2006 OTGA report

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ECONOMICS " FINANCE " PLANNING The Contributions of Indian Gaming to Oregon 9s Economy in 2006 A Market and Economic Impact Analysis for the Oregon Tribal Gaming Alliance 888 SW Fifth Avenue Suite 1460 Portland, Oregon 97204 503-222-6060 www.econw.com By: Robert Whelan & Alec Josephson June 30, 2008 2006 Oregon Indian Gaming Analysis ECONorthwest Page 1 Section I Executive Summary Assignment The Oregon Tribal Gaming Alliance ( cOTGA d) is a coalition of nine Indian tribes in Oregon. Each owns and operates a casino in the state. The OTGA retained ECONorthwest to conduct a market and economic impact analysis of the tribal casino gaming industry in Oregon for the year 2006.

This is the fourth year such an analysis has been done. The data presented in this report come from various sources, but primarily from OTGA member tribes. They provided audited operating data on their casinos and related activities such as hotels and restaurants.

The tribes also prepared lists of charities and donations made by OTGA members through their charitable foundations and businesses. Riley Research Associates provided the results of a survey for this analysis. Statistics from state and federal government sources, such as the Oregon Lottery and the Bureau of Indian ... more. less.

Affairs, were also used to produce this report. This report replicates past work where the size and impact of tribal gaming in Oregon had been measured. Three additional research elements are included in this analysis. Overall, the following key topics are examined in this report: " Economic impacts of tribal gaming: What was the total economic impact of tribal gaming on the Oregon economy in 2006 and how does it compare with previous years? " The size of the gaming market in Oregon: How much gambling was conducted in Oregon in 2006 and how much money did Oregonians spend? What share of the total gaming in Oregon was attributable to the nine tribes and the Oregon Lottery? How has the market changed over the past decade? " Charitable contributions by tribes: All nine tribes make donations to area charities and most have established charitable community foundations financed by casino gaming revenues. How much was donated in 2006? What types of charities benefited? " Survey results: In 2004, ECONorthwest engaged Riley Research Associates to ask questions about casino gaming in their survey of Oregon voters. This survey was repeated on March 2008 and the findings were analyzed for this report. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 2 Major Findings This analysis of the gaming market in Oregon and the ultimate impacts of tribal gaming on the state economy in 2006 concluded the following: " The nine federally recognized tribes in Oregon run Indian casinos; most are located in rural areas. Gaming commissions, the Oregon State Police, and the federal government closely regulate the casinos. " The casinos directly employ thousands of workers. Casino jobs pay above industry average wages, and benefits are common and considerable. " Tribal casinos paid for $123.4 million in tribal government programs in 2006. These programs fulfill needs that would otherwise go unsatisfied and receive only partial funding from the state and federal government. " The casinos, through impacts at many levels of the economy, resulted in 13,916 jobs in Oregon in 2006. " Despite healthy absolute growth, Indian casinos 9 relative share of the Oregon gaming market declined for the first time in 2006. This is a result of the Oregon Lottery 9s even stronger growth. " Tribal casinos gave more than $8,100,000 in charitable donations in 2006. " Oregonians hold positive opinions regarding tribal casinos in their state although the percentage believing otherwise has increased in the last four years. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 3 Caveats As with any economic research, ECONorthwest used the best data available. However, revisions and estimation processes cause inexactness. Therefore, there are certain important caveats to any economic analysis, including this report: " Eight OTGA members provided full revenue and expenditure data. The Klamath Tribes, which has the second smallest casino in Oregon, provided only partial data for 2006. " ECONorthwest conducted checks to ensure that the data provided by tribes was complete and consistent with other publicly- or privately- collected data. " This analysis also relies on data from public sources, which are assumed to be accurate. Among the sources are the Oregon Lottery, the Oregon Racing Commission, the Washington Lottery, the Washington Gambling Commission, the Washington Racing Commission, the Oregon Employment Department, the Reno-Sparks Convention and Visitors Authority, the U.S. Bureau of Economic Analysis, the U.S. Department of Transportation, the Las Vegas Visitors & Convention Authority, Population Research Center at Portland State University, the Office of Financial Management at the State of Washington, and the Charitable Activities Section of the Oregon Department of Justice. " Due to lags in reporting from government sources, population and personal income data used in this analysis are subject to revisions. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 4 Section II Oregon Casinos and Tribes There are nine federally recognized tribal governments based in Oregon. Each one operated a casino in 2006. Six also had hotels as part of their gaming operations and seven offered RV sites to patrons. Although the tribes are sovereign nations, the State of Oregon exercises considerable control over the size and location, types of games, regulations, and other important features of the nine tribal casinos. To build and run a casino, a tribe and the Governor must first negotiate an agreement or compact (currently, in Oregon, these are called cClass III Gaming Compacts d) that determines the key features of the casino. For instance, Oregon gaming compacts limit tribes to one casino each. This section begins with an overview of the casinos in Oregon and a description of their facilities at year-end 2006. It is followed by a synopsis of the history and location of each tribe. Casinos in 2006 Table 1 lists the names, locations, tribal ownerships, opening dates, and the numbers of hotel rooms and RV hook-up sites of the nine casinos in Oregon, as of December 31, 2006. 1 Table 1: A Summary of Oregon Casinos, Year-End 2006 Casino City Tribe First Opened Hotel Rooms RV Sites Chinook Winds Lincoln City Confederated Tribes of Siletz Indians May 1995 227 51 Kah-Nee-Ta Warm Springs Confederated Tribes of Warm Springs May 1995 139 51 Kla-Mo-Ya Chiloquin The Klamath Tribes July 1997 - - Old Camp Burns Burns Paiute Tribe August 1998 - 18 Seven Feathers Canyonville Cow Creek Band of Umpqua Tribe of Indians April 1992* 147 31 Spirit Mountain Grand Ronde Confederated Tribes of Grand Ronde October 1995 250 93 The Mill North Bend Coquille Indian Tribe May 1995 112 102 Three Rivers Florence Confederated Tribes of the Coos, Lower Umpqua & Siuslaw Indians June 2004 - - Wildhorse Pendleton Confederated Tribes of the Umatilla Indian Reservation Nov. 1994 100 100 Total Lodging at Tribal Casinos 975 446 At Year-End 2006 * Opened as a bingo hall in 1992 and expanded into a casino in April 1994. The first Indian gaming facility in Oregon was the Cow Creek Bingo Hall. It opened in April 1992 in Canyonville, south of Roseburg. The bingo hall was replaced on April 29, 1994 with a casino that included slot machine-like devices called video lottery terminals ( cVLTs d), keno, and blackjack tables. By the end of 1995, five other tribes followed suit with their own casinos. Since then three others opened 4the last being the Three Rivers Casino in June 2004. 