Casino gambling continues to drive economic development for Native American tribes in South Dakota, even though the casinos on rural reservations struggle to compete for a sparse population of bettors.

Many of the tribes also say they are hamstrung by the state's refusal to allow them to have more slot machines.

Despite these challenges, even isolated casinos such as the Oglala Sioux Tribe's Prairie Wind Casino on the western edge of the Pine Ridge reservation have created much-needed jobs, according to Phil Hogen, a member of the Oglala Sioux Tribe and chairman of the National Indian Gaming Commission.

"Indian gaming is the best economic development tool that ever came to Indian country," Hogen said in a recent phone interview from his Washington office.

Prairie Wind Casino employs 252 people, according to casino manager Michael Graham.

Statewide, the eight tribes that operate casinos (including two over the border in North Dakota) employ more than 2,500 people, according to Clarence Skye, executive director of United Sioux Tribes, based in Pierre.

Those jobs then have a ripple effect on retail businesses on reservations and in nearby towns, including Rapid City.

Revenue generated from the casinos goes toward tribal programs and projects, some of which get matching funds from the federal government or private organizations, Skye said.

The tribal gambling industry does not release the amounts of revenue generated by individual tribes' casinos, but nationally, it has grown to $26 billion in gross revenues, said Hogen, who is scheduled to speak Friday at a tribal gambling summit in Rapid City (see related story).

Seven percent of the money gambled legally last year in South Dakota was wagered at tribal casinos, where $114.8 million was spent, according to the "Indian Gaming Industry Report" by Alan Meister of Analysis Group, a consultant company. The report said gambling at tribal casinos in 2006 was up 11.4 percent over 2005.

Hogen said commercial gambling in places like Las Vegas and Atlantic City get the biggest slice of the national betting pie now, with state lotteries in second place. "Gaining fast is Indian gaming, which soon will be the second-largest sector," Hogen said.

But he said about 15 percent of the 225 tribes involved in gambling generate about two-thirds of the revenue. The tribal casinos near urban areas rake in the money, he said.

Rural challenge

Tribal casinos in more rural, remote areas face challenges attracting customers.

Graham says Prairie Wind has weekday promotions. That casino saw an increase in guests soon after it expanded its facility last summer. Since then, he said, "it's kind of slowed down."

The Lower Brule Sioux Tribe's Golden Buffalo Casino is 16 miles off Interstate 90 and is not really on the way to anywhere, admits longtime tribal Chairman Mike Jandreau. "When you're out in the boondocks, off the road, it's difficult unless you're able to offer them incentives driven by your capacity to make money," Jandreau said. "One of the things that has helped us is getting the Native American Scenic Byway loop up through the reservation."

But tribal gambling officials say one of their biggest obstacles is the state's unwillingness to allow them more than the 250 machines currently allowed.

The 1988 Indian Gaming Regulatory Act said tribes may have class III devices such as slot machines if a state has the same types of devices and if the tribe has a compact with the state.

The state has compacts with all nine tribes in South Dakota. Only one of them, the Cheyenne River Sioux Tribe, has not built a casino.

The tribes say that, in some cases, they could make more money if they could have more machines.

"We could use some more machines," Prairie Wind's Graham said. "I think we have the floor space, and whenever we have a special promotion, there are times we have guests standing waiting to play a machine."

But Graham said no tribe will want to place more machines than the market will bear. "You don't want to buy 50 machines and let them sit idle on the floor. Then, you'd be losing too much money," Graham said.

Jandreau said the Golden Buffalo Casino on Lower Brule has the opposite problem. It doesn't have enough business to support the 250 machines the state allows. Jandreau would like to be able to move about 65 machines to another tribe's casino, such as the one at Flandreau, which has the market, and then share in the profits.

But he said the state won't even talk about that idea.

Battling the state

Several tribes are seeking revised compacts with the state. Stymied in negotiations for a new compact for its Royal River Gaming Complex in Flandreau,

the Santee Sioux Tribe has sued the state.

The Oglalas' Two Lance accuses the state of South Dakota of using the compact as a controlling mechanism rather than a compromise.

"The state doesn't allow for the differences each tribes experience," Two Lance said.

Larry Eliason, executive secretary of the South Dakota Commission on Gaming, said the state has considered all the proposals made by the tribes.

But he said under federal tribal gambling law, the state is required to consider a variety of factors, such as public interest, public safety, criminality, financial integrity and adverse economic impacts on existing gambling activities. Eliason said existing gambling activities can include both state and other tribal gambling efforts.

Existing state gambling activities include Deadwood gambling and video lottery.

Two Lance and Jandreau believe the state is looking out for its No. 1 gambling interest: video lottery.

"They've got to do it," Jandreau said. "It's nearly $200 million of their revenue."

Hogen said it is in the state's own best interest to foster more tribal gambling opportunities. "I think that every job that's created on South Dakota's nine Indian reservations results in savings to South Dakota taxpayers," he said. Hogen said the high unemployment rates on the reservations translate into expenses for the state.

"I think the state would be well served if they'd look carefully at those reservations where more gaming jobs might be created and try to accommodate the tribes with an arrangement," he said. "I don't think it would take too many dollars away from Deadwood and state gaming."

S.D. tribal casinos

Oglala Sioux Tribe - Prairie Wind Casino, west of Oglala

Rosebud Sioux Tribe - Rosebud Casino, south of Mission

Lower Brule Sioux Tribe - Golden Buffalo Casino, in Lower Brule

Crow Creek Sioux Tribe - Lode Star Casino, in Fort Thompson

Standing Rock Sioux Tribe - Grand River Casino, near Mobridge, and Prairie Knights Casino, between Fort Yates, N.D., and Cannon Ball, N.D.

Yankton Sioux Tribe - Fort Randall Casino, east of Pickstown

Flandreau Santee Sioux Tribe - Royal River Casino and Hotel, in Flandreau

Sisseton-Wahpeton Sioux Tribe - Dakota Sioux Casino near Watertown, Dakota Connection Casino & Bingo near Agency Village, and Dakota Magic Casino near Hankinson, N.D.

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com