United States General Accounting Office

GAO Report to the Chairman, Committee on

Ways and Means, House of

Representatives

May 1997 TAX POLICY

A Profile of the Indian

Gaming Industry

GAO/GGD-97-91

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-275479 

May 5, 1997

The Honorable Bill Archer

Chairman, Committee on Ways and Means

House of Representatives

Dear Mr. Chairman:

Indian gaming activities and the revenues generated from them have

grown substantially since the late 1980s. Recognizing this, Congress, as

part of its deliberations on the Seven-Year Balanced Budget Reconciliation

Act of 1995, debated taxing the income earned from gaming activities by

Indian tribes and also by some tax-exempt organizations. Since the debate,

you have asked us to provide you with information on the Indian gaming

industry.

This report is a follow-up to the preliminary data we provided you in

August 1996.1

 In this report, our objectives are to provide you with (1) an

updated profile of the Indian gaming industry, (2) information on the

amount of transfers to the tribes from their gaming facilities, (3) a

comparison of Indian gaming revenues with the revenues generated by

other legalized gaming activities, and (4) a summary of the federal tax

treatment of Indian tribes and tribe members.

Background In the late 1970s, Indian tribes began authorizing or conducting various

types of gaming activity with only tribal oversight. In 1987, the Supreme

Court confirmed that Indian tribes had authority to operate gaming

establishments on their trust lands without having to comply with state

laws and regulations.2

 To resolve outstanding issues between tribes and

states and to provide oversight, Congress passed the Indian Gaming

Regulatory Act of 1988 (IGRA).3

IGRA established the following three classes of gaming to be regulated by a

combination of the tribal governments, state governments, Bureau of

Indian Affairs (BIA)—an agency of the Department of the Interior, and

National Indian Gaming Commission (NIGC).

1

See Profile of Indian Gaming (GAO/GGD-96-148R, Aug. 20, 1996).

2

California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987).

3

See 25 U.S.C. sections 2701-2721.

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• Class I gaming consists of social gaming for nominal prizes or ceremonial

gaming. It is regulated solely by the tribe, and no financial reporting to

other authorities is required.

• Class II gaming includes bingo, pull-tabs, and punch-boards. Tribes can

conduct only class II games that are legal under state law, and these games

are regulated by the tribes and NIGC.

• Class III gaming consists of all other forms of gaming, including casino

games, slot machines, and pari-mutuel betting.4

 Class III games are

regulated as indicated below.

Tribes are required to obtain state, NIGC, and Department of Interior

approval to establish and operate class III gaming facilities. IGRA requires

that tribes and states negotiate a tribal-state compact to balance the

interests of both the state and the tribe. The Secretary of the Interior is

authorized to approve any tribal-state compact and has delegated this

authority to the Assistant Secretary—Indian Affairs, who is responsible for

BIA. All class II and III gaming operations on Indian lands are required to

submit copies of their annual financial statement audits to NIGC.

5

The tribal-state compact is an agreement that may include provisions

concerning standards for the operation and maintenance of the gaming

facility, the application of laws and regulations of the tribe or the state that

are related to the licensing and regulation of the gaming activity, and the

assessment by the state of amounts necessary to defray the costs of

regulating the gaming activity.

IGRA specifies that the tribal ordinance concerning the conduct of class II

or III gaming on Indian lands within the tribe’s jurisdiction must provide

that the net revenues from any tribal gaming are not to be used for

purposes other than to (1) fund tribal government operations or programs,

(2) provide for the general welfare of the Indian tribe and its members,

(3) promote tribal economic development, (4) donate to charitable

organizations, or (5) help fund operations of local government agencies.

Tribes may distribute a portion of their net revenues directly to tribal

members, provided that the tribes have a revenue allocation plan approved

by BIA. This plan is to describe how tribes intend to allocate net revenues

among various governmental, educational, and charitable projects,

including direct payments to tribal members.

4

Pari-mutuel betting is generally considered to include on-track, off-track, and inter-track betting on

horse racing, dog racing, and jai-alai.

5

See 25 C.F.R. section 571.13 and 25 U.S.C. section 2710(b)(2)(C) (1996).

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Results in Brief As of December 31, 1996, 184 tribes were operating 281 gaming facilities.

For 178 of these facilities, operated by 126 tribes, we obtained and

examined 1995 financial statements.6

 These 178 facilities reported

generating gaming revenues (dollars wagered minus payouts) of about

$4.5 billion, with 8 of them accounting for about 40 percent of these

revenues. The gaming facilities also reported generating over $300 million

in revenues from sales such as food, beverages, and hotel rooms. Net

income (total revenues minus expenses) reported for the 178 facilities was

about $1.9 billion, representing 38 percent of the $4.9 billion total

revenues.

According to the financial statements, about $1.6 billion was transferred to

106 tribes in 1995.7

 Of this $1.6 billion, more than 50 percent went to 10

tribes. For 20 tribes, the financial statements did not show any transfers.

None of the financial statements indicated how the transfers were used by

the tribes.

Gaming revenues generated by all class II and class III Indian facilities for

which we had financial statements equaled at least 10 percent of the

estimated gaming revenues generated by legalized gaming (including

casinos, lotteries, pari-mutuel betting, and others) reported by the gaming

industry in 1995.

