The 2008 presidential campaign proved to be one of the most historic, expensive and contentious in US history, lasting 20 months. Both parties offered unique candidates …either the first biracial (Illinois Senator Barack Obama’s mother was white and his father was African) for president, or the first female vice-president (Alaska Governor Sarah Palin) for vice-president.
After his November victory, Obama was inaugurated on January 20. He faces challenges and an immediate set of economic, foreign policy and domestic crises unthinkable at the campaign’s launch in early 2007. Obama has his work cut out for him through 2012.
Looking forward, most analysts agree that in 2009, gaming will be tested in almost every American jurisdiction. Operators will confront economic, labor and political circumstances frequently out of their control.
With a new Democratic administration and majority in both the House of Representatives and the Senate, will American gaming – both commercial and tribal – fare better? How will it change, if at all, from the eight years of the Bush administration?
No one has the answer. For this article, most sources could only speculate on Obama’s future positions. Some reluctantly acknowledged this election as the American electorate’s taking a “leap of faith” into the unknown.
Obama’s short national political career, prior to taking the presidential oath of office, reveals little about his attitudes on gaming. While teaching law in Chicago, Obama often advocated states’ rights, so some believe he will cede authority over most gaming issues to individual jurisdictions.
Joseph A. Corbo, Jr., vice-president & general counsel of the Borgata Resort Casino & Spa in Atlantic City and president of the Casino Association of New Jersey (CANJ), urges optimism. He says, “Like everyone affected by the economic downturn, we anticipate new opportunities to better our situation in 2009. The new presidency offers hope of a fresh start for our country. We hope President Obama and his administration can create optimism among Americans, helping to restore consumer confidence and improve economic fundamentals.”
Most venues operate in diverse geographic and demographic locations. Mike Pollock, managing director of international gaming research and consulting firm Spectrum Gaming Group, says, “Casino customers are a microcosm of the economy, reflecting the current domestic income, housing and employment. First, President Obama needs to free up capital and put more disposable income in the consumers’ hands.”
Acknowledging the public’s reluctance to spend in late 2008, Pollock supports a stimulus package. “Historically, consumers were not saving, believing in real estate values and stock portfolios. If their houses were great investments, why bother saving? Americans saved at a negative rate in 2005 and 2006,” says Pollock.
Frank Fahrenkopf Jr., president and CEO of the American Gaming Association (AGA), describes an economic “double whammy” in 2008. He says, “Consumer spending is down, but there is also a lack of liquidity because companies are so highly leveraged. They may have refinanced during the downturn, but banks are not loaning large amounts.”
A profitable bottom line depends not only on consumer spending, but also on the expenses incurred by casino operators. Labor costs are a huge expenditure throughout any gaming property.
Organized labor in the US has attempted to penetrate casino operations for years. Traditionally Democratic, labor unions’ millions of members raised $400 million for Obama’s campaign, and pushed for massive voter turnout. Two unions, the Hotel Employees and Restaurant Employees International Union (HERE) and Service Employees International Union (SCIU), were early Obama advocates.
While labor unions often overlap between states, laws affecting them often originate on the state – not federal – level. Frank Catania, a former New Jersey regulator and president of Catania Consulting Group, Inc., does not anticipate any impact at all on labor from Obama’s election.
He says, “Any changes are controlled mostly by state laws. Whatever labor changes are made federally will affect all industries…not just gaming. Gaming is hurting as badly, if not worse, than the other sectors.”
However, one major labor debate is raging. The proposed Employee Free Choice Act, also called “card check”, would authorize unions – rather than companies, under current law – to gather employee votes to unionize by signing cards in place of secret ballots. Obama voiced his early support, and union leadership wants it introduced in the first 100 days.
Critics fear that workers could face undue pressure to publicly express their intentions. Unions prefer it to eliminate an employer’s knowledge of its activities. Secret ballots often provide businesses months to mount their opposition.
‘’Card check” also allows an arbitrator to impose a first contract within 120 days of a union’s formation, if both parties cannot agree on terms. Current laws permit a year, which cancels the unions’ bargaining rights if no contract is achieved.
Management and small business oppose it, claiming “card check” would stifle democratic voting and jeopardize many businesses. The AGA board has directed Fahrenkopf to join with the U.S. Chamber of Commerce and other business groups to defeat “card check”.
“We have good relations with labor, and treasure our alliances. The first year is the toughest. Since Obama wants bipartisanship, if they push for this within that time, deep party lines will be drawn,” says Fahrenkopf.
Michael Soll, executive vice president of The Innovation Group consulting firm, predicts that despite Obama’s support for unions, companies that have held out will continue. He says, “The President will not tip the scales. Gaming unions are only in a few key areas.”
However, Indian tribes may also reject “card check”. John Tahsuda, vice president of Navigators Global, a lobbying firm advocating Native American issues, states tribes oppose “card check”.
“They see it as a slow movement to treat tribes like other traditional private businesses rather than individual governments. Obama will generate endless good will if he exempts tribal employees.” However, Tahsuda is not optimistic.
Public perception often blurs Indian and commercial casinos. However, each recognized tribe has its own sovereignty and regulatory structures, sometimes in opposition of the federal government.
All attempts to amend the 1988 Indian Gaming Regulatory Act (IGRA) have failed. Any new push would go before North Dakota Democratic Senator Byron Dorgan, chairman of the Senate Committee on Indian Affairs.