1 Opening dates refer to a tribe 9s first gaming operations whether in a permanent or temporary facility. The Wildhorse and Chinook Winds casinos started in temporary structures. Three Rivers also began in a temporary structure that was replaced with a permanent casino building in late 2007. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 5 The initial gaming compacts limited tribes to only one type of casino table game 4blackjack. In January 1997, the Grand Ronde negotiated a change that allowed them to install roulette, craps, and other casino table games in exchange for funding a charitable foundation with a share of the casino 9s profits. Since then, the Coos, Lower Umpqua, and Siuslaw, the Siletz, Cow Creek, Coquille, and Umatilla have amended their compacts similarly. So far the other tribes in Oregon have not chosen to expand into other forms of table games. The tribes reported that they had catered to over 10.4 million visitors in 2006. The tribes sold 272,067 room nights at their hotels and 51,815 nights at their RV parks. Oregon tribes operated six hotels with 975 rooms at the end of 2006 and RV parks with 446 sites on them. Casino Capacity As shown in Table 2, the nine Indian casinos in Oregon had 7,078 VLTs and 125 gaming tables on December 31, 2006. In contrast, Oregon Lottery retailers had 11,376 VLTs and 2,940 keno outlets scattered throughout Oregon. Table 2: Indian Casino Gaming & Non-Tribal Gaming Capacity, Year- End 2006 Gaming Venue VLTs Table Games Poker Tables Bingo Seats Keno Wagering Outlets Restaurant & Lounge Seating Indian Casinos: Chinook Winds 1,231 24 5 1,200 1 1,051 Kah-Nee-Ta 323 6 3 - - 356 Kla-Mo-Ya 340 6 - - - 119 Old Camp 134 - - 60 - 60 Seven Feathers 1,290 22 7 346 1 536 Spirit Mountain 1,971 36 17 - 1 601 The Mill 714 13 4 - 1 90 Three Rivers 400 6 - - - 119 Wildhorse 675 12 3 350 1 154 Indian Casino Total 7,078 125 39 1,956 5 3,086 Non-Tribal Gamin :* At lotter retailers 11,376 - - - 2,940 162,975 At charity bingo halls 28,868 Sources: Tribal reports, Oregon Department of Justice, Oregon Lottery, 2002 Economic Census, and ECONorthwest. * Approximate year-end numbers. Between 2005 and 2006 Indian casinos in Oregon increased the number of VLTs in response to strong consumer demand and an amended compact, signed by Governor Kulongoski and the Grand Ronde, which allowed the Spirit Mountain Casino to expand. The number of VLTs went up by 1,048. There was a small decline in table games and an increase in poker tables, which reflect changing player preferences in the market. Bingo at tribal casinos saw a large drop of 1,026 seats in 2006 primarily because of the closure of the bingo hall at Spirit Mountain, which has since reopened. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 6 In contrast, the Oregon Lottery continued its expansion with 655 more VLTs statewide. It added many retailers in 2006: 110 more VLT and 150 more keno outlets. Table 3: Change in Gaming Capacity, 2005 - 2006 Gaming Location/Type 2005 2006 Change Indian Casinos: VLTs 6,030 7,078 1,048 Table games 131 125 (6) Poker tables 37 39 2 Bingo seats 2,982 1,956 (1,026) Oregon Lottery: VLTs 10,721 11,376 655 Video lottery retail sites 2,063 2,173 110 Keno game retail sites 2,790 2,940 150 Sources: Tribal reports, Oregon Department of Justice, Oregon Lottery, and ECONorthwest May 2008. Changes Made Since 2006 and Current Expansion Efforts Since December 31, 2006, some tribes have made or are in the process of making substantial additions to their properties: In 2007, the Spirit Mountain Casino converted their bingo hall into a casino after negotiating a compact amendment allowing 2,000 VLTs. In May 2008, they resumed bingo after opening a large event and entertainment center, as part of a 135,196 SF expansion that included offices, parking, convention facilities, and a youth activity center. Three Rivers completed a $56 million construction project with the opening of a new permanent casino, 8,500 SF events center, and a 93- room hotel in December 2007. The Mill opened a new lounge in 2007 and will launch a seven-story, 92-room hotel in June 2008. The casino will add about 200 VLTs. Wildhorse completed a major expansion in April 2007 with a new enclosed non-smoking casino, two restaurants, a nightclub, and lounge. More changes are on tap for 2009, including a 100-room upscale hotel, amphitheater, courtyard, pool, and more casino space. The Kla-Mo-Ya Casino is expanding its casino and restaurant. A new 40-room hotel is due to open December 2009. The Seven Feathers Casino will add 154 hotel rooms, a new spa, and a buffet in early 2009. Chinook Winds is renovating and expanding its golf course. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 7 Tribes in Oregon Figure 1 is a map showing the principal locations of the nine federally recognized tribes based in Oregon. They are all in rural communities or in mid- sized cities such as North Bend. Beside the areas noted on this map, most tribes have land parcels that are not contiguous to these principal locations. Figure 1: Tribes in Oregon Source: Oregon Legislative Commission on Indian Services. 2007-09 Oregon Directory of American Indian Resources , page 34. In addition to the nine tribes, a portion of the Fort McDermitt Paiute- Shoshone Indian Reservation extends into the southeastern corner of Oregon. That tribe, however, is based in Nevada. According to the Oregon Legislative Commission on Indian Services, there are also two Indian communities in the state, the Chetco and Celilo-Wyam Indian Community, that are not federally recognized tribes. They, too, are shown in Figure 1. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 8 The Burns Paiute Tribe The Burns Paiute Tribe descends from the Wadatika band of Paiute. They lived and seasonally migrated over a vast 5,200 square mile territory. It extended from the Cascade Mountain Range in central Oregon to the Payette Valley north of Boise, Idaho; and from southern parts of the Blue Mountains near the headwaters of the Powder River north of John Day, to the desert south of Steens Mountain. In 1873, a 1.8 million acre Malheur Reservation was formed in southeastern Oregon for the tribes of the region. This land was taken from the tribes. In the winter of 1879 over 500 Paiute were marched to Washington and forced to relocate on the Yakama Reservation and Fort Vancouver. Many of those at Fort Vancouver subsequently were relocated to the Warm Springs Reservation. Many of the members of the Wadatika band on the Yakama Reservation moved back to Burns. In 1928, a local land company gave the Burns Paiute 10 acres of land just outside the city. In 1969, after a 35-year court case, the tribe was awarded a small sum of money for the lands taken from the Malheur Reservation. In 1972, the Burns Paiute were recognized as an independent Indian Tribe. Today the Burns Paiute Tribe has 341 members and their reservation covers just 770 acres north of the city of Burns in Harney County. The tribe 9s Old Camp Casino is located there. 2 The Old Camp Casino serves a somewhat isolated market. Located in Harney County, which has a population of about 7,700, the Old Camp is Oregon 9s smallest casino. The Confederated Tribes of the Coos, Lower Umpqua, and Siuslaw Indians The Coos, Lower Umpqua, and Siuslaw Indians are three tribes organized into a confederation. They occupied southwest Oregon coastal areas along the three major rivers in Coos, Douglas, and Lane Counties that were named after the tribes. In 1855, coastal tribes signed a treaty with the U.S. Government, but a year later the Rogue River War broke out south of Coos Bay and the U.S. Army, in a preemptive strike, rounded up the Coos Indians and forced them to live in an encampment. The Lower Umpqua Indians were soon forced in as well. Both tribes later refused to relocate to the Siletz Reservation and, instead, joined the Siuslaw Indians. In 1918, the three tribes formed a confederation and pursued land claims they were entitled to under the 1855 treaty. 