We compared class III Indian facility revenues with reported revenues

from Atlantic City and Nevada casinos. In the aggregate, 109 class III

Indian facilities generated about the same total amount in gaming

revenues as the 12 Atlantic City casinos and more than half the gaming

revenues of the 213 Nevada casinos. Average gaming revenues for these

Indian facilities were significantly less than those of Atlantic City casinos

but about equal to the average for the Nevada casinos. In terms of the

distribution of gaming revenues among the facilities, class III Indian

facilities were similar to Nevada casinos—a small proportion of the

facilities accounted for a large share of the aggregate gaming revenues. By

contrast, the gaming revenues of the 12 Atlantic City casinos were more

equally distributed.

6

Some facilities were not included in our analyses because they were new and financial statements

were not yet required; the financial statements submitted were incomplete; or the financial statements

were not filed as of the date we completed our data collection. (See app. I.)

7

In addition to transfers, some tribes received a total of $91 million from the gaming facilities for items

such as taxes and fees, rent and other charges, and cost reimbursements, which are not included in the

$1.6 billion.

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In addition, our analyses revealed that the largest class III Indian facilities

generated higher operating income (income from gaming and other normal

operations, such as concessions) as a percentage of total revenues than

the largest Nevada and all Atlantic City casinos. According to industry

experts, this difference is partly due to the fact that these Nevada and

Atlantic City casinos have competition in close proximity and are subject

to various state taxes and costs that were not generally incurred by these

Indian facilities.

IRS has determined that Indian tribes are not subject to federal income tax

because they are political agencies not included within the meaning of the

income tax provisions of the Internal Revenue Code. Thus, revenues

generated from gaming operations of federally recognized Indian tribes are

not taxable. Indian tribes are not, however, tax-exempt organizations

within the meaning of provisions of the Code that exempt certain

categories of organizations from income tax. Individual tribe members are

subject to federal income tax. Payments of net revenues from gaming

operations to members of Indian tribes are generally taxable, and the tribe

is responsible for withholding income taxes from the payments.

Scope and

Methodology

We determined the number of tribes with gaming facilities by reviewing

documents provided by NIGC, which identified all tribes with gaming

operations as of December 31, 1996. To perform our analyses on revenues,

costs and expenses, and net income, for example, we obtained 1995

financial statements that were submitted to NIGC as of November 22, 1996.

The sample of facilities included in our report consists of the 178 gaming

facilities represented by these financial statements. The sample is not

representative of the universe of all Indian gaming facilities. Some

facilities were not included in our analyses because they were new and not

yet required to file financial statements, the financial statements submitted

were incomplete, or the financial statements were not filed as of the date

we completed our data collection (see app. I). We used Audit and

Accounting Guide: Audits of Casinos, published by the American Institute

of Certified Public Accountants, and spoke with industry experts for

guidance in deciding what data to extract from the financial statements

and what analyses to perform on these data.

We also used the financial statements to determine the amount of

transfers to the tribes. The transfers as described in this report represent

the amounts in the financial statements allocated to the “tribes.” The

amounts could have been received by the tribal government or tribal

Page 4 GAO/GGD-97-91 Indian Gaming Industry
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members, but we were not able to determine this because the financial

statements did not indicate how the transfers were used or who received

them.

To compare Indian gaming with other legalized gaming activities, we used

data reported in International Gaming and Wagering Business and

financial statement data submitted to the Nevada and Atlantic City gaming

commissions.8

To describe the legal issues regarding the taxation of Indian gaming

revenues, we reviewed relevant sections of the Internal Revenue Code and

the IRS and Department of the Treasury rulings and regulations pertaining

to the taxation of Indian tribes. We also interviewed officials from

Treasury, IRS, and BIA. (See app. I for more details on our scope and

methodology.)

We conducted our review from October 1996 through March 1997 in

accordance with generally accepted government auditing standards. We

obtained comments on a draft of this report from the Internal Revenue

Service, the Department of the Interior, and the Chair of NIGC. These

comments are discussed at the end of this letter.

Profile of the Indian

Gaming Industry

As shown in figure 1, Indian gaming revenues have grown significantly

since 1988 when IGRA was enacted. IGRA provided the regulatory

framework for tribes to establish and operate gaming facilities.

8

International Gaming and Wagering Business is a trade publication that annually publishes estimates

prepared by Christiansen/Cummings Associates, Inc., on the amounts of money wagered and spent on

each type of legal gambling activity in the United States.

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Figure 1: Indian Gaming Revenues,

1985-95

0

1,000

2,000

3,000

4,000

5,000

Year

Constant dollars (dollars in millions)

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

125 139 148 156

369

570

806

1,628

2,842

3,514

4,547

Note: Conversion to 1995 constant dollars used the Consumer Price Index.

Source: International Gaming and Wagering Business, selected issues between 1985 and 1995;

and GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

More Than Half of

Continental U.S. Tribes

Operated Gaming Facilities

According to information provided by NIGC, 184 of the 555 Indian tribes

officially recognized by the United States were operating a total of 281

gaming facilities as of December 31, 1996. Of the 184 tribes, 182 were in

the continental United States, representing 55 percent of all continental

U.S. tribes (329). The remaining two tribes were in Alaska. According to

Page 6 GAO/GGD-97-91 Indian Gaming Industry
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NIGC, the 226 tribes in Alaska are generally too remote or too small to

operate gaming facilities.9

An additional 32 tribes had been authorized to operate gaming facilities

but had not opened any as of December 31, 1996, according to NIGC

information. (See fig. 2 for the distribution of Indian gaming facilities in

operation.)

