Well, it’s not the first time we tried to reneg on a deal struck with Native Indian tribes.

Years ago several of the Native Indian tribes in Michigan struck a deal with the State. The long and short of it is: Tribes pay millions of dollars in taxes to the State, Tribes open books and allow State auditing, State prevents competition in gaming. … Years pass, and the state decides to grant some exceptions to the anti-gaming laws and open some casinos in Detroit. Through a loophole in the agreement, this reduces or eliminates the tribes’ obligation to continue paying taxes to the State. The State, being in a financial crisis wants their $300M. The tribes refuse to pay. There are some coincidental oversight issues, but I think those are beside the point. My take:

What we really need to ask is “Why did the tribes feel compelled to make such an agreement in the first place?” After all, the land on which they’ve built their casinos is sovereign territory. I don’t believe that the tribes would’ve agreed to these payments if they didn’t think their receipts would more than compensate for them. It’s a little bit of quid pro quo, if you will.

It follows that the ONLY reason why the tribes would’ve agreed to such terms is to secure their monopoly on gaming. This is what we call “Rent-Seeking.” It seems that the tribes put a price-tag on their effective monopoly, and so long as they were the sole proprietors of gaming-houses in the state, they would pay it in order to reap monopoly profits. Now, once they’ve lost their priveleged status as monopolists, there is no economically justifiable reason to continue paying the State for a privelege they no longer enjoy. It seems there is no legal reason, either.

This is the power of lobbying and special interest groups at its absolute finest: we have what by all means amounts (practically) to a group of non-citizens preventing us from competing with them on our own land, through our legislature. Exaggerate it a little bit and it’s easier to see how absurd the situation really is: What if French winemakers (in France) were able to get the US Congress to prohibit the production of Wine? In return, france would send us Billions of dollars that they made selling high(er) priced wine to us (compare to the casinos: a lot of the tribal casinos play a soft-17 in blacjack, essentially making it more expensive to play there as opposed to a hard 17 at most US casinos.)

If it sounds ridiculous, its because it is. It is ridiculous that an indian tribe gives money to a state (from the state’s citizens, who through lack of competition are forced to pay higher prices) to ensure that nobody can compete with the tribes in gaming.

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All of this is like crying over spilt milk. Governor Engler made a deal that in retrospect turns out to be not so good for the state coffers. I suppose the state should’ve considered that when they opened the non-Indian casinos in detroit 10 years ago.

What I presume is that the state decided that they would be able to generate a significant portion of those millions through the tax on the Detroit Casinos. Any shortcoming, and I’m sure there is one, could be chalked up as an investment in the revitalisation of the city. After all, most legislators would rather see a vibrant, attractive Detroit (round which the state’s economy is centered) than have a few extra million in largely ill-gotten casino money.

Now the State wants to have its cake, and eat it, too. Only the Tribes no longer want to bake.