The “New Buffalo” Confronts a Pandemic: Implications of the COVID-19 Shock for the Indigenous Gaming Industry
The “New Buffalo” Confronts a Pandemic: Implications of the COVID-19 Shock for the Indigenous Gaming Industry
Laurel Wheeler
This non-peer reviewed entry is published as part of the Critical Gambling Studies Blog.
How to cite: Wheeler, L. (2021). The ’New Buffalo’ Confronts a Pandemic: Implications of the COVID-19 Shock for the Indigenous Gaming Industry. Critical Gambling Studies. https://doi.org/10.29173/cgs93
“It’s
really pretty much crippled our tribal economy…The casinos are the bread and
butter of our funding.”
- Marlon
WhiteEagle, president of the Ho-Chunk Nation (in Wisconsin State Journal, June 2020)
“Life and
death…We’re just going to write off 2020. There’s no sense in trying to work
under the delusion that we’ll be able to claw back to normal life this year.”
- Bryan Newland, tribal chairman of the Bay Mills Indian Community (in New York Times, May 2020)
Abstract: The COVID-19 pandemic is
an economic shock that affects both the supply of and demand for goods and
services. These effects are particularly profound in the hospitality and
leisure sector, which includes the gaming industry. COVID-19 therefore has the
potential to result in lasting damage to localities that depend on gaming
revenues. For Indigenous gaming communities, the stakes are especially high.
The Indigenous casino and gaming industry has been characterized as the coming
of the “new buffalo[1],”
a trope that alludes to the high levels of wealth enjoyed by bison-reliant
communities in the Great Plains. Indeed, Indigenous gaming has been a valuable
engine of economic growth for many communities across North America, but
COVID-19 reveals this economic success to be a double-edged sword. The COVID-19
shock is now threatening to undermine an industry that has come to play a
critical role in the physical and financial health of Indigenous gaming
communities as well as in their capacity to exercise their right to
self-determination.
Click below to listen to an interview
with Joseph P Kalt, Co-director of the Harvard Project on American Indian
Economic Development: “COVID-19 has closed tribal casinos and cut off other
vital revenue sources”
Two Economic Shocks in One Pandemic
More
than one year after the novel coronavirus was first identified in humans, nations
across the globe are experiencing a second wave of COVID-19 infections. In many
places, this second wave threatens to be more injurious than the first, putting
additional stress on already-weakened health care systems against the backdrop
of an economic downturn. In an effort to slow the spread of the virus, local
and national governments across North and South America, Asia, and Europe are
instituting another series of restrictions on travel, activities, and
gatherings. Inevitably, each new set of COVID-19-related restrictions renews
debate about how to manage a health crisis and an economic crisis
simultaneously.
From
an economic standpoint, COVID-19 represents a severe, unanticipated shock with
the particularly pernicious feature of affecting both supply and demand.
Restrictions implemented to benefit public health come at the cost of
production. Lockdowns that prevent workers from doing their jobs and social
distancing measures that force businesses to close are examples of shocks that
affect the supply of goods and services. But the COVID-19 pandemic is not only
a short-run supply shock that comes and goes with the tightening and relaxing
of restrictions. We now know that COVID-19 initially emerged as a supply shock
but later led to an even larger demand shock (Guerrieri et al., 2020). A demand
shock is anything that affects consumers’ ability or willingness to purchase
goods and services at a given price. As unemployment rises and consumers cut
back on spending, demand for goods and services continues to plummet. The dual
nature of this economic shock is rare, perhaps most often associated with
natural disasters.
The Casino and Gaming Industry takes
a Direct Hit
Although
the COVID-19 shock pervades large swaths of the economy, it does not affect all
sectors equally. At the start of the pandemic, economists began to make
predictions about sectoral vulnerability to the COVID-19 shock (see, for
example, the
analysis by Mark Zandi, chief economist at Moody’s). The consensus
view was that the leisure and hospitality sector, characterized by face-to-face
interaction and close physical proximity, would be among the most “at-risk.”
This is compared with the finance, insurance, or health care sectors, which
were generally regarded to be shielded from the worst damage. Those predictions
were borne out in the early months of the pandemic. Estimates using data from
the United States indicate that the initial damage to the leisure and
hospitality sector dwarfed the damage to other sectors, both in terms of supply
and demand effects (see Figure 1). And situated
squarely within the leisure and hospitality sector is the casino and gaming industry.
