Economic Impact Study — 2008

Introduction

The Poarch Creek Tribal Nation operates three Indian gaming facilities in the state of Alabama. Creek Bingo Palace is located in Atmore county, Riverside Entertainment Center is in Elmore county, and Tallapoosa Entertainment Center in Montgomery county. These operations create employment, enhance revenue to business communities throughout the state, and provide services within the Tribal boundaries.

The intent of this study is to measure the economic effects of the Poarch Creek Tribes' three gaming enterprises in 2008 within the three counties, the state of Alabama, and the United States.

Uses of Indian Gaming Expenditures

The schematic in Figure 1 shows the uses of Indian casino gross revenues. Consistent with its operation as a business, each casino (Casino) must pay for capital facilities (Construction); goods and services required for operations and maintenance (Vendor Purchases); and labor (Employee Wages). In addition, many Tribes across the country make payments to states to reimburse them for regulatory oversight or infrastructural costs, and they incur their own regulatory costs (Taxes). Consistent with its operation as a Tribally-owned enterprise, the casino transfers its income after these expenses (Net Revenue) to the Tribe that owns it (Tribal Government). This income is either spent or invested by the Tribe in accord with the Indian Gaming Regulatory Act (IGRA), and these expenditures (Government Purchases, Wages, etc.) build basic community infrastructure, such as schools, roads and water and sewer systems. Under IGRA, Tribal government gaming revenue also is used to fund essential government services, such as police and fire protection, education, health care, housing, child and elder care, cultural preservation and general welfare.

Figure 1: Disposition of Casino Gross Revenues

Economic Benefits from Indian Gaming

Indian gaming creates jobs at three levels. First is employment at Indian gaming facilities, ancillary facilities, and other Tribal government and enterprise positions. A second round of job creation occurs as Indian gaming employees spend their income on goods and services. A third level of employment is created when Indian gaming operations, ancillary facilities and Tribal governments buy goods and services in the economy and make capital improvements.

Poarch Creek Tribal casinos employ 903 workers in Atmore, Montgomery, and Elmore counties. Ninety percent of these casino workers are non-Indians. Casino payroll amounted to $22.3 million in 2008.

After taxes, casino employees were left with $14.8 million in disposable income. Spending this income created another 269 jobs, bringing job creation for the first and second levels to 1,172. While some of these jobs are undoubtedly located within Alabama, this study does not estimate the number.

In 2008, Poarch Creek gaming facilities, their ancillaries and Tribal governments spent $87.2 million on goods and services. This spending created another 1,575 jobs — 346 of which were located in Atmore, Montgomery and Elmore counties; 1,229 in other parts of Alabama.

The Tribe also undertook $121 million in capital construction projects which created another 2,158 jobs in the state of Alabama. 1,715 of these jobs were in the counties of Atmore, Montgomery and Elmore.

In total, Poarch Creek gaming created 4,904 jobs. Of this total, 95 percent 4,635 were in the state of Alabama. Just over sixty-three percent of these state jobs 2,963 were within Atmore, Montgomery and Elmore counties. Figure 2 summarizes the employment gains and Figure 3 their location.

Figure 2

Figure 3

Poarch Creek Government Services Funded Through Indian Gaming

The Indian Gaming Regulatory Act provides that Indian Tribes shall use the net revenue from Indian gaming for five general purposes: (1) to fund Tribal government services, operations and programs; (2) to promote Tribal general welfare; (3) to promote Tribal economic development; (4) to make charitable donations; and (5) to help fund local government agencies.

As Figure 4 shows, the Poarch Creek Tribal Nation distributed its 2008 net government revenue as follows:

• 19 percent Trusts/Education & Health Programs
• 25 percent Direct Income/Salaries (Tribal Members)
• 34 percent Gov't Operations/Services/Gov't Salaries
• 16 percent Construction/Development
• 7 percent Enterprises

Figure 4

Effect of Alabama Gaming Activity on Government Tax Bases & Revenue

Federal, state, and local taxes claim roughly a third of income generated in the United States. Increases in economic activity expand the tax base and increase government revenue. Poarch Creek Tribal gaming created 4,904 jobs throughout Alabama and the United States. The wages associated with these jobs generated federal, state, and local payroll, income, and other taxes and help reduced welfare payments and unemployment benefits, freeing up more government revenue for other purposes.

Wages paid to employees of Tribal governments amounted to $22.3 million; employment resulting from purchases and construction generated another $128 million. Together this higher income yielded $22.5 million in Federal income taxes and $23.0 million in Social Security taxes. Besides adding $45.5 million to its revenues, the Federal government saved $12.3 million through lower payouts of welfare and unemployment benefits. As a result, the increased economic activity generated by Poarch Creek Tribal gaming increased total federal treasury revenues in 2008 by $57.7 million.

Tribal gaming also added $10.3 million to the revenue of state and local governments through income, payroll, sales, excise, and other taxes. Figures 5 and 6 summarize the effects of increased economic activity on federal, state, and local budgets.

Figure 5

Figure 6

Conclusion

In 2008, Poarch Creek Tribal gaming added 903 jobs through employment in casinos and other Tribal facilities funded by casino earnings. Casino workers spending their wages resulted in the creation of another 269 jobs. Purchases, including capital construction projects, by the Tribal casinos and other Tribal facilities added 3,732 jobs. All in all, Poarch Creek Tribal gaming generated 4,904 jobs throughout Alabama and the United States.

Income from job creation boosts government revenue. In 2008, Federal income and payroll taxes claimed $45.5 million of the wages resulting from job creation attributed to Poarch Creek Tribal gaming. The Federal government also saved $12.3 million in reduced welfare payments and unemployment benefits, and the state of Alabama collected $10.3 million in state income, payroll, sales, excise and other taxes.

Poarch Creek Tribal gaming has made possible economic development in areas which were largely outside the view of similar efforts in the state. Development on Tribal lands is designed and controlled by Tribal members and draws upon the talents and skills of Tribal members. Doing so stimulates even more internal growth which is critical to the future of all Tribal Nations.

Revenue from Poarch Creek Tribal gaming supports many needed programs and services. Without funds from casino operations, the costs of health education and counseling, safety programs, heating assistance, education, law enforcement, fire protection, ambulance, and other services would fall on tribal, county, state, or federal governments. The resulting increased demand for government revenues, which, in the absence of Tribal gaming operations, also would be lower, mean some government programs — Indian and non-Indian — could receive less support or be eliminated altogether.

In sum, Poarch Creek Tribal gaming has had many beneficial effects. Casino and ancillary operations have created a substantial number of jobs, a majority within Alabama. The economic stimulus these jobs provide has raised the incomes of Tribal and non-Tribal members and improved the balance sheets of federal, state, and local governments. Revenue from casino operations has helped promote economic development within the Tribe and funded valuable programs and services.