9

Additionally, it is unclear whether certain lands set aside for Alaska natives under the Alaska Native

Claims Settlement Act meet the IGRA definition of Indian lands on which gaming may be conducted.

(See 43 U.S.C. 1601 et seq.)

Page 7 GAO/GGD-97-91 Indian Gaming Industry
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Figure 2: Distribution of Indian Gaming Facilities

CALIFORNIA

IDAHO

OREGON

WASHINGTON

MONTANA

WYOMING

UTAH

COLORADO

ARIZONA

NEW MEXICO

TEXAS

OKLAHOMA

KANSAS

NEBRASKA

SOUTH DAKOTA

NORTH DAKOTA MINNESOTA

WISCONSIN

IOWA

ILLINOIS

OHIO

IN

KENTUCKY

WV

VIRGINIA

NO. CAROLINA

GEORGIA

FL

ALABAMA

MS

ARKANSAS

LA

NEVADA

MICHIGAN

PENNSYLVANIA

NJ

NEW YORK

VT

NH

MAINE

TENNESSEE

CAROLINA

SO.

DC

(17)

(22)

(2)

(3)

(3)

(17)

(23)

(1)

(6)

(3) (2)

(5)

(7)

(8)

(10)

(20)

(19)

(3)

(1)

(5)

(3)

(12)

(36)

(1)

(1) (17)

CA

ID

OR

WA

MT

WY

UTAH CO

AZ NM

TX

OK

KS

NE

SD

ND MN

WI

IA

ILLINOIS

OHIO

IN

KENTUCKY

WV

VIRGINIA

NC

GEORGIA

FL

MS AL

ARKANSAS

LA

NV

MI

PENNSYLVANIA

NJ

NY

CT

TENNESSEE

CAROLINA

SO.

DE

DC

(16)

(41)

(2)

(2)

(7)

(3)

(3)

(25)

(1)

(6)

(1)

(4)

(4)

(7) (6)

(20)

(28)

(19)

(2)

(1)

(6)

(3)

(13) (36)

(1)

(1) (21)

CT (2)

(2)

AK

Note 1: Map does not show those operations that were closed by December 31, 1996.

Note 2: This information may not agree with NIGC’s records because of differences in

methodologies used to identify and count facilities.

Source: GAO analysis of NIGC’s list of gaming facilities as of December 31, 1996.

Revenues From Indian

Gaming Facilities

Exceeded $4 Billion

From our analyses of the 178 gaming facilities’ financial statements, we

found that reported gaming revenues were about $4.5 billion and revenues

from other activities, such as food, beverages, and hotel rooms, were over

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$300 million (see table 1). Median gaming revenues for class II facilities

were about $2.5 million and for class III, about $12.7 million.10

Total net income was about $1.9 billion, with a median of $0.6 million for

class II and $4.9 million for class III facilities. About 90 percent of the

facilities generated net income, and about 10 percent generated net losses.

Most of the facilities were class III, and they accounted for a large majority

of all gaming revenues, total revenues, and net income.

Table 1: 1995 Revenues, Costs and Expenses, and Net Income for Class II and III Indian Gaming Facilities

Dollars in millions

Percentage of total

Income statement item

Class II

(N=66)a

Class III

(N=112)a

Total

(N=178)a Class II Class III Total

Revenue

Gaming $568 $3,979 $4,547 12% 88% 100%

Otherb 35 306 341 10 90 100

Total 603 4,285 4,888 12 88 100

Costs and expenses 367 2,644 3,011 12 88 100

Net income 236 1,641 1,877 13 87 100

aThe “N” represents number of facilities.

bOther revenues include, for example, revenues from food, beverages, hotel rooms, and interest.

Source: GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

About 40 percent of all gaming revenues were generated by eight of the

class III gaming facilities. Figure 3 shows the distribution of gaming

revenues for the 66 class II Indian facilities represented in our analysis.

More than half of all class II gaming revenues were generated by eight

facilities with gaming revenues of at least $20 million.

10See appendix I for methodology used to account for class II and class III facilities.

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Figure 3: Distribution of Class II

Facilities’ Gaming Revenues

0

100

200

300

400

500

600

Gaming revenues (dollars in millions)

$119.6 $119.4

$328.9

Range of gaming revenues

N = 50 N = 8 N = 8

< $10M > $10M and < $20M > $20M

Note: The “N” represents the number of facilities.

Source: GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

Figure 4 shows the distribution of gaming revenues for the 112 class III

Indian facilities represented in our analysis. Almost half of the gaming

revenues were generated by eight facilities with gaming revenues of at

least $100 million each.

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Figure 4: Distribution of Class III

Facilities’ Gaming Revenues

0

1,000

2,000

3,000

4,000

Gaming revenues (dollars in millions)

$217

$1,849.1

$755.1

$447.7

$710.2

Range of gaming revenues

N = 41 N = 8 N = 32 N = 21 N =10

< $10M $10M and

< $20M

> $20M and

< $50M

> $50M and

< $100M

> > $100M

Note: The “N” represents the number of facilities.

Source: GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

Net Income Accounted for

38 Percent of Total

Reported Revenues

In total, net income of Indian gaming facilities (class II and III) was about

38 percent of total reported revenues. Net income as a percent of total

revenues was about the same for class II and class III facilities (see fig. 5).11

11Figures 5 and 6 are based on total revenues, because net income includes more than gaming

revenues.