Figure 1:
Shock Decomposition for April 2020
In
March 2020, S&P Global Market Intelligence identified the casino and gaming
industry as one
of five industries most at risk of default in the United States. At
the time, casinos across the world were closing their doors as governments tried
to buy time to develop a cohesive response to a novel disease. In a 72-hour
period in March, Canada shut down almost all of its 114 casinos (Stevens,
2020). Those closures corresponded to millions of dollars in lost revenue in
several provinces, including Manitoba
and Quebec.
Across the border, casino closures in the United States contributed to second
quarter gross revenue losses measuring in the billions of dollars (American Gaming Association, 2020).
As
you can see from Figure 2, the near-complete shutdown of the casino and gaming
industry was relatively short lived. The majority of gaming properties in North
America had re-opened by the end of the second quarter of 2020. The September
update posted by S&P Global Market Intelligence had removed the
casino and gaming industry from their list of five industries most likely to
default. But that doesn’t mean the gaming industry is out of the woods yet. The
pandemic’s second wave is responsible for another round of closures. And until
the macro economy improves and the inherent risk associated with being in close
proximity to other people is mitigated, demand for traditional gaming options
like casinos is likely to remain below 2019 levels.[2]
We
should care about the economic damage to the casino and gaming industry not
only because we care about the industry, but also because we care about the
communities that depend on it. Localities that rely heavily on gaming will be
disproportionately affected by the COVID-19 shock. If these places lack diversification
in their industrial base, they are left with no insurance against the shock,
leading to widespread furloughs, unemployment, and lost wages within the community.
With this concern in mind, The
Brookings Institute conducted an analysis that ranked metropolitan
areas in the United States by exposure to the economic effects of COVID-19
based on the share of jobs in high-risk industries (see Figure 3). Two of the
top five most exposed metropolitan areas are among the world’s most prominent
casino cities: Atlantic City and Las Vegas.
Figure 3:
Share of Jobs in Industries at High Risk from COVID-19 across the United States
Notes: Map created by the Brookings
Institute using Zandi (2020) definitions of “at-risk” industries. The figure can
be accessed at: https://www.brookings.edu/blog/the-avenue/2020/03/17/the-places-a-covid-19-recession-will-likely-hit-hardest/
The Economics of Indigenous Gaming
Counted
among the localities that specialize in the casino and gaming industry are many
Indigenous communities across North America. The 1988 passage of the Indian
Gaming Regulatory Act gave rise to a rapid proliferation of gaming facilities on
federal reservations across the United States (see Figure 4). Today, more than
400 casinos operate on reservations in 29 states, generating gross revenues
that exceed $30 billion annually (National Indian Gaming Commission, 2020).
Many tribal governments have invested heavily in the casino and gaming
industry. By and large, those investments have paid off. Although experiences
have not been uniform, most gaming communities have benefited from sustained
revenues, which they have invested in a range of anti-poverty programs and
tribal services (Akee et al., 2015). For example, Cattelino (2010) details how
the Florida Seminoles allocate their gaming revenues to health care and
education infrastructure, cultural programs, and economic diversification
projects ranging from cattle ranching to venture capitalism. The Indigenous
gaming industry in Canada is much smaller in scale but nonetheless important to
the First Nations that operate 19 for-profit and charitable casinos, together
generating more than $1 billion in gross revenue annually (Belanger, 2014).
Figure 4: The Evolution of Indigenous Gaming in the United States, 1990-2014
Notes: Author’s own production using Census reservation shapefiles and data on casino openings on federally recognized reservations across the United States (Wheeler, 2019).
The Vulnerabilities of
Casino-Reliance
Particularly
in the early days, Indigenous gaming was hailed as an economic development
panacea. It was described as “the new buffalo,” drawing comparison to the
historical importance of the North American bison to many Indigenous
communities throughout the Plains, the Northwest, and the Rocky Mountains. For
10,000 years, these communities relied on bison for food, clothing, blankets,
and trade. The bison was the backbone of their economies and a source of
prosperity. Comparing Indigenous gaming to the North American bison underscores
the perceived importance of the industry to the prosperity of Indigenous
communities. It also raises questions about the vulnerability of gaming
communities to economic shocks. European settlers hunted
the bison to near-extinction in the late 19th century,
devastating the economies of the bison-reliant communities. Economists at the
University of Victoria have shown that the slaughter of the bison was so
destructive to bison-reliant communities that the negative effects persist to
this day in the form of both economic and physical outcomes (Feir et al.,
2019).[3] It
would be inappropriate to stretch the “new buffalo” analogy to generate predictions
about the impact of the COVID-19 shock on casino-reliant communities. [4] Nevertheless, the destruction of the bison
illustrates the inherent economic vulnerabilities associated with lack of
diversification.
