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With the loss of gambling, things on the Flathead Reservation are grim for adult beverage businesses, and few hold out hope for any relief in the near term.

The fallout has spread across the reservation but is affecting off-reservation licensees as well, according to those on the scene.

Class III gaming ended there late last fall when the state and the Confederated Salish and Kootenai Tribes (CS&KT) failed to reach agreement on a new gaming compact which could have allowed the continuation of Class III gambling which, under Montana law, includes video poker and keno.

Without a tribal/state compact, the federal Indian Gaming Regulatory Act (IGRA) forbids operation of Class III games on Indian Reservations.

In negotiations that began in March 2006, the tribes sought full jurisdiction over all reservation gambling, including over non-tribal operations licensed by the state. They wanted a compact to allow them to run any and all games with any or no limits along with complete taxation, regulatory and enforcement authority.

The state responded by offering the tribes increased payout and wager limits, more machines, a freeze on the number of non-tribal licenses and machines, and $700,000 in revenue sharing of gaming and fuel taxes.

Finally, the state made several offers to extend the compact in effect at the time, but the tribe held firm to its opening position. Additionally, Governor Brian Schweitzer contended he had no authority to allow gaming within the state that was not authorized by the state constitution or Montana statute.

The impasse remained unresolved as the clock wound down. At midnight November 30, gaming machine plugs were pulled and machines carted off the reservation.

According to Andrew Huff, chief negotiator for the Governor's Office and who replaced Deann Sandholm when she retired, the state is willing and ready to negotiate any time the Tribes request negotiations.

"It's their move," Huff said.

And CS&KT spokesman Robert McDonald indicated May 21 that the Tribes have no intention of re-opening talks or changing their position.

"We're focused on our Class II gaming ventures and have moved on," he told the Tavern Times. (See related sidebar.)

The Tribes have continued to operate what the courts have deemed Class II video "bingo" machines which play much like Class III slot machines but are tied by wire into a national gaming pool.

These "Rocket Bingo" machines and their like are vended to the tribes by the machines' manufacturer, who runs the actual game and takes a rake off the "hold" the money left in the machine after winnings are paid from wagers. Thus, the Tribes are now the vendee rather than the vendor'; they are no longer the owners and operators of the machines and games as was the case with Class III machines under the old compact.

They are running their Class II gaming primarily out of the Kwa Tuq Nuk resort in Polson and the Gray Wolf Peak Casino, the refurbished former Joe's Smoke Ring, at Evaro.

In a web-site message to tribal members in March, Tribal Chairman James Steele said the tribe had sustained a $1.5-$2 million loss when Class III gaming was shut down, but that he was hopeful the Tribe's exclusive operation of gaming on the reservation albeit Class II could make up for the loss and that early numbers were encouraging.

Local non-tribal operators contend, however, that reservation resident gamblers are now taking their business to Missoula to the south, and Lakeside, Bigfork and Kalispell to the north.

Shonda Clary, owners of Cheers Etc. in Pablo, mid-way between Polson and Ronan but well off Highway 93, said the lack of gambling entertainment on the reservation has pushed people to neighboring communities where they spend their dollars not just for gambling recreation, but also for groceries, gasoline and other entertainment.

"This hurts everyone all across the reservation," she said.

Glenda Woods, who with her husband, Ross, owns and operates the Sports Page bowling alley, restaurant and casino in Polson, agrees.

Gamblers who now play off-reservation "are taking money out of the whole community," she says, adding that her business is down nearly 40 percent since the gamblers, who used to come in to play the machines and would also purchase a meal, beverages and other entertainment available there, are now going elsewhere.

The Woods built and started the Sports Page almost 10 years ago and the venture represents a nearly $1 million investment which has now been put at risk, Glenda says.

She's laid off three employees and cut the hours of others, she says. In addition, she and her husband are putting in extraordinary hours, often double-shifts, to try to reduce payroll expense, and at the expense of more parenting time for their young kids.

they've also cut their advertising substantially, which must be felt at the local radio station and newspaper. "we've cut out any donations, our contributions to schools, charities..."

Clary, at Cheers Etc., has made similar adjustments. She's laid off six of her 10 workers and is trying to pick up the slack to make ends meet, now working 60-70 hours each week, even swamping the place herself.

She says her business is off 60-70 percent.
   
She is also caught in another squeeze: she owned her own machines, for which she paid "over $108,000." Clary says she still owes $75,000 to the bank for these capital assets which are producing no income and, rather, continue to suck money as she pays for storage rental off-reservation.
    
In fact, on the day of the interview, she placed a classified ad in the Montana Tavern Times to try to sell her 20 machines for just $52,000 an obvious loss. She said she simply has to find some way to ease the finance payments which are badly skewing her profit and loss statements.

"I'm dipping into my savings," she says with obvious concern in her voice.

When speaking with reservation licensees, they have in common a somber tone, including Donnita Snyder, who with her husband, Ken, operates KD's Valley Club in Ronan.

But the Snyders are trying a business tack that may diverge from the crowd, though to date the result has been largely the same.

The Snyders, Donnita says, instead of slashing costs have actually increased them. they've added a breakfast menu seven days a week ("Ken does that"), are providing live music Saturdays and Sundays and karaoke. The added entertainment takes added staff...and expense.

The result?

"we've managed to hold our own on revenues," Donnita says,"but expenses are up to the point where our margin is about half of what it was" before gambling went away. "We're trying to find some way to draw people in and its not cheap."

Can the Snyders keep this up?

"It depends," Donnita says. "If we don't get hit with any major expense, like a roof, maybe we can keep muddling along. April was a horrific month with work comp, quarterly withholdings, income taxes..."

"The frustrating thing to me," she says, "is we seem to have been forgotten. I know this is making Mark (Staples, Montana Tavern Association Legal and Government Affairs Counsel) crazy, but what can he do? This is between the Tribe and the Governor.

"We don't have the money to spend on re-election campaigns'; not like the Tribe. We don't seem to be able to get help from Washington, D.C. We just get pats on the head."

Snyder says she is telling reservation operators, "Don't count on gaming coming back. We have to try to make it without or we'll just give ourselves ulcers."

Clary echoes Synder: "I'm making it, but barely. It's close every week. I've put the place up for sale. There are six or seven others for sale now, too. If it doesn't sell, I'll just have to keep cutting back. It's just day-by-day, and I'm a 'locals' bar'; I can't expect (anticipated Flathead Lake area) tourism to help.

"The Tribe's position is not helping anyone," Clary continues. "Those we've laid off don't have new jobs. This is just killing us. Operators in Missoula and Kalispell are doing well. They tell me they've had a big increases. That's all money leaving this reservation.

"What we need is a long-term agreement more than five years."

Woods also laments the loss of customers. "Lunch time we still do okay, but afternoons are dead. That's when we used to see a lot of our gaming customers. We don't see them anymore.

Woods says, "I just don't know how long people can stay in business. And there's no end in sight. Nobody's talking. Personally, I believe the Tribe has no intention of joining in a compact. They can afford to wait. I think the tribal membership should have had a vote on this'; the result might have been different.

"The licenses on the reservation are worth one-eighth of what they were," Woods continues. "You can't afford to sell your business for what you've got into it. This has ruined a lot of good business plans.

"It's not fair. We work hard, and our employees do. We run a good, clean business. Now we'll struggle to pay our kids' college tuition. It's just so disheartening. There's nothing you can do. We have no vote.

"I've got to believe, though, that Governor was right. Nobody wants wide-open gambling in Montana and not on the reservations, either."

Source: The Montana Tavern Times, June 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.