2 http://www.harneycounty.com/Paiute.htm 2006 Oregon Indian Gaming Analysis ECONorthwest Page 9 Under a program by the Eisenhower administration in the 1950 9s, the U.S. Congress terminated the Confederated Tribes of Coos, Lower Umpqua, and Siuslaw Indians along with all other tribes of western Oregon. In 1984, after a long battle, the status of the Confederated Tribes of Coos, Lower Umpqua, and Siuslaw Indians was restored. 3 The Tribes currently have 855 members. In June 2004 the Coos, Lower Umpqua, and Siuslaw opened the Three Rivers Casino in a temporary structure. This was replaced in January 2008 with a permanent casino building and hotel. It is located about a mile east of Florence on the main highway linking Eugene to the coast. Coquille Indian Tribe The Coquille Indian Tribe descended from people who inhabited the watershed of the Coquille River system, which covers approximately the region around the present day cities of Bandon, Coos Bay, and North Bend on the southern Oregon coast. The tribe signed treaties with the U.S. Government in 1851 and 1855, which ceded 700,000 acres of ancestral territory, however, the treaties were never ratified by Congress, so the Coquille were denied a permanent homeland. The tribe was terminated by the Eisenhower administration in 1954, but then subsequently restored by Congress in June 1989. The Coquille Indians were then able to acquire several land parcels. 4 The Coquille Indian Tribe has 819 members and owns the Mill Casino-Hotel in North Bend, Oregon. It overlooks the waterfront off highway US-101. The casino has prospered because it offers highly competitive accommodations on the southern Oregon coast and is a much needed entertainment venue for locals. The Coquille Tribe is in the midst of a hotel and casino expansion due for completion in the summer of 2008. Cow Creek Band of Umpqua Tribe of Indians For well over a thousand years, the Cow Creek Umpqua Indians occupied the inland areas of what is today Douglas County, Oregon. According to the Legislative Commission on Indian Services, in 2007 there were 1,289 members of the Cow Creek. In 1853, soon after the discovery of gold in southwest Oregon, the tribe entered into a treaty which ceded their land to the Federal Government for 2.3 cents an acre 4a tiny fraction of the true market value at that time. Three years later, the Cow Creek Umpqua Indians, along with the other tribes in western Oregon and parts of California, were rounded up and forced onto a reservation created in Grand Ronde. 3 http://www.ctclusi.org/cultural_historical.asp 4 http://www.npaihb.org/profiles/tribal_profiles/Oregon/Coquille.htm 2006 Oregon Indian Gaming Analysis ECONorthwest Page 10 In 1954, Congress terminated the Cow Creek Band. After a long battle, the Federal Government reversed its position and disavowed termination. In 1982, the Cow Creek Band was restored. 5 The tribe fought the Federal Government over the 1853 land claims and received about $1.3 million. The Cow Creek Band borrowed $825,000 from the U.S. Bureau of Indian Affairs in 1991 to help pay for the construction of a bingo hall which later became a casino. The Seven Feathers Hotel & Casino Resort is right off exit 99 on Interstate-5, which makes it very accessible to residents of Roseburg, Medford, Ashland, and Grants Pass, as well as travelers driving through the area on busy Interstate-5. Highly successful, the resort is now undergoing an expansion. Confederated Tribes of Grand Ronde The Confederated Tribes of the Grand Ronde Community of Oregon is comprised of over 20 tribes and bands whose traditional homelands extend from northern California to the north shore of the Columbia River. It is the largest tribe based in Oregon and has 4,926 members. The anteceding tribes and bands of Grand Ronde ceded these lands to the United States through a number of treaties. Among these treaties is the Willamette Valley Treaty of January 22, 1855, which ceded the entire Willamette Valley Basin from Cascade Falls on the Columbia River in the east to Oak Point in the west. With the treaties came the forced removal of the Willamette Valley tribes to the Grand Ronde Reservation that was created by treaty and an executive order given on June 30, 1857. The reservation covered over 60,000 acres of land on the eastern side of the Coast Range, on the headwaters of the South Yamhill River, about 60 miles southwest of Portland and about 25 miles from the ocean. Over time, much of the original reservation land was stripped from the Tribe by ill- conceived federal policies. In 1954, Congress terminated the federal status of the Grand Ronde tribes. The Tribal members were left with little more than a ten-acre cemetery and maintenance shed. Their federally recognized status was gone, but the people of Grand Ronde continued as a community and Tribal leaders worked tirelessly to restore the Confederated Tribes of Grand Ronde 9s status as a federally recognized tribe. Their efforts led to the signing of the Grand Ronde Restoration Act on November 22, 1983. Five years later, President Ronald Reagan restored 9,811 acres of the original Reservation to the Grand Ronde Tribes. 6 5 http://www.cowcreek.com/story/x01history/index.html 6 http://www.grandronde.org/misc/ourstory.html 2006 Oregon Indian Gaming Analysis ECONorthwest Page 11 The Grand Ronde Tribe owns and operates Spirit Mountain Casino, which is on the main east-west route between Portland and Lincoln City. It is the largest casino in Oregon. Each year the Tribe dedicates six percent of the casino profits to The Spirit Mountain Community Fund. The fund supports non-profit organizations in Western Oregon. Since the fund was established in 1995, the Tribe has given nearly $47 million to assist Oregon non-profit groups and civic institutions. Spirit Mountain is the closest full-service casino to Salem and Portland metropolitan area residents; over 750,000 households live within 90 minutes of its doors. Spirit Mountain is one of the largest employers in the Polk-Yamhill County area. The Casino also supports numerous local vendors from food suppliers to linen services and printers, spending over $1.5 million with local vendors each year. The Klamath Tribes The Klamath Basin of southern Oregon was the traditional homeland for the Klamath tribes: the Modoc and the Yahooskin band of Snake Indians for thousands of years. In 2007, there were 3,552 members of the Klamath Tribes. After decades of hostilities with newcomers, the tribes ceded 23 million acres in 1864 and moved to a 1.8 million acre reservation. The Klamath tribes were very resourceful and built highly successful cattle and lumber operations on their lands. By the 1950 9s, the Klamath were one of the wealthiest tribes in the country. That came to an abrupt end when the U.S. Congress passed the Klamath Termination Act. The Klamath Tribes were restored in 1986, but their land was not returned. Gradually the Klamath Tribes are rebuilding their economy. In 1997, they opened their first business since termination 4the Kla-Mo-Ya Casino, named for an acronym of the three tribes. 7 Kla-Mo-Ya is off US-97, the main north-south route of central Oregon, in the town of Chiloquin. The casino is a popular gaming destination for residents in the Klamath Falls area but has also become an attraction for tourists traveling on the highway. As such, they are planning to add a hotel and make other enhancements to their property. Confederated Tribes of Siletz Indians The Siletz are a federally recognized confederation of many bands originating from northern California, western Oregon, and southwest Washington, who ceded 19 million acres to the U.S. and agreed to confederate on the Coast, or Siletz, Reservation on the central Oregon Coast in 1856. 