The
shuttering of tribal casinos in the United States between March and May 2020
resulted in 300,000 people out of work, $997 million in lost wages, and
approximately $4.4 billion in lost economic activity overall (Meister Economic
Consulting, 2020). Indigenous casinos employ members of the community as well
as non-members, so the economic effects of casino closures extend beyond the
boundaries of the reservation or reserve. Most worrying is the effect of lost
casino revenue on Indigenous gaming communities. Unlike state or local
governments, tribal governments have no tax base. For the Ho-Chunk Nation, the
Oneida Nation, and many other gaming communities, casino revenues comprise the
vast majority of the tribal government’s operating budget. Marlon WhiteEagle,
president of the Ho-Chunk Nation, described the casino closures as “crippl[ing]”
to their tribal economy (Wisconsin State Journal, 2020). In the
embedded interview at the top of this post, Joseph Kalt, Co-director of the
Harvard Project on American Indian Economic Development, tells of the
pervasiveness of these debilitating effects. He explains that, due to COVID-19,
Indigenous gaming communities “run a risk of reversing about 30 years of slow,
but steady progress.”
The COVID-19 Shock Wave: Beyond
Economics
The
COVID-19 threat to progress is not only an economic concern. Indigenous
communities are facing an acute public health crisis in the midst of a
financial crisis. We’ve seen that racially marginalized communities experience
disproportionately high rates of infection and mortality, a phenomenon that has
been linked
to social inequities. Many Indigenous communities across North
America are particularly
vulnerable to COVID-19 due to overcrowded living conditions, underfunded
health care systems, and the prevalence of pre-existing health conditions. The
high incidence of COVID-19 in Indigenous populations has generated real concern
about loss
of culture and traditions,
in particular as Indigenous communities lose more of their Elders to the
effects of the virus.
Among
Indigenous communities involved in the casino and gaming industry, COVID-19 may
pose an additional set of challenges related to self-determination, or the collective
right to “freely pursue their economic, social and cultural development”
(Article 1 of the International Covenant on Civil and Political Rights). Although
the sovereignty of Indigenous nations is inherent, settler colonialism in North
America has acted to subvert it, either by design or by circumstance.[5] Within
this context, Indigenous gaming emerged, strengthening the means to exercise
sovereignty in law and in practice (Belanger et al., 2013). For many Indigenous
communities, entrance into the casino and gaming industry is an assertion of
sovereignty – an affirmation of their right to govern issues related to
economic development on their homelands, even when those activities are
prohibited by law elsewhere.[6] In
the longer run, economic progress through gaming strengthens political power
and the ability to self-govern effectively. Although the relationship between
economic growth and sovereignty is complex,[7] one
thing is clear: the COVID-19 shock has implications that extend well beyond
revenue loss for Indigenous gaming communities. In contrast, gaming cities like
Las Vegas and Atlantic City may be susceptible to severe economic ramifications
but they are unlikely to endure domestic political ramifications.
Throughout
the pandemic, Indigenous communities have leveraged their
sovereign status to enact regulations and implement policies to protect
their citizens. Even in the absence of state or provincial safety measures,
Indigenous nations have implemented curfews and lockdowns, set up call centers
and incident command systems, and created highway checkpoints. By the same
token, sovereignty gives Indigenous nations the option to forgo safety measures
that have been put in place by the state, provincial, or federal government.
Indigenous communities may decide to keep their casinos open even when other
commercial casinos have been forced to close. This has left many gaming
communities with a
difficult choice between the health of their community members and
their economic stability. Yet, in reality, when casino revenues fund tribal
services like health care, are these options separable?
The Road Ahead
The
COVID-19 pandemic further exposes the known precariousness of an economy that
lacks diversification. Any locality that is heavily reliant on the casino and
gaming industry is likely to be particularly hard-hit by the COVID-19 shock.
