decisions about how to distribute per capita payments are inherently political for tribal officials.

Per capita commitments can become an obstacle for tribal officials who would like to use gaming money for economic development, but fear losing public support, said John Teller, an enrolled member of the Menominee Tribe who lives in Shawano and oversees IT services for the tribe’s school district.

Teller also has Oneida heritage and remembers a 2007 one-time per capita payment: $5,000 to members younger than 62 and $10,000 to older members. The money came from a reserve fund built up over time.

In 2012, Oneida members younger than 62 received $1,200, and older members received $2,000. Members recently voted to decrease payments to $1,000 starting this year, Oneida spokesman Phil Wisneski said.

The one-time bonus in 2007 was a boost for members but may have been more useful elsewhere, Teller said.

“Are you taking this $100,000 and investing it into something smart and profitable for the long run or taking it and paying every tribal member $100?” Teller asked hypothetically. “It’s going to get some people very, very upset if you don’t do (that).”

Other Oneida members still want the money to be funneled toward individual payments, especially for older members.

Terry Jordan recently returned to the reservation where he grew up in a three-room house without indoor plumbing. Jordan, 61, and his wife moved back from northern Wisconsin when he retired in 2013 and bought a bar just north of State 54 on the reservation.

Gambling has done an undeniable amount of good during the last three decades, but too much money leaves the reservation, Jordan said, seated inside “Diane’s Bar.”

Projects that officials hold up as examples how well the tribe is doing are sore spots with Jordan, who’s considering a run for tribal chairman. As much as he loves Green Bay Packers football, Jordan said the Oneida Nation entrance gate at Lambeau Field strikes him as a vanity project.

He’d rather see per capita payments increase, especially for his mother who is in her 80s, and other elders.

“They run it like a big business, and it ain’t,” Jordan said. “Bring it back home.”

The middle ground

Others tribes have chosen a middle ground of paying for government services, along with lower per capita.

In 2012, the Ho-Chunk Nation per capita budget came to about $12,000 per member, second only to the Potawatomi. The tribe puts money into a trust until members turn 18 — or 25 for those who don’t graduate from high school or get a GED diploma.

Anne Thundercloud, a former Ho-Chunk spokeswoman who now works as a public relations consultant, said the per capita payments for the tribe are “helpful” but not ideal.

“I would like to see it put towards our programs,” Thundercloud said, “especially those dealing with employment and training.”

Jon Greendeer, the Ho-Chunk’s elected president, said the per capita payments are intended to supplement household income. But he knows it’s “dependent income” for some, so the tribe’s focus is helping members become educated and find careers.

“We want them to work,” Greendeer said. “We want them to want to work.”

Members of the Lac du Flambeau tribe who have turned 18 receive half of the money in trust on their behalf after graduating high school, said president Tom Maulson. A year later, they receive the rest.

“So it’s really a good system, but yet we still struggle with our young people even though we try to put a financial spin to it in the high school system by talking about where they invest their dollars,” Maulson said.

But it’s hard to begrudge people for wanting to use that money as they choose considering the tribe’s history, Maulson said.

“It’s night to day when you take a look at the change in Indian Country,” he said. “You got kids now that want hundred-dollar tennis shoes.

“We were lucky to get tennis shoes to go to school because we ran barefoot all summer long.”

‘Per capita’ 101
Net gaming revenue (profit) can be distributed to a tribe’s members on a per capita basis.
This typically means each enrolled member of the tribe receives the same amount.
At least seven of Wisconsin’s 11 tribes have opted to do so from 2008 to 2012, according to federal audits completed during that time.
Some tribes provide higher payments to elderly members. Tribes typically create a trust account for minors and set guidelines on when the money becomes accessible, for example when they turn 18 or receive a high school or GED degree.
Tribes opting to provide per capita payments must have a financial plan approved by the Bureau of Indian Affairs or risk being fined, under the Indian Gaming Regulatory Act.
The issue is controversial. Supporters argue the revenue belongs to tribal members who are “shareholders in the tribal estate” and that it makes a bigger difference in the bank accounts of families than through government programs.
Opponents argue it is a new form of welfare and that the system causes conflict within tribes by creating motivation to remove people from the tribal membership rolls and increase payments to those remaining.
Per capita payments are subject to federal income tax laws.