Poarch Creeks offer to cover AL's $250M shortfall in exchange for exclusive gaming rights

In a stunning turn of events, the Poarch Band of Creek Indians are offering to singlehandedly solve Alabama’s short-term budget crisis, but with one controversial string attached.

The Indians’ offer, which was first reported by the Montgomery Advertiser, is to cover the state’s approximately $250 million General Fund Budget deficit in return for the state granting them exclusive rights to casino gaming in the state.

The offer appears to be the Tribe’s response to a proposal by Sen. Del Marsh (R-Anniston) that would expand gambling at four locations around the state, in addition to approving a state-sponsored lottery.

“What’s happening now is disappointing to us,” Robert McGhee, the Poarch Creek’s head of governmental affairs, told the Advertiser. “It’s a complete shift in direction.”

Marsh’s proposal was backed by a study conducted by Auburn University-Montgomery’s Institute for Accountability and Government Efficiency (IAGE). The study found that the state, should it approve a gambling “compact” and state lottery, could expect $331 million in annual lottery revenue and 11,000 new jobs, mostly at the casinos.

McGhee questioned the study’s jobs numbers, noting that the Tribe currently owns three casinos that employ a total of 2,500 people, well below the number jobs the study asserts could be created by opening new casinos. He also noted that one of the facilities referenced in the study — Mobile Greyhound Park — is owned by the Tribe and would never expand its current gaming options because it would take away business from their Atmore locations.

McGhee told the Advertiser the Tribe will advocate for lawmakers to pass a lottery bill, then work separately with the Poarch Creeks to establish a compact.

Indian tribes have been granted sovereign powers and rights by the federal government to self-govern themselves on their land. However, the Indian Gaming Regulatory Act gives states in which Native American lands exist a role in regulating any gaming that takes place on tribal land. So states enter into compacts, essentially government-to-government relationships, with Indian tribes detailing what types of gaming are allowed.

Currently, Alabama allows only “Class II” gaming on the Poarch Creek’s land, enabling them to run electronic bingo machines. Allowing “Class III” gaming would approve table games such as blackjack, poker, roulette, craps, and slot machines. The deal the Indians are seeking would not require such an expansion in the types of gaming, but would allow them to add a fourth facility, which would bring in the additional revenue for them to justify stroking a large check to the state up front.

“You have to ask if approving Class III gaming is what’s best for the state,” McGhee said. “It is my understanding that only $64 million comes from the casinos. You would still make $330 million from the lottery and keep your current laws… (Class III gaming is) not something we’ve pursued because we were happy with our situation here. If this is the direction that the state ultimately takes, we’ll have to discuss what’s best for us from an economic standpoint and make decisions that are in our best interest.”

The Alabama Citizens Action Program, or ALCAP, an evangelical Christian lobbying group is already drumming up their base to campaign against any expansion of gambling. But the Poarch Creek’s proposal — if accepted as-is — could potentially be an avenue to halt the expansion of gaming to areas outside of Indian land.

The fact that the Tribe could write the state a check for $250 million underscores the massive financial ramifications of any gambling proposal. The Poarch Creek’s three casinos brought in over $300 million in 2013.

The 2015 legislative session is just past its halfway point and lawmakers have yet to build a consensus around a plan to patch the impending budget shortfall, with tax increases, cuts, structural reforms and gambling expansions all garnering consideration.