Without being able to observe the economic portfolios of all Indigenous gaming
communities, it seems safe to say that many Indigenous communities in North
America have come to depend on the industry that has been called “the new
buffalo.” On the surface, the worrying implication of the “new buffalo” analogy
is that the COVID-19 shock will have severe consequences for casino-reliant
communities, just as the slaughter of the bison had for bison-reliant
communities. However, deeper analysis shows where the parallelism ends between
the bison and the casinos. Bison were more than a source of livelihood. They
played a central role in the traditions and culture of the peoples who depended
on them. In contrast, as described by Manitowabi (2017), casinos are economic
tools with tenuous connections to culture.[8]
So
what is the future of the Indigenous gaming industry in the wake of the
COVID-19 pandemic? It may be too early to say. But if history is any
indication, there’s reason to remain optimistic. In 2005, Hurricane Katrina
devastated the Mississippi Gulf Coast, another region of importance to the
casino and gaming industry. Casinos along the Gulf Coast closed in anticipation
of the storm. Many remained closed in the aftermath, after incurring major
structural damage (Ewing et al., 2009). As with COVID-19, communities had lost
their major source of employment overnight. But after announcing their plans to
rebuild, casinos proved to be “an anchor” for regional recovery efforts (p. 2).
Perhaps casinos will be at the forefront of COVID-19 recovery as well.
For
many Indigenous communities coming out of the COVID-19 pandemic, the road ahead
will be winding. Indigenous peoples across North America have a long history of
resilience in the face of extreme adversity. That resilience derives from
adaptation. Feir et al. (2019) argue that bison-reliant communities suffered
persistent, negative economic and health outcomes in large part because federal
restrictions designed to protect settler-colonial interests prevented
Indigenous peoples from adjusting to new conditions.[9]
One lesson for the present day is that Indigenous communities may be able to
absorb the COVID-19 shock by continuing to assert their sovereignty to develop
individualized strategies to respond to the COVID-19 pandemic. Because of the
nature of the COVID-19 shock, the most effective strategies will target both
demand and supply. And in the long-run, both gaming and non-gaming communities
should continue to diversify their local economies as insurance against future shocks.
Laurel Wheeler is an Assistant
Professor in the Department of Economics at the University of Alberta. As a
labor and development economist, her research addresses issues of poverty and
inequality in low-income countries and in North America.
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[1] See,
for example, Lane (1995). As Cattelino (2008) points out, the “new buffalo”
motif falls short in some respects. Importantly, the imagery inaccurately
suggests that entrance into the casino and gaming industry is a passive action,
something that “acts upon” Indigenous communities, rather than an action taken
by Indigenous communities based on economic, political, and cultural incentives
(p. 29).
[2] This is, of course,
abstracting away from non-traditional options such as online gambling.
[3] Physical measures such as height are often
used as non-economic indicators of well-being. Feir et al. (2019) find that the
descendants of bison-reliant peoples are shorter due to the slaughter of the
bison, suggesting that their well-being was impacted through a mechanism such
as malnutrition.
[4] The slaughter of
the bison did not only affect bison-reliant communities through economic
channels. Bison were integrated into the fabric of Indigenous society. The
intentional destruction of the bison was both an economic act and a
socio-cultural one.
[5] As one example,
U.S. federal policy in the Termination Era (from the 1940s-1960s) sought to
forcibly assimilate Indigenous people by eradicating federal reservations,
terminating treaty obligations to Indigenous nations, and ending government aid
programs.
[6] This perspective is
more likely to be relevant in the U.S. context than the Canadian context.
Canada does not recognize that First Nations have a right to participate in the
casino and gaming industry in the way that the United States does (Marshall,
2019). Instead, pursuant to the 1985 Criminal Code of Canada, First Nations
must enter into agreements with provinces.
[7] In fact, economic
growth may simultaneously strengthen the means to exercise sovereignty and
undermine sovereignty (Cattelino, 2010). For example, the U.S. federal
government used economic strength as way to target tribes for Termination Era
policies, based on the idea that the communities with the strongest economies
no longer needed a collective agreement with the federal government. Cattelino
calls this approach “need-based sovereignty,” which puts Indigenous communities
in the untenable position of being unable to exercise sovereignty without
economic power and yet challenged about the legitimacy of their sovereignty
given economic power.
[8] Through a case
study of Casino Rama, Manitowabi (2017) illustrates how Indigenous casinos may
employ cultural stereotypes of indigeneity for marketing purposes rather than
for the purposes of genuine cultural expression.
[9] Specifically, Feir
et al. (2019) suggest that federal restrictions on mobility and economic
diversification precluded communities from making adjustments to economic
shocks.
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