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Figure 5: Costs and Expenses and Net Income Margins

38% 62%

Costs and

expenses

Net income

N = 66 gaming facilities N = 112 gaming facilities

39% 61%

Costs and

expenses

Net income

Class II facilities Class III facilities

Source: GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

In addition, the net income of about half of the Indian gaming facilities

was at least 30 percent of their total revenues (see fig. 6).

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Figure 6: Facilities and Net Income

Margins

0

20

40

60

80

100

120

140

160

180

45

36

97

Net income margin

Number of facilities

< 20% > 20% and <30% > 30%

Source: GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

Most Tribes Received

Transfers From Gaming

Facilities

Of the 126 tribes included in our analysis, 106 reported receiving about

$1.6 billion in transfers from their gaming facilities, as shown in figure 7.

These 106 tribes operated 149 gaming facilities.12 Ten of the tribes

reported receiving transfers of at least $50 million each and accounted for

more than half of the total transferred. The financial statements of 20 of

the 126 tribes did not show transfers from their gaming facilities.

12In addition to transfers, some tribes received a total of $91 million from the gaming facilities for such

items as taxes and fees, rent and other charges, and cost reimbursements, which are not included in

the $1.6 billion.

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Figure 7: Distribution of Funds

Reportedly Transferred to 106 Tribes

0

200

400

600

800

1,000

1,200

1,400

1,600

Dollars transferred (in millions)

$197

$900

N = 73 N = 14 N = 9

$203

$286

Range of dollars transferred

N = 10

<$10M > $10M and <$20M > $20M and <$50M > $50M

Note: The “N” represents the number of tribes.

Source: GAO analysis of 1995 financial statements that were filed with NIGC as of November 22,

1996.

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Comparison of Indian

Gaming With Other

U.S. Legalized Gaming

Indian Gaming Revenues

Represented at Least 10

Percent of the U.S. Market

in 1995

Table 2 shows that Indian gaming revenues (class II and III) were at least

10 percent of the revenues estimated to have been generated by legal

gaming in 1995 and compares Indian gaming to other legalized gaming.

Because our sample of financial statements did not cover all existing

Indian facilities, the 10 percent market share could be higher.

Table 2: Gaming Revenue Market

Shares, 1995 Type of gaming Percentage of total

Casinos (does not include Indian) 40%

Lotteries 34

Indian gaming (class II and III) 10

Pari-mutuels 8

Charitable games 3

Charitable bingo 2

Card rooms and bookmaking 2

Totala 100

aTotal does not sum to 100 because of rounding.

Source: The percentage of Indian gaming was based on GAO’s analysis of class II and III 1995

financial statements that were filed with NIGC as of November 22, 1996. The percentages of other

legalized gaming were calculated from estimates reported in International Gaming and Wagering

Business, Vol. 17, No. 8, August 1996.

Table 3 gives a breakdown of the casino segment of the gaming industry,

including class III Indian gaming.

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Table 3: Casino Gaming Revenue

Shares, 1995 Casinos Percentage of total

Nevada/New Jersey slot machines 32%

Riverboats 21

Indian gaming (class III) 18

Nevada/New Jersey table games 18

Noncasino devices 6

Other land-based casinos 2

Deepwater cruise ships 1

Cruises-to-nowhere 1

Other commercial gambling 1

Total 100

Source: The percentage of Indian gaming was based on GAO’s analysis of class III 1995 financial

statements that were filed with NIGC as of November 22, 1996. The percentages of casino

gaming were calculated from estimates reported in International Gaming and Wagering Business,

Vol. 17, No. 8, August 1996.

Class III Indian Gaming

and Nevada and Atlantic

City Casinos

In total, gaming revenues generated by class III Indian facilities and

Atlantic City casinos in 1995 were similar, as shown in table 4. In addition,

the average gaming revenues generated by class III Indian facilities and

Nevada casinos were similar. The comparisons are for facilities and

casinos with at least $1 million in gaming revenues because that was how

data were reported for Nevada.

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Table 4: Reported Indian, Nevada, and Atlantic City Gaming Revenues, 1995a

Dollars in thousands

Income statement item Indian class III Nevada Atlantic City

Gaming revenues $3,976,892 $7,030,994 $3,627,820

Other revenuesb 290,210 4,016,239 350,812

Total revenuesc $4,267,102 $11,047,234 3,978,632

Gaming revenues as a percentage of total 93 64 91

Average gaming revenues $36,485 $33,009 $302,318

Number of facilities 109 213 12

aFor facilities and casinos with $1 million and more in gaming revenues.

bOther revenues include, for example, revenues from food, beverages, and hotel rooms; interest

was excluded.

cTotal may not sum because of rounding.

Source: GAO analysis of class III 1995 financial statements that were filed with NIGC as of

November 22, 1996; Nevada Gaming Abstract, December 1995, with financial data as of June 30,

1995; and financial statement analyses prepared by the New Jersey Casino Control Commission,

March 7, 1996, for financial data as of June 30, 1995.

A small proportion of both class III Indian facilities and Nevada casinos

generated significant amounts in gaming revenues and accounted for a

large share of their respective aggregate gaming revenues (see fig. 8).

Specifically, 13 percent of Indian class III facilities generated 59 percent of

the Indian gaming revenues. Atlantic City casinos are not shown because

their gaming revenues were more equally distributed. For example,

50 percent of the casinos generated about 59 percent of the gaming

revenues.

