ndian tribes with casinos spent almost $40 million over the past five years on political contributions to Washington politicians and lobbyists in an all-out effort to minimize federal oversight of their casinos, even as questions multiplied about whether profits were being properly handled.
So far, the gaming tribes have succeeded in keeping the budget of the commission overseeing Indian casinos far below comparable gambling regulatory agencies. As the Indian gaming industry exploded in popularity in the 1990s - led by Connecticut's Foxwoods and Mohegan Sun casinos - congressional leaders did not heed pleas for the commission's budget to be sharply increased.
As a result, officials acknowledge, the federal government has never conducted a full audit of any casino and lacks the tools to investigate the intricate financial deals between tribes and their non-Indian backers. ''This is an industry that does not want to be regulated, so it gives large amounts of money to Congress,'' said Larry Noble, executive director of the Center for Responsive Politics, a nonpartisan group.
Without aggressive federal oversight, the integrity of Indian casinos is a matter left almost entirely to the tribes that own them. Frmer federal gaming regulator Anthony Hope once likened the situation to ''the fox running the hen coop.''
Keeping the federal government out of Indian casinos has been the singular mission of the industry's premier trade group, the National Indian Gaming Association. The trade group acknowledges that its 10 staff members are constantly on Capitol Hill trying to contain the reach and scope of federal regulation by arguing that it is an infringement on tribal sovereignty.
The industry believes its backers in Congress can limit federal involvement in casinos by limiting funding of the regulatory commission.
Last month, at a conference of Indian casino executives and lawyers at Foxwoods, that message was delivered by Barry Brandon, who until December was the government's chief regulator at the National Indian Gaming Commission but has since become a lobbyist. He urged the group of about 150 to keep Congress from reopening the legislation that first established the commission's modest budget.
''A lot of work has gone into keeping it successfully closed,'' he said at the Foxwoods conference. ''The danger is that once it's opened, there will be more authority given to the commission. That would allow Congress to be the regulator, instead of you. Politics plays such a big role in Indian gaming.''
Brandon, a member of the Muscogee (Creek) Nation of Oklahoma who left the regulatory commission for the Washington lobbying firm of Akin, Gump, told the group to ''keep working with your best friends on Capitol Hill.
''Your best strategy is to keep the commission at its current size. The $8 million budget is very limited in resources. Make sure Congress doesn't fund them at $25-$30-$40 million, which could happen if anti-Indian, antigaming forces have their way in Congress.'' Among those in the audience were some of the most generous political contributors to members of Congress.
US Representative Patrick Kennedy, Democrat of Rhode Island, has received almost $25,000 in donations from Indian gaming tribes in recent years, making him one of the top recipients in Congress in terms of donations from gaming interests. He said he believes gaming tribes already do a very good job of policing their own casinos. Still, Kennedy said he favors increasing funding for the National Indian Gaming Commission, although other issues affecting Native American health, education and reservation infrastructure have a higher legislative priority, he said.
''Many gaming tribes do support Congressman Kennedy, and he is proud of that support,'' said Tony Marcella, Kennedy's chief of staff. ''That's because Congressman Kennedy supports the tribes on a full range of issues, including gaming, which is a vitally important source of revenue for many tribes.
Rick Hill, the executive director of the trade group, said tribes successfully police their own operations. ''They have to keep customers coming,'' he said. ''They're the big losers if there are problems.''
But whether the tribes themselves operate with clean hands is uncertain. The National Indian Gaming Commission simply does not know. It has full investigative powers, but it has never conducted a full audit. Casinos are occasionally cited for technical violations, but rarely fined.
And the commission's chief of staff, Richard Schiff, concedes that the commission makes no effort to make sure tribes spend their billions of dollars in gaming profits only on the purposes permitted by Congress. ''It's a blind spot,'' he said.
Tribes keep confidential whatever wrongdoing their own policing efforts uncover, but say millions of dollars are spent annually on security, surveillance, and other measures. Asked if there is corruption in the Indian casinos, Sheila Morago of the trade group said, ''It's not like you can point to any casino and say there's a money-laundering scheme going on there.''
Yet, even with limited federal resources, a spate of cases indicates otherwise.
In 1998, leaders of the Rincon tribe in California pleaded guilty in connection with accusations of acting as a front for a Pittsburgh crime family plotting to take control of their casino to launder money. Federal prosecutors said it was a classic example of the mob's infiltration of a cash-based business.
In Oklahoma, the former manager of a casino owned by the Kiowa tribe accused tribal council members of stealing more than $2 million by using gaming proceeds for personal expenses.
And at Mohegan Sun, in Montville, Conn., a supervisor in the money-counting room was caught only after 13 months of carrying off stacks of cash totaling up to $823,000.
''It's a cash business,'' said Hill, the industry lobbyist. ''There are going to be isolated incidents.''
Today, only four auditors and 15 full-time investigators are responsible for tracking $10 billion in revenue at 325 Indian gaming operations in 29 states. By contrast, the state of New Jersey spends $58 million, and employs over 200 auditors and investigators for $4 billion in revenue at 12 casinos in Atlantic City alone.
Yet, since 1993, repeated efforts to increase federal regulation have failed, despite pleas from Justice Department lawyers, Nevada state gaming regulators, and others.
Hope, the commission's first chairman, complained that lack of funding meant casino operators ''can basically do what they want,'' and Philip Hogen, another former chairman, once warned that without additional funding the commission ''would crash and burn. It's curtains.''
Senator John McCain, Republican of Arizona, in 1995 vowed to renew a two-year effort to toughen Indian gaming regulations and expressed confidence he could win approval of a ''narrowly focused'' bill.
But he couldn't. It lacked support. And in 1996, a frustrated Senator Harry Reid, Democrat of Nevada, warned of potential scandal because of the ''hands-off'' regulatory approach taken by the gaming commission. Once again, McCain was forced to vow, ''next year.''
Meanwhile, in 1993 and 1994, Richard ''Skip'' Hayward, the force behind Foxwoods, gave more than $1 million to the National Democratic Party, and $50,000 to the Republicans.
In 1997, an amendment attached to an appropriations bill gave the National Indian Gaming Commission an $8 million budget, a relatively insignificant amount in an industry undergoing extraordinary expansion. Meanwhile, Representatives J.D. Hayworth, Republican of Arizona, and Dale Kildee, Democrat of Michigan, combined forces to thwart other efforts to restrict Indian gaming, including the imposition of a 34 percent income tax on casino earnings.
Hayworth received $37,950 in politial contributions from the Indian gaming industry in recent years, while Kildee got $36,650, according to the Center for Responsive Politics. Heavy contributions were also made to members of Connecticut's delegation: Senator Christopher Dodd, Democrat ($30,550); Representative Nancy Johnson, Republican, ($25,200); and former representative Sam Gejdenson ($39,250).
One tribe that spends lavishly for political clout in Washington is the Mississippi Band of Choctaw, operators of the $250 million-a-year Silver Star Casino. Asked about the $1 million he spends annually for Washington lobbyists, Choctaw Chief Philip Martin replied: ''I learned that from the white man. If you want support you are going to have to make friends.''
Sean P. Murphy's email address is smurphy@globe.com.