Dorgan prefers oversight, and would request information before possibly amending IGRA over several years. Tahsuda also predicts no amendments within at least the first year. The House of Representatives also does not rank this a priority issue.
Obama campaigned heavily throughout Indian Country, visiting several states with significant tribal populations. National Indian Gaming Association (NIGA) Chairman Ernie Stevens cites record tribal election turnout.
Tahsuda says in small Indian communities, Obama pledged increased funding for Indian issues and programs. However, current economic realities may nullify Obama’s earlier promises.
“Historically, whether Democratic or Republican, Indian funding is the first to be cut and the last to be reinstated. Yet, tribal members believe aid should reach them first. Seven of America’s 10 poorest counties are on reservations. The millions needed would not impact the total economic picture,” he says.
In Indian Country, symbolism and language have tremendous significance. Tahsuda says, “Tribal members have high expectations. Obama should personally host a national meeting with tribal leaders in Washington D.C. Bill Clinton held one summit during his eight years, earning good will. If Obama does something similar, tribes will cut him some slack.”
What about tribal recognition going forward? Citing Obama’s advocacy of states’ rights, tribes will look for Obama’s support of their sovereignty. Soll describes Obama as “troubled” with governors who fail to negotiate compacts with tribes within their states.
The federal Bureau of Indian Affairs (BIA) has also flagged three key issues:
• A May 2005 letter bars the BIA from approving compacts for gaming sites not yet held in trust – a key requirement.
• A January 2008 “guidance memorandum”, which already has three legal challenges, increases difficulty for tribal acquisition of non-reservation lands.
• A recent regulation instructs the BIA how to determine if a site acquired after 1988 can be used for a casino.
Soll says, “Traditionally, Democratic administrations have been more favorable about land rights. The last four years were the most inactive. But, even with ancestral history and land rights, environmental concerns may keep Obama’s administration from ‘rubber stamping’ tribal gaming deals.”
With multiple crises confronting the US, will Obama want to expend any “political capital” towards tribal issues? Although Obama’s advisors on tribal issues favor gaming, Whittier Law School Professor and international gaming law expert I. Nelson Rose predicts stability. “Imposed by Obama’s predecessor, I do not anticipate widespread repeal of those restrictions that make it extremely difficult to get new off-reservation land for gaming,” he says.
However, Stevens disagrees, believing the freeze on tribal recognition will change. “I think Obama will help grow jurisdictions,” he says.
NIGA Executive Director Mark Van Norman views Obama as a welcome change. By breaking racial barriers, he envisions future Indian political opportunities. Van Norman hopes for a greater focus on the West, incorporating veterans like former Democratic South Dakota Senator Tom Daschle, nominated for the Secretary of Health and Human Services (HHS) and Democratic Arizona Governor Janet Napolitano, potential Secretary of Homeland Security.
Obama has nominated Colorado Democratic Senator Ken Salazar for the crucial Secretary of the Interior position. Salazar has little experience with tribal issues. He does have environmental and natural resources background, which may prove useful when dealing with environmental groups attempting to block casino construction.

What else will happen?
Other political issues may again come under discussion. Online Internet gaming has been banned throughout the Bush years. The most recent prohibition was the Unlawful Internet Gambling Enforcement Act (UIGEA). This legislation prohibits money transfers from financial institutions, including banks or casinos, to Internet gaming sites. Many online companies exited the US market following its 2006 enactment by the Republican Congress.
In www.newcasinosonline.org, Ryan Blalock writes that Obama has never promised anything regarding regulating online gaming. However, Obama does not believe that the Internet should be subject to many rules and regulations. Legislators may see some movement over the next four years, and many hope that the proper regulations may appear.
An optimistic Catania says, “I think after the first year, once Obama settles in and gets the economy on the road to recovery, they will examine regulations to tax the I-Gaming industry.”
Commercial casino industry leadership within the AGA advocated a Congressional study for Internet gambling in 2005. With a new administration, interest could be renewed.
Rose asserts, “The Majority Leader of the US Senate is Harry Reid, Democratic Senator from Nevada. Reid is obviously greatly influenced by the AGA positions, and will not block a study.”
If anything happens, Fahrenkopf envisions legislation similar to that previously sponsored by Democratic Congressman Barney Frank of Massachusetts. Frank introduced a bill to legalize, regulate and tax Internet gaming on a federal level. Fahrenkopf thinks that any Internet gaming activity will fall within the parameters of Frank’s proposals.
Rose also concludes that Frank, who chairs the House Financial Services Committee, will again push to undo the UIGEA. He will likely battle Alabama Republication Congressman Spencer Bachus. An outspoken opponent of Internet gambling, Bachus calls it harmful to families and, specifically, teenagers.
With declining casino employment, development and revenue statistics in virtually all US gaming jurisdictions, the American gaming industry will struggle in 2009. Casino executives warned of tough times at the November G2E convention in Las Vegas. The era of colossal multi-billion-dollar gaming meccas has almost certainly ended.
Looking ahead, the gaming industry has no choice but to hold its collective breath in anticipation. Corbo says, “Despite the accolades and high expectations, Obama faces huge challenges that the world can only hope he can handle. Many American casino companies have global holdings, so whatever happens will impact US and international gaming. They are proactively preparing themselves for any possible situation.
While we're cautiously optimistic, we are realistic. A new economic world is taking shape. We have adjusted our business model to economic changes, and will continue to do so as the situation evolves.”
Good luck to all.

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