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Figure 8: Reported Class III Indian

Facilities and Nevada Casinos With

Gaming Revenues of $72 Million and

More

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20

40

60

80

100

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Percent of total facilities/gaming revenues

Legend

AAAA AAAA

AAAA

Indian

Nevada

Facilities Gaming revenues

13%

9%

44%

59%

Note: The Nevada casinos in this analysis are limited to those casinos reported by the Nevada

Gaming Abstract as generating gaming revenues of $72 million and more. Nevada may have

other casinos with gaming revenues of $72 million and more, but because of limitations in the way

the data were reported, we were not able to determine such casinos.

Source: GAO analysis of class III 1995 financial statements that were filed with NIGC as of

November 22, 1996; and Nevada Gaming Abstract, December 1995, with financial data as of

June 30, 1995.

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Operating Income as a

Percentage of Total

Revenues of Large Class III

Indian Facilities Was

Almost Twice That of

Large Nevada and Atlantic

City Casinos

Operating income as a percentage of total revenues for large class III

Indian facilities was almost twice as much as that of large Nevada and

Atlantic City casinos. Table 5 shows the results of our analysis of

operating income for class III Indian facilities and for Nevada and Atlantic

City casinos with gaming revenues of $72 million and more.13 Operating

income is a common measure used by industry experts to analyze and

compare the profitability of businesses. It discounts the effects of capital

structure and other nonoperating incomes and expenses that are not

directly related to the performance of the business operations. (See the

glossary for further details.)

Table 5: Reported Operating Income of Facilities and Casinos With Gaming Revenues of $72 Million and More, 1995

Dollars in millions

Percentage of total revenues

Income statement item

Class III

(N=14)a

Nevada

(N=19)a,b

Atlantic City

(N=12)a Class III Nevada Atlantic City

Revenue

Gaming $2,354 $3,086 $3,628 94% 58% 91%

Otherc 141 2,250 351 6 42 9

Totald 2,496 5,336 3,979 100 100 100

Costs and expenses 1,307 4,196 2,996 52 79 75

Operating income 1,189 1,141 982 48 21 25

aThe “N” represents number of facilities.

bThe Nevada casinos in this analysis are limited to those casinos reported by the Nevada Gaming

Abstract as generating gaming revenues of $72 million and more. Nevada may have other

casinos with gaming revenues of $72 million and more, but because of limitations in the way the

data were reported, we were not able to determine such casinos.

cOther revenues include, for example, revenues from food, beverages, and hotel rooms; interest

was excluded.

dTotals may not sum because of rounding.

Source: GAO analysis of class III 1995 financial statements that were filed with NIGC as of

November 22, 1996; Nevada Gaming Abstract, December 1995, with financial data as of June 30,

1995; and financial statement analyses prepared by the New Jersey Casino Control Commission,

March 7, 1996, for financial data as of June 30, 1995.

According to industry experts, the difference in operating income margin

(operating income as a percentage of total revenues) between these 14

class III facilities and these Nevada and Atlantic City casinos is explained,

13To make reasonable comparisons of operating income among class III Indian facilities and Nevada

and Atlantic City casinos, we included only those facilities reported as generating $72 million or more

in gaming revenues. The highest category included in the Nevada Gaming Abstract was gaming

revenues of $72 million and more, and all Atlantic City casinos generated more than $72 million in

gaming revenues.

Page 19 GAO/GGD-97-91 Indian Gaming Industry
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in part, by the different operational environments of the facilities.

Specifically, the operating income shown in table 5 for Nevada and

Atlantic City casinos was reduced by expenses that were not generally

incurred at these Indian facilities, such as state gaming taxes and other

state requirements. For example, Atlantic City casinos are subject to an

8-percent tax on their gaming revenues. Further, these Nevada and

Atlantic City casinos have more competition in close proximity than the 14

class III Indian facilities.

Another possible explanation for the differences in operating income was

the nature of the tribes’ relationships with their gaming facilities: Some

tribes provided goods and services to the gaming facilities free of charge

or at a low cost, which would have reduced their operating expenses.

Federal Tax

Treatment of Indians

and Indian Tribes

Overview Although no statutory provision exempts Indian tribes from income

taxation, IRS has concluded that federally recognized Indian tribes and

their federally chartered corporations are not subject to federal income

tax.14 With respect to tribes, IRS based its conclusion on the determination

that the tribes are political agencies that Congress did not intend to

include within the meaning of the income tax provisions of the Internal

Revenue Code. Indian tribes are not, however, tax-exempt organizations

within the meaning of the provisions of the Code that exempt certain

categories of organizations from income tax. With respect to the tribes’

federally chartered corporations, IRS takes the view that no taxable entity

separate from the tribes exists. IRS has also found that individual tribe

members are U.S. citizens and are subject to federal income tax unless a

specific exemption can be found in a treaty or statute.

IRS has found, however, that Indian tribal governments have no inherent

exemption from federal excise taxes and, absent a specific statutory

exemption, must purchase taxable articles or services on a tax-paid basis

and must pay tax on their sale or use of taxable articles or services.

14Four revenue rulings address the federal income tax status of Indian tribal governments. See Rev.

Rul. 67-284, 1967-2 C.B. 55; Rev. Rul. 81-295, 1981-2 C.B. 15; Rev. Rul. 94-16, 1994-1 C.B. 19; and Rev.

Rul. 94-65, 1994-2 C.B. 14. A revenue ruling is an official interpretation by IRS that indicates its official

policy on an issue or a line of reasoning.

Page 20 GAO/GGD-97-91 Indian Gaming Industry
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Section 7871 of the Code, enacted in 1982, provides an exemption from

certain excise taxes. In addition, Indian tribes that are employers must pay

federal employment taxes on wages paid to employees.

A provision included as part of the House-passed Seven-Year Balanced

Budget Reconciliation Act of 1995 would have made the tribes subject,

under section 511(a) of the Code, to the unrelated business income tax on

revenues from class II and class III gaming.15 The unrelated business

income tax currently applies to the income from the business activities of

tax-exempt organizations that are not substantially related to the

organizations’ exempt function. The proposed tax would have been the

first explicit federal income tax applied to an Indian tribe.16 A

memorandum prepared by the Congressional Research Service, dated

October 10, 1995, concluded that the proposal did not seem to be invalid

on any constitutional ground.17

Historical Perspective Before enactment of the Indian Reorganization Act of 1934 (IRA),

congressional policy had been directed toward the assimilation of Indian

tribes and the allotment of Indian lands to individual tribe members.18 IRA

ended the practice of allotment as it applied to tribally owned lands.19 The

15H.R. 2491, 104th Cong., section 13631 (1995). The provision was dropped in conference; see H.R.

Conf. Rep. No. 104-350 at 141 Cong. Rec. H12841, 12874.

16See, however, section 7871(a)(5) of the Code, which provides that an Indian tribal government shall

be treated as a state for purposes of section 511(a)(2)(B), which applies the unrelated business income

tax to colleges and universities owned or operated by state governments.

17The memorandum also concluded that taxing tribal gaming proceeds, despite the fact that state

lottery revenues are untaxed, does not implicate any constitutional right that the tribes have to being

treated on a par with states. The memorandum noted that because of the long history of treaty-making

with Indian tribes, there is the possibility that an individual tribe may be able to invoke particular

provisions of a treaty or statute and convince the federal courts that these provisions insulated the

tribe against such a tax. The memorandum cautioned that a court looking at such an issue would not

be likely to set aside general tax legislation as unconstitutional, but would consider whether

abrogating the particular treaty implicated a vested property interest to which there is a right to

compensation. The memorandum concluded, however, that the prospect of such a treaty provision

seems very unlikely.

In legal memoranda commissioned by the Mashantucket Pequot Tribe, a contrary view has been

expressed. These include a memorandum prepared by Douglas Endreson, Sonosky, Chambers, Sachse

& Endreson, Oct. 26, 1995, 95 TNT 233-40. The memorandum concludes that the proposed tax would

be unconstitutional. The memorandum also maintains that the tax would abrogate certain

treaty-protected rights to self-government.

18Act of June 18, 1934, ch. 576, 48 Stat. 984 (codified as amended at 25 U.S.C. 461 et seq.).

19David Getches, Charles F. Wilkinson, and Robert A. Williams, Federal Indian Law (St. Paul, Minn.:

West Publishing Company, 1993), p. 216.

Page 21 GAO/GGD-97-91 Indian Gaming Industry
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act was designed to further tribal self-government by providing for tribal

organization.

IRA section 16 provided that any tribe may adopt a constitution and bylaws,

and it established a procedure for ratification by tribal members and

approval by the Secretary of the Interior.20 Section 16 also provided that

the constitution adopted by the tribe vested certain rights and powers in

the tribe, including the right to prevent the sale and disposition of tribal

lands and the right to negotiate with federal, state, and local governments.

Section 17 provided for the formation of a business corporation and

established procedures for petition and ratification.21 Thus, IRA allowed for

a dual mechanism by which the governmental affairs of an Indian tribe are

conducted under a constitution and bylaws adopted under IRA section 16

and the commercial matters are handled by a business corporation

organized under section 17.

IRA section 16 provided that “In addition to all powers vested in any Indian

tribe by existing law, the constitution shall also vest in such tribe or its

tribal council [a list of powers].” An early opinion of the Solicitor for the

Department of the Interior considered the issue of what powers are

incorporated in the constitution and bylaws of an Indian tribe by this

reference to “powers vested in any Indian tribe or tribal council.”22 The

opinion concluded that the vested powers are those powers of local

self-government that have never been terminated by law or waived by

treaty, including the power to: (1) adopt a form of government, create

offices, and prescribe the duties thereof; (2) regulate the domestic

relations of tribal members; (3) levy dues, fees, or taxes upon tribal

members; and (4) regulate the use and disposition of all property within

the jurisdiction of the tribe.

The opinion noted that the list was based on general legislation and

judicial decisions of general application and was subject to modification

with respect to particular tribes, in light of particular powers granted or

particular restrictions imposed by special legislation.

2025 U.S.C. 476 (1996).

2125 U.S.C. 477 (1996).

22Opinion dated Oct. 25, 1934, Decisions of the Department of the Interior, Vol. 55, p. 14, cited in GCM

26556.