7 http://www.klamathtribes.org/history.html 2006 Oregon Indian Gaming Analysis ECONorthwest Page 12 In 1865 and 1875, 900,000 acres of the cpermanent reservation d were opened to settlement by presidential and congressional actions. Additional lands were lost through allotment and forced fee policies. By 1912, over half of the Siletz Indian allotments were no longer Indian owned. The Confederated Tribes of Siletz Indians were terminated in 1954-56, but in 1977, the Siletz became the first tribe in Oregon and second in the U.S. to gain restoration. The Siletz have a 5,000-acre reservation in Lincoln County 8 and 4,094 members. The Confederated Tribes of Siletz Indians operate the Chinook Winds Casino in Lincoln City 4a major coastal tourist community. They recently acquired and renovated a large oceanfront hotel next to the casino and have added a golf course and RV park to their repertoire of visitor amenities. Confederated Tribes of the Umatilla Indian Reservation The Confederated Tribes of Umatilla Indian Reservation was established in 1855 by a treaty signed by the U.S. Government with the Cayuse, Umatilla, and Walla Walla tribes. Those three tribes occupied the Columbia River Plateau of southeastern Washington and northeastern Oregon. Of the 510,000 acres that were originally reserved in 1855, only 178,882 remain as part of the Umatilla Reservation and non-Indians own 48 percent of that. 9 Tribal enrollment, in 2007, was 2,447. The Tribes own the Wildhorse Resort & Casino, which is located off Interstate-84 a few miles east of Pendleton 4the largest city in Umatilla County. Wildhorse benefits from its proximity to the comparatively much more populous and affluent Tri-Cities area of nearby Washington and the steady stream of tourists and truck drivers who travel on I-84. The casino has gone through a series of expansions. They are currently working on a hotel addition and the construction of other amenities to serve their guests. The Confederated Tribes of Warm Springs The Confederated Tribes of Warm Springs consist of three distinct tribes. The Wasco and Walla Walla (later called the Warm Springs) bands lived along the Columbia River and its tributaries; they often would trade with one another, but had separate cultures and languages. The Paiute occupied the high deserts of southeastern Oregon and rarely had contact with the Wasco or Warm Springs. 8 http://ctsi.nsn.us/WhoWeAre/history___culture.html 9 http://www.umatilla.nsn.us/ 2006 Oregon Indian Gaming Analysis ECONorthwest Page 13 In 1855, the U.S. government and the Wasco and Warm Springs tribes signed a treaty, which created the Warm Springs Reservation. It is located south of the Columbia River between the Cascade Mountains and the Deschutes River in north central Oregon. In 1879, the U.S. government began settling Paiute Indians from Fort Vancouver onto the Warm Springs Reservation. The three tribes, in 1937, organized themselves as The Confederated Tribes of Warm Springs Reservation of Oregon. 10 Enrollment totaled 4,306 in 2007. The Warm Springs built forest products and tourism businesses on their reservation. In 1964 they opened Kah-Nee-Ta Village near a natural hot springs deep in Indian Head Canyon about eleven miles from the main road, Highway-26. In 1972, a lodge was built there. The Indian Head Casino was added to Kah-Nee-Ta in 1995. In 2001, the casino was merged into the lodge and the name was changed to the Kah-Nee-Ta High Desert Resort & Casino. Although halfway between the large and comparatively affluent cities of Portland and Bend, its long distance from both cities and location well off the main highway constrain its customer base largely to locals and regular hotel guests. Gaming Regulation Indian casinos in Oregon are heavily regulated considerably more so than commercial casinos are. There are three independently acting entities directly involved in regulating the operations of tribal casinos in Oregon. In addition, casinos spend millions each year on security and auditing. The first layer of regulation is the gaming commission. There are nine in Oregon 4one for each casino. Gaming commissions are independent of casino management. They license employees, monitor games to ensure legal compliance and fairness, establish control standards, and conduct audits. The Oregon State Police regulate casinos. In 2006, tribes paid almost $1.7 million to the Oregon State Police to fund the tribal gaming section. The police monitor casinos, run background checks on casino employees and suppliers, and ensure the integrity and fairness of games. The National Indian Gaming Commission ( cNIGC d) is an independent agency of the federal government that also regulates gaming at tribal casinos. The NIGC 9s mission is to see that Indian tribes are the fair beneficiaries of gaming revenue, assure that gaming is conducted honestly, and to shield tribes from corrupting influences. They do this by conducting audits, private investigations, and background checks. The NIGC is funded entirely by Indian casinos. Tribes in Oregon paid about $232,000 in fees to support the NIGC 9s work in 2006. 10 http://www.warmsprings.com/Warmsprings/Tribal_Community/History__Culture/ 2006 Oregon Indian Gaming Analysis ECONorthwest Page 14 In 2006, tribes in Oregon paid almost $14.2 million to gaming commissions, the Oregon State Police, and the federal government for gaming regulation and oversight. As shown in Table 4, less was spent regulating other forms of gaming. Tribes paid for 70 percent of all the gaming regulation and enforcement costs in Oregon in 2006. Table 4: Federal, State & Tribal Government Gaming Regulatory and Enforcement Spending in Oregon, 2006* Type of Gaming in Oregon 2006 Change from 2005 Regulation Costs Paid by Oregon Tribes: Oregon State Police - tribal gaming section $1,667,981 ($60,705) Nine tribal gaming commissions 12,082,286 1,401,560 National Indian Gaming Commission 231,994 (3,426) Paid by Oregon Tribes $13,982,261 $1,337,430 Oregon State Police, paid by gaming vendors 183,904 (90,671) Total casino regulatory costs $14,166,164 $1,246,758 Oregon Lottery: Oregon State Police contract $2,256,541 $325,519 Security services 644,713 91,070 Other lottery security expenses 196,499 (54,260) Total OR lottery regulatory costs $3,097,753 $362,329 Charitable bingo, raffles & fundraisers $659,872 ($89,129) Horse racing 2,126,848 100,294 Total Gaming Regulation $20,050,637 $1,620,252 * Note: Oregon Lottery data are for the fiscal year ending June 30, 2006. Horse racing and charitable gaming regulation by the state are estimated calendar year totals calculated from fiscal year or biennial budget data. Sources: The Oregon Lottery, Charitable Activities Section of the Oregon Dept. of Justice, Oregon Racing Commission budget, Joe Vricella (Grand Ronde Tribe), National Indian Gaming Commission, and the nine tribes based in Oregon. The Oregon Lottery spent nearly $3.1 million on direct security and regulation in 2006. The cost of regulating and overseeing charitable gaming by the Oregon Department of Justice was over $659,000 in 2006 whereas the Oregon Racing Commission 9s work exceeded two million dollars. Statewide, about $20.1 million was spent of gaming regulation and enforcement efforts. In addition, considerable yet unquantifiable amounts were spent on gaming security by casinos, the lottery, lottery retailers, racetracks, and charitable game operators. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 15 Section III Oregon Economic Impacts Tribal gaming has grown to become a crucial tool for helping Oregon tribes meet the needs of tribal members. Tribal gaming also benefits the state economy. The many benefits of tribal gaming include: " Tribal gaming has created stable employment for thousands of workers. " Returns from casinos are funding essential tribal government jobs and services, paying for improvements to local infrastructure, and supporting healthcare, housing, and education programs. " For members of tribes, casinos have meant less poverty, more employment, better standards of living, and less reliance on state and federal assistance. " For Oregon, tribal gaming has emerged as a catalyst for tourism. " Casinos are a major source of jobs that pay above average wages and often include health insurance, retirement plans, and other benefits. Casino workers include tribal and non-tribal members. Most casino workers live in rural Oregon. This section begins with a brief description of the methodology used to measure economic impacts. It is followed by an analysis of 2006 tribal gaming revenues, expenditures, and employment basic data that drives downstream impacts. This section then offers a summary of the economic and fiscal impacts of tribal gaming in 2006, and concludes with an evaluation of the changes in gaming and its economic impacts between 2003 and 2006. Economic Impact Analysis Economic impact analysis is a way of measuring how an industry, such as tribal gaming, affects a state economy. It is done through the use of computer models that are designed to trace the flow of dollars through an economy as they move between businesses, consumers, and employees. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 16 Methodology Spending and employment by an industry will often generate impacts elsewhere in the economy. These downstream impacts are measured in terms of output, wages, and jobs. 11 A method called cinput-output d modeling was developed by economists to measure them. 12 An input-output model is a mathematical representation of an economy. It shows how different parts (or sectors) of an economy are linked to one another. Information about linkages comes from various sources, including U.S. Census reports on population and businesses. The most widely used input-output tool is IMPLAN, which is an acronym for cIMPact analysis for PLANning. d 13 In simple terms, the IMPLAN model works by tracing how money generated in one sector of the economy is spent and re- spent throughout the rest of the economy. For this analysis, an IMPLAN model was built to measure how the various activities attributed to tribal gaming impacted the Oregon economy in 2006. Stages of Impacts Impacts are felt at various stages or steps. Input-output models start with the direct impacts of the initial sector (in this case, tribal gaming and tribal government activities financed by gaming revenues). Spending by the tribes then indirectly affects backward-linked businesses that supply goods and services to the tribe and other businesses, and generates additional induced spending by households who directly or indirectly benefit from the increase in wages and purchasing power. These three types of impacts are discussed in the following section. D irect impacts represent the first stage of impacts and are usually associated with the industry or activity that is the focus of the study. In this case, direct impacts include the output and employment of the nine tribal casinos and their related businesses, such as hotels and restaurants. In addition, because gaming revenues are used to help finance tribal government activities, the direct impacts also include the output, jobs, and wages for those tribal government activities that are financed by the casinos. 11 Output is the broadest measure of economic activity. It is the total value of production. For hotel-casinos output is mostly gaming revenues, hotel room, and restaurant sales. However, for retail items, output is the difference between sales and the cost of goods sold. Wages are total payments to workers including benefits such as health insurance, life insurance, and retirement accounts. Jobs include both part and full time. 12 Wassily Leontief first put input-output analysis to practical use in the late 1930 9s. While at Harvard, Leontief used his input-output system to construct an empirical model of the United States economy. This research gave rise to his 1941 classic, cStructure of American Industry, 1919-1929. d For his research, Leontief was awarded the Nobel Prize in Economics in 1973. 13 IMPLAN was initially developed by the U.S. Department of Agriculture in cooperation with FEMA and the Bureau of Land Management to assist federal agencies in their land and resource management planning. Since 1993, the Minnesota Implan Group, Inc. has been maintaining IMPLAN and updating the data used in the models. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 17 The second stage covers indirect impacts , which are all the effects on other sectors that supply tribal casino operations with goods and services. For example, when an Oregon casino hires a local contractor to install carpeting, the amount paid is an indirect output. Furthermore, when that contractor, in turn, buys carpet from a store in Salem, that purchase also contributes to the total indirect output, as does the extra work done by the contractor and store clerk. Indirect impacts can go back many steps from the originating direct source, albeit their size diminishes considerably as they do. The third stage counts the induced impacts from higher incomes and additional purchasing power for casino workers and for businesses affected by tribal gaming operations. In the previous example, the extra wages of the carpet installer and store clerk along with the additional profits of their employers cause incomes in Oregon to rise. When this money is spent in Oregon, it stimulates downstream impacts on the economy. These are income-induced impacts and they are often quite large, especially in high-payroll industries like tribal gaming. Adapting IMPLAN to Fit the True Spending Pattern of Oregon Casinos This analysis used the IMPLAN software to develop a model of the Oregon economy. IMPLAN contains a mathematical description of the spending pattern (or cproduction function d) of a typical commercial hotel-casino in the United States. Tribal casinos in Oregon, however, have markedly different expenditure patterns. Unlike commercial casinos, tribal casinos in Oregon reinvest heavily in local communities, spend significantly more on employee benefits, donate much more of their revenues to local charities, and return their profits to support local tribal government programs. In order to more accurately model the economic impacts of tribal gaming; this analysis used actual data from the nine tribes to develop a true spending pattern of casinos in Oregon. Furthermore, the additional spending on tribal governments that was underwritten by gaming was incorporated into the model. This was done so that the model would accurately measure the impacts of tribal government expenditures on social and economic development programs, healthcare, education, public works, and other similar local needs. This differs from a standard commercial hotel-casino assumed in IMPLAN, which would divert much of its cash flow to out of the state investors. Basic Assumptions of the Impact Analysis The scope, definitions, and other basic assumptions of the impact analysis conducted for OTGA include: " The analysis measures the economic impacts for the 2006 calendar year. " The definition of the tribal gaming sector includes the hotels, restaurants, and other ancillary activities and amenities directly associated with the casinos and offered to casino customers. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 18 " Since gaming revenues are used to finance additional tribal government activities, the direct impacts also include those portions of tribal government and other tribal needs that are underwritten by casinos. " The analysis reveals the gross impacts of the casinos. These are all of the impacts that can be traced back to the original spending by the tribes in 2006 regardless of what spending would have occurred had the casinos not existed. In other words, all impacts linked to tribal gaming are reported without netting out possible substitution effects, such as the loss of an overnight stay at a non-casino hotel because a guest chooses to stay at an Indian casino hotel instead. Tribal Gaming Operations in 2006 Data collected from individual tribes for the 2006 calendar year form the inputs into the economic impact analysis. This data includes tribal gaming revenues, the number of direct hires and their wages, and expenditures by major categories. Revenues and Expenditures Table 5 shows the revenue and spending data for tribal gaming operations in 2006. The casinos generated about $487.2 million in gaming revenues, $52.5 million from food and beverage sales, $24.8 million from lodging, and $15.7 million from all other sources for a grand total of $580.2 million. Revenues from gaming, food and beverages, and lodging all increased from the previous year, with lodging posting almost an 18 percent gain from 2005. Expenses also increased across most categories, with labor, construction, and equipment costs increasing the most. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 19 Table 5: Revenues and Selected Expenditures by Tribal Casinos in Oregon, 2006 Revenues and Expenditures 2006 Revenues Gaming $487,154,637 Food and beverage sales 52,544,106 Hotels and RV parks 24,773,617 Gift ships, recreation and other 15,686,944 Total revenues $580,159,304 Selected Expenditures Labor $193,950,932 Advertising, marketing and sales 34,131,661 Costs of goods sold 32,820,335 Repairs and maintenance 3,063,209 Supplies 7,256,394 Professional services 4,538,953 Entertainment, comps, and other operating 60,794,808 Charity, community fees and donations 10,460,854 Construction and equipment purchases 65,799,990 Tribal government services and member support 202,003,630 Source: Tribal reports. Labor Costs Payroll is the biggest expense for casinos because it is a labor-intensive industry. Over 2006, the casinos employed an average of 5,190 workers. The average wage for these workers in 2006 was $27,080. This was far greater than the statewide average wage for workers in the leisure and hospitality industry, which was $15,555 in 2006. 14 Benefits and payroll taxes paid by the casinos averaged $10,605 per worker. Employer-paid healthcare alone was $4,908 per worker (a 7.9 percent increase over 2005). Employees paid an average of $5,697 in state, federal, and social security taxes on their wages earned at the casinos. These taxes are distinct from the payroll taxes paid by the casinos. Details of labor costs are shown on Table 6. In addition to these amounts, the tribes also paid for several hundred thousand dollars worth of temporary labor. 14 Oregon Employment Department website accessed on June 19, 2008, at http://www.qualityinfo.org/olmisj/CEP 2006 Oregon Indian Gaming Analysis ECONorthwest Page 20 Table 6: Wages, Taxes, and Benefits Paid by Tribal Casinos and Employees, 2006 Labor Statistics 2006 Casino Labor Costs Wages & salaries (including gratuities) $140,544,772 Payroll taxes $12,622,656 Healthcare benefits $24,716,325 Retirement, other benefits and compensation $16,067,179 Total paid by casinos $193,950,932 Avg. number of employees 5,036 Per Employee Wages $27,908 Benefits and taxes paid by casinos $10,605 State & federal income, and social insurance $5,679 Sources: Tribal reports, Oregon Department of Revenue, Social Security Administration, and the Oregon Employment Department. ECONorthwest estimated taxes paid based on average tax returns of comparably compensated full-time Oregon residents. Tribal Government Support The main purpose of having casinos is to underwrite services to tribal members and to provide jobs and other economic development opportunities for tribal members and citizens in the surrounding communities. All of the casinos provided much needed employment for tribal members. Eight of the nine tribes reported having earnings from gaming that 4after paying for gaming operating expenses, capital costs, and debts 4 were available to also pay for tribal government services. A breakdown of how those funds were used to finance additional tribal government programs is shown in Figure 2. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 21 Figure 2: Tribal Government Spending on Major Programs Financed by Gaming Revenues in 2006 Healthcare is the greatest tribal expense that casino gaming helped to fund. In 2006, approximately 51 percent of gaming revenues available to tribes were used to fund expanded healthcare services. Gaming revenues went to pay for various other essential services, such as family/social services and housing (16 percent), public works and public safety (collectively 9 percent), and education and job training (13 percent). In some cases, these services are available for both tribal and non-tribal members of the community. Without casino revenues, these programs likely would have been eliminated or curtailed, or the financial responsibilities of federal, state, and local governments would have increased. Results of the Impact Analysis In 2006, tribal gaming supported a total of $703.6 million in direct economic output (a 4.3 percent increase over 2005) and $239.0 million in wages and benefits (a 5.3 percent increase) in Oregon. Direct impacts came from two sources. The first was from tribal casino operations (gaming, hotels, gift shops, restaurants, and related services). The second was the additional tribal government spending made possible because of support from tribal gaming operations. These direct economic impacts and their totals are shown in the first three rows of Table 7. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 22 Table 7: Economic Impacts of Tribal Gaming in Oregon in 2006 Economic Activity Economic Output Wages and Benefits Full- and Part-Time Jobs Direct Impacts Supported by Tribal Gaming Gaming & Hospitality Revenues $580,159,300 $193,950,900 5,190 Tribal Needs Supported by Casinos $123,427,400 $45,048,800 904 Direct Impacts $703,586,700 $238,999,700 6,094 Indirect & Induced Impacts on Oregon's Economy Natural Resources and Construction $59,425,500 $16,988,100 580 Manufacturing 75,820,200 11,441,800 258 Wholesale and Retail Trade 112,428,500 41,032,600 1,346 Services 292,072,600 112,329,500 4,421 Other 176,838,300 55,652,200 1,217 Indirect & Induced Impacts $716,585,100 $237,444,200 7,822 Total Impact of Casinos on Oregon's Economy $1,420,171,800 $476,443,900 13,916 Note: cOther d includes transportation; communication; utilities; finance, insurance and real estate; and government sectors . The bulk of the direct economic impacts came from the gaming and hospitality businesses of the nine tribes. These operations directly generated $580.2 million in total economic output, and $194.0 million in wages and benefits for 5,190 full- and part-time jobs in Oregon in 2006. Revenues from tribal gaming generated another $123.4 million in direct economic output as measured by the value of additional tribal government services. These tribal government services and programs required the work of 904 full- and part-time employees who received nearly $45.1 million in wages and benefits in 2006. Indirect and Induced Impacts There are strong linkages between spending by tribes and their casinos and economic activity in other sectors of the state economy because Oregon tribes are, by definition, local. Thus, they direct much of their spending to in-state suppliers that employ Oregon residents. In economic terms, this spending is the first round of indirect impacts. There will be additional rounds of indirect effects as businesses buy from one another. Added to these are the induced impacts that arise from the spending of wages and income. Together, these indirect and induced impacts spread the initial direct impacts to other sectors of the Oregon economy. When added together, the indirect and induced impacts are about as large as the original direct impacts. This is often described as a cmultiplier d effect, since the direct impacts cause multiple impacts as they flow through Oregon 9s economy. As can be seen in Table 7, the indirect and induced output associated with tribal gaming in 2006 was $716.6 million. This additional output stimulated an additional 7,822 jobs and $237.4 million in wages and benefits in Oregon. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 23 These indirect and induced impacts are spread throughout the state economy. The service sector 4Oregon 9s largest 4gained the most with $292.1 million in additional output, 4,421 more jobs, and $112.3 million in wages and benefits. Much of the earnings of tribal gaming and tribal government employees were spent on services that then supported the jobs of other Oregonians. Examples of such services include medical care, recreation, daycare, and car repairs. Thus, the service sector benefits considerably. Workers in the trade sector, which consists of wholesalers and retailers, depend non-directly on the casinos for 1,346 jobs and $41.0 million in wages and benefits. For example, in 2006, casinos made $23.1 million on wholesale food and beverage purchases just to keep their restaurants running. In addition, casinos spent $34.1 million on advertising and promotions. Overwhelmingly, this spending went to Oregon companies that, in turn, made additional purchases from other Oregon based businesses. Table 7 shows that cOther d sectors of Oregon 9s economy accounted for a large share (25.0 percent) of the indirect and induced output. Much of that was the result of the spending on housing by casino and tribal employees. It shows up as increased output in the banking and real estate industries, which are two of the largest cother d sectors. Workers in the western United States spend about 22 percent of their incomes on shelter. 15 Dollars from casinos flow directly into home purchases, apartment rents, and remodeling projects 4and ultimately into higher property taxes for local schools and communities. Multiplier Effects As noted, the total economic impacts of tribal gaming were much greater than the direct economic impacts alone. Economic multipliers are used to gauge the effect that a given amount of economic activity in one sector, such as tribal gaming, has on the rest of the economy. For any given direct impact, the larger the multiplier, the greater its total effect on the economy. The multiplier of greatest importance, especially in rural Oregon where so many casinos are located, is the jobs multiplier. Tribal gaming has a jobs multiplier of 2.28 in Oregon. This says that, on average, every job directly generated by tribal gaming supports another 1.28 jobs in other sectors of the state economy. 15 Western U.S. data from the US Bureau of Labor Statistics Consumer Expenditure Survey: http://www.bls.gov/cex/home.htm . 2006 Oregon Indian Gaming Analysis ECONorthwest Page 24 It is important to note that the 2006 multipliers across all impact categories 4 output, wages, and jobs 4are less than in 2005. This is not due to any significant changes in tribal spending patterns. In general, spending by the tribes directly impacted the same industry sectors, and increased modestly between 2005 and 2006. Moreover, this is not due to any changes in the modeling methodologies. For consistent impact measures over time, ECONorthwest has carefully followed the same modeling approach over the 2003 to 2006 time periods. The lower economic impact multipliers are due to the new 2006 IMPLAN model of the Oregon economy. This IMPLAN model shows that the indirect relationships among businesses are largely the same. However, the induced consumption spending by households has a smaller impact on the economy in the 2006 model than in 2005. ECONorthwest evaluated the model and concluded that the main reason for the smaller multipliers is the increased tendency for Oregon households to purchase goods and services from non-Oregon suppliers (imports). Imports represent a cleakage d from the Oregon economy. Because of this greater propensity to import in 2006, the induced impacts are lower and so too are the multipliers. Nevertheless, the multiplier process still exists to spread output, wage, and job impacts to other sectors of Oregon 9s economy. To help illustrate these multiplier effects, Figure 3 shows the impact of a hundred tribal gaming jobs. After applying the job multiplier, a total of 128 jobs are supported around the state of Oregon through indirect and induced impacts. As can be seen from Figure 3, these additional jobs are found in sectors many steps removed from tribal gaming, including construction and manufacturing. Figure 3: Indirect and Induced Job Impacts Felt in Oregon, by Sector, Resulting from 100 Tribal Gaming Jobs in 2006 2006 Oregon Indian Gaming Analysis ECONorthwest Page 25 Gaming results in similarly high multipliers for other measures. For example, the output multiplier is 2.02, which says that for every dollar of output directly generated by tribal gaming, another $1.02 of additional output results elsewhere in Oregon. The wage multiplier in 2006 is 1.99. That means for every dollar in wages and benefits directly paid for by tribal gaming operations in Oregon, another $0.99 in wages and benefits were supported in other sectors of the state economy. Tax Impacts Tribes are governments unto themselves. They earn revenues and then use them to pay for affordable housing projects, healthcare, education, police services, public works, road construction, administration, and social services. Some of this spending also directly benefits non-tribal members of the affected local communities through shared services for healthcare, recreation, and support for public schools. In addition, the contributions and donations made by tribal governments benefit all Oregonians. Casinos in Oregon are part of tribal governments, much as the Oregon Lottery is part of Oregon state government. Neither the Oregon Lottery nor the tribal casinos are subject to income and property taxes, but their cash flows are both used to support government services and public needs. In addition, many tribal governments do, in fact, pay state and local jurisdictions for services. The greatest fiscal impact of tribal gaming comes in the form of income taxes paid by casino and tribal government employees, tribal members, and all the workers and businesses that earn money in non-direct ways because of gaming. In 2006, tribal gaming generated approximately $23.2 million in Oregon personal and corporate income taxes and $42.3 million in federal income tax revenues. In total, almost $130.2 million in revenues to federal, state, and local governments in 2006 was attributable to the economic effects of the nine tribal casinos in the state. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 26 Table 8: Taxes and Other Government Revenues Attributable to Oregon Tribal Gaming in 2006 Jurisdiction/Source Tribal Gaming Impact State of Oregon State personal & corporate income tax $23,178,100 Other state taxes, fees & licenses 15,653,600 Total State Taxes $38,831,700 Local Governments in Oregon Local property taxes $13,317,100 Other local taxes, fees & licenses 4,653,600 Total Local Taxes $17,970,700 U.S. Federal Government Federal personal & corporate income tax $42,285,500 Excise & retirement taxes 31,093,900 Total Federal Taxes $73,379,400 Total All $130,181,800 Recent Trends Tribal gaming in Oregon is growing. Its growth has benefited tribal governments, which are able to increase services and support for members. The growth in gaming and the tribal services it supports have directly and indirectly helped the entire state economy. Gaming Operations According to data provided by the tribes, in 2006, visitation to the casinos increased approximately 17.0 percent, while the number of room nights sold increased 12.5 percent. Gaming revenues rose six percent. As in the Oregon market as a whole, occupancy and room rates were up, so lodging revenues at casinos also grew. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 27 Table 9: Comparison of Tribal Gaming Visitation, Revenues, and Expenditures 2003 3 2006 2003 2004 2005 2006 Visitation Casino 8,102,578 8,600,599 8,926,938 10,440,719 Hotels room nights 169,558 212,881 241,738 272,067 Revenues Gaming $384,192,000 $419,599,000 $459,689,000 $487,155,000 Food and Beverage 41,672,000 45,633,000 49,082,000 52,544,000 Hotel, Lodging and RV 14,783,000 18,254,000 21,021,000 24,774,000 Other 13,098,000 15,552,000 16,393,000 15,687,000 Total Revenues $453,745,000 $499,038,000 $546,185,000 $580,160,000 Major Expenditures Labor $162,935,000 $174,161,000 $185,588,000 $193,951,000 Operating and Other 127,528,000 128,761,000 149,733,000 162,096,000 -Donations and Contributions 7,713,000 8,088,000 9,079,000 9,698,000 -Fees/Contributions to S&L Govt 1,987,742 4,872,526 4,864,000 2,247,000 Construction/New Equipment 42,124,000 56,735,000 28,513,000 65,800,000 Support for Tribal Govts and Members $141,665,000 $168,826,000 $179,992,000 $202,004,000 Catering to the needs of more visitors resulted in higher spending by the casinos. Labor costs grew by $8.3 million. Other operating costs, especially on utilities, entertainment, and maintenance, jumped nearly $12.4 million over the preceding year. Tribes have continued making significant contributions to Oregon charities and non-profits. In 2006, donations and contributions reached another record high of $9,698,000 about a $619,000 more than in 2005. Capital spending on construction, new equipment, and other fixed assets increased significantly in 2006, from $28.5 million in 2005 to $65.8 million in 2006. As predicted in our 2005 impact study, the construction slowdown that occurred in 2005 was short-lived. Indeed, seven of the nine casinos had major multi-million dollar expansions and improvements projects underway in 2006. Since the first bingo hall opened in 1992, the nine Indian tribes of Oregon have invested $510 million on hotels, casinos, and other tourism amenities. The tribes paid for these investments on their own, and by borrowing money at considerable risk and cost. Overall, these investments equal 19 percent of all the spending on the construction of lodging, amusement, social, and recreation facilities in Oregon between 1992 and 2006. 16 16 Based on construction project data from F.W. Dodge. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 28 Tribal Services Increases in gaming visitors and revenues have meant more financial resources for tribal government activities. In 2006, approximately $202 million in gaming revenues went to support tribal government and members up $20.0 million from the previous year. The money has gone to build or improve health clinics, housing, youth and cultural centers; pay down debt; provide medical and job training services; pay for education programs ranging from Head Start classes to college scholarships; and increase the standard of living for tribal members. Oregon tribal governments are planning more construction, infrastructure improvements, economic development projects, and spending on social programs. All of this will enhance the economic capacity of the communities, tribal members, and affected employees and their families for years to come. Much of this spending, however, is dependent on the success of the tribes 9 major economic development program 4tribal gaming. Economic Impact Trends Between 2003 and 2006, the continuing success of tribal gaming translated into steadily growing direct impacts on Oregon 9s economy. For reasons discussed earlier in this section, the induced impacts declined modestly in 2006 due to general structural changes in the economy, but were still significant. Table 10 shows the direct and total economic impacts associated with tribal gaming between 2003 and 2006. Table 10: Comparison of Economic Impacts, 2003 3 2006 Impacts 2003 2004 2005 2006 Direct Output $563,671,000 $619,269,000 $674,785,000 $703,586,700 Wages and Benefits $192,388,200 $215,834,000 $227,015,000 $238,999,700 Jobs 5,328 5,699 5,939 6,094 Total Output $1,026,921,000 $1,326,931,000 $1,474,701,000 $1,420,171,800 Wages and Benefits $348,874,000 $470,454,000 $509,407,000 $476,443,900 Jobs 10,968 14,534 15,221 13,916 In total, tribal gaming directly and non-directly generated almost $1.420 billion in economic activity in 2006 down less than four percent from 2005 but over 38 percent greater than in 2003. In addition, $476.4 million in wages and benefits can be traced to tribal gaming in 2006 a slight decrease from 2005 but an increase of $127.6 million from 2003. The number of jobs affected increased from 10,968 in 2003 to 13,916 in 2006. 2006 Oregon Indian Gaming Analysis ECONorthwest Page 29 Fiscal Impact Trends As shown in Table 11, the economic impacts associated with tribal gaming generated additional federal, state, and local government revenues. In 2006, tribal gaming was associated with approximately $130.2 million in revenues for local, state, and federal taxing jurisdictions. This is less than in 2005, but over the entire 2003 32006 time period, the economic activity generated by tribal gaming is directly or indirectly tied to almost $493.8 million in tax and other government revenues. Table 11: Comparison of Fiscal Impacts, 2003 3 2005 Fiscal Impacts (Taxes & Other Revenues) 2003 2004 2005 2006 State of Oregon $25,611,700 $34,487,100 $41,155,000 $38,831,700 Local governments in Oregon 17,013,900 19,293,900 22,036,900 $17,970,700 Federal government 58,289,400 68,693,700 77,072,700 $73,379,400 Total $100,915,000 $122,474,700 $140,264,600 $130,181,800 2006 Oregon Indian Gaming Analysis ECONorthwest Page 30 Section IV Gaming Market in 2006 The gaming market is measured in terms of revenues, which is approximately the difference between how much people wager and what they collect in prizes at lotteries, casinos, racetracks, and elsewhere. A detailed explanation of how gaming revenues are measured and the different types of gaming in Oregon can be found in Appendix A, which begins on page 47. For this analysis, the size of the gaming market in Oregon was determined by assembling data from lotteries, state agencies, federal government sources, tribes, and surveys. Because many Oregonians go across state borders to gamble, data was collected for Washington and Nevada. Proprietary economic models were also used. The size of the market in Oregon is measured in two different ways depending upon how the data are to be used. They are: (1) Gaming done in Oregon by residents and visitors to the state, and (2) Gaming by residents of Oregon regardless of whether it was done. Gaming Revenues in 2006 Table 12 shows 2006 gaming revenues by both measures. The first, g

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