Page 22 GAO/GGD-97-91 Indian Gaming Industry
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In an early General Counsel Memorandum, IRS found that these

conclusions were

“a striking indication on the part of Congress and the executive department of the

Government charged with administering various Indian laws that Indian tribes as such have

been recognized as political agencies and have never lost their inherent powers of limited

sovereignty . . . [and that] an Indian tribe, as such, is not a taxable entity within the purview

of the income tax provisions of the Internal Revenue Code.”23

This principle forms the basis for the IRS policy on the income tax status of

Indian tribes, as set forth in the series of revenue rulings. IRS has

determined, however, that although Indian tribes are governments, they

are not political subdivisions of the United States, individual states, or

territories for purposes of the Code provisions that apply special tax

treatment to these governmental units. These include the state exemptions

from excise taxes, the income tax exemption for interest on municipal

bonds, and the deduction of charitable contributions to governmental

units for estate tax purposes.24 In 1982, Congress enacted the Indian Tribal

Tax Status Act (Tribal Tax Act), treating tribal governments as states for a

number of specified tax provisions, including provisions relating to

tax-exempt bonds, charitable contribution deductions, and certain excise

tax provisions.25 The treatment is generally available in transactions in

which tribes exercise essential governmental functions.

Summary of Taxation of

Indian Business Activities

The following sections outline the federal income tax treatment that

applies to the various structures that generally can be used by tribes to

carry out business activities. IGRA provides that unless a tribe elects to

license individual owners, the tribe must have the sole proprietary interest

and responsibility for the conduct of the gaming activity. Thus, gaming

operations must generally be operated by an entity owned by the tribe, or

as an arm of the tribe itself. Payments to tribe members and the

application of other federal taxes are also discussed.

23See GCM 26556 (Dec. 20, 1949). In GCM 38853 (May 17, 1982), the Chief Counsel’s office noted that

“historically, the IRS has taken the position that the income tax statutes do not purport to tax the

political entity embodied in the concept of an Indian tribe and no attempt has been made to tax the

tribe with respect to tribal income,” and indicated that the position of the office was that “in the

absence of express legislation, no modification should be made to the taxability of Indian tribes on

tribal income.”

24See Rev. Rul. 74-179, 1974-1 C.B. 279; Rev. Rul. 68-231, 1968-1 C.B. 48; and Rev. Rul. 58-610, 1958-2

C.B. 815. IRS determined that because Indian tribes do not derive their powers of self-government

from the United States or the states, they are not political subdivisions within the meaning of these

provisions.

25Pub. L. No. 97-473, 96 Stat. 2607 (codified at I.R.C. section 7871).

Page 23 GAO/GGD-97-91 Indian Gaming Industry
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Federally Recognized Indian Tribes Are Exempt From Federal

Income Taxation. According to IRS, federally recognized Indian tribes are

not subject to federal income taxation.26 Rev. Rul. 67-284 states that

“income tax statutes do not tax Indian tribes. The tribe is not a taxable

entity.” Any income earned by the tribe is not subject to income tax,

regardless of whether the business activity is inside or outside of

Indian-owned lands.

The Senate Finance Committee Report on legislation that later became the

Tribal Tax Act recognized IRS’ position that sections 1 and 11 of the

Internal Revenue Code do not reach Indian tribes as set forth in Rev. Rul.

67-284 and stated that the proposed legislation did not amend this

treatment.27

Federally Chartered Tribal Corporations Are Not Subject to

Federal Income Taxation. IRS has determined that federally chartered

tribal corporations organized under IRA section 17 are not subject to

federal income taxation, regardless of where the income is earned. In Rev.

Rul. 81-295, IRS found that a federally chartered Indian tribal corporation

has the same tax status as the tribe and is not taxable. The revenue ruling

described a particular federally chartered Indian tribe. The tribe was

formally organized under a constitution and bylaws pursuant to IRA section

16. In addition, at the time of formal organization, the tribal members had

ratified a corporate charter as permitted by IRA section 17. The Secretary

of the Interior had approved the tribe’s constitution and bylaws and the

corporation’s charter. This principle was affirmed in Rev. Rul. 94-16.

Further, in Rev. Rul. 94-65, IRS concluded that a tribal corporation

organized under the Oklahoma Indian Welfare Act section 3 is not subject

to federal income taxation on the income earned in the conduct of

commercial business in or outside of Indian-owned lands.28

State-chartered Tribal Corporations Are Subject to Federal

Income Tax. IRS has determined that a corporation organized by an Indian

tribe under state law is subject to federal income tax regardless of the

location of the activities that generate the income. In Rev. Rul. 94-16, IRS

reasoned that a corporation organized by an Indian tribe under state law is

26BIA publishes a list of federally acknowledged Indian tribes in the Federal Register. See 25 C.F.R.

section 83.5(a) (1996 ed.).

27S. Rept. 97-646, at 8 (1982) reprinted in 1982 U.S.C.C.A.N. 4580, 4586.

2825 U.S.C. 503.

Page 24 GAO/GGD-97-91 Indian Gaming Industry
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not the same as an Indian tribal corporation organized under IRA section 17

and does not share the same tax status as the tribe for federal income tax

purposes.

Wholly-owned Tribal Law Corporations Generally Have Not Been

Subject to Administrative Attempts to Impose Income Taxes.

Although IRS has addressed the tax status of federally recognized Indian

tribes and federally chartered corporations, it has not issued a published

ruling on the tax status of wholly-owned corporations chartered under

tribal law. Many Indian tribal governments have organized wholly-owned

tribal corporations to conduct business operations rather than obtain a

state or federal charter. Although IRS has not issued published rulings, IRS

officials are not aware of any administrative attempt to date to impose

federal income taxes on wholly-owned tribal corporations.

Payment of Other Federal Taxes. IRS has determined that Indian tribal

governments have no inherent exemption from excise taxes, but section

7871 of the Code provides them with a limited exemption. In Rev. Rul.

94-82, 1994-2 C.B. 412, IRS cited Confederated Tribes of the Warm Springs

Reservation v. Kurtz, in which the court found that an Indian tribe did not

fit within the excise tax exemption for “any State, any political subdivision

of a State, or the District of Columbia.”29 The court reasoned that since the

tribe did not derive authority from the state, the state government

exemption is not applicable to the tribe.

Section 7871 specifically provides that a tribal government is to be treated

as a state for purposes of certain excise taxes if the transaction involves

the exercise of an essential governmental function. Consequently, Indian

tribes performing essential governmental functions share the same excise

tax exemptions as states for many excise taxes. However, both Indian

tribes and states are subject to wagering excise taxes. The states are,

however, exempt from excise taxes on lotteries.

Payments to Tribal Members Are Taxable. No provision of the

Internal Revenue Code exempts individual Indians from the payment of

federal income tax; thus, exemptions must be based on a treaty or an act

of Congress.30 In some cases, a tribal member may receive general welfare

29691 F.2d 878 (9th Cir. 1982).

30Squire v. Capoeman, 351 U.S. 1 (1956). Subsequent federal appeals court cases have interpreted

Squire v. Capoeman to mean that a tax exemption must be based on some particular language in a

treaty or statute and that an exemption may not be based on policy alone. United States v. Anderson,

625 F.2d 910, 913, cert. denied. 450 U.S. 920 (1980).

Page 25 GAO/GGD-97-91 Indian Gaming Industry
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payments from the tribe. Although amounts paid for general welfare may

not be taxable, payments made pro rata to all tribal members are evidence

that the payments are not based on need and, thus, probably will not

qualify for the general welfare exclusion.31

The Indian Gaming Regulatory Act of 1988 provided that the net revenues

from any tribal gaming are not to be used for purposes other than to

(1) fund tribal government operations or programs, (2) provide for the

general welfare of the Indian tribe and its members, (3) promote tribal

economic development, (4) donate to charitable organizations, or (5) help

fund operations of local government agencies.32

IGRA also provided that net revenues from gaming may be used to make per

capita payments to members of the Indian tribe, but only if the tribe has

prepared a revenue allocation plan to allocate revenues to uses authorized

by IGRA. The plan must be approved by the Secretary of the Interior as

adequate, particularly with respect to the funding of tribal government

operations or programs and promoting tribal economic development. IGRA

also required that the interests of minors and other legally incompetent

persons entitled to receive any of the payments be protected and

preserved. Because the payments are per capita distributions of gaming

proceeds, they are generally subject to taxation when distributed.

Additionally, IGRA itself provides that the per capita payments are subject

to federal taxation, and the act requires that tribes notify their members of

the tax liability when payments are made.

Section 3402(r) of the Internal Revenue Code provides that every person

making a payment to a member of an Indian tribe from the net revenues

from class II or class III gaming activity must withhold income taxes from

the payment. The withholding is capped at 31 percent. Tribal governments

must report the total amount of taxable per capita payments made to each

tribal member on Form 1099-Misc. Tribal governments are to report any

federal income tax withheld on per capita payments on Form 945, Annual

Return of Withheld Federal Income Tax, and make any necessary federal

tax deposits.

31IRS policy has long provided for exclusion of public assistance payments or social welfare payments

from income. These payments may include food stamps, housing assistance benefits, and Medicare

benefits.

3225 U.S.C. 2710(b)(2) (1996).

Page 26 GAO/GGD-97-91 Indian Gaming Industry
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Agency Comments We provided a draft of this report to the Internal Revenue Service,

Department of the Interior, and National Indian Gaming Commission. IRS’

Office of Chief Counsel generally agreed with our presentation of the

federal tax treatment of Indian tribes and their members and provided

some technical comments. We have incorporated those comments where

appropriate. Interior’s Director of Audit and Evaluation provided a

technical comment regarding the authority to approve class III gaming and

tribal-state compacts, which we incorporated.

NIGC provided a number of technical comments that we incorporated as

appropriate. Two of the comments warrant further discussion. First, the

NIGC Acting Chair indicated that our number of tribes and facilities did not

agree with NIGC’s records. In an April 18, 1997, meeting with NIGC officials,

we discussed the number of tribes and facilities and made changes to the

report where appropriate. However, our final figures and list of facilities

are not the same as NIGC’s because of differences in the methodology used

to identify and count facilities. NIGC officials acknowledged the differences

in methodology and agreed with our final figures and list of facilities.

Second, the NIGC Acting Chair also indicated that we should not include

state gaming taxes and other payments to the state as examples of

expenses incurred by Atlantic City and Nevada casinos but not by Indian

gaming facilities. She stated that some tribal-state compacts may include

payments from either the tribe or the gaming facility to states. We told NIGC

officials that information provided by industry specialists and in the

financial statements of the gaming facilities included in our analysis of

operating income showed no payments of taxes or other fees to the state.

We also explained to NIGC officials that this information is not meant to

indicate that tribes or their gaming facilities pay no taxes or fees to states

but to explain some of the differences in the operating income between

Indian gaming facilities and Atlantic City and Nevada casinos. NIGC

officials accepted this explanation.

Interior’s Assistant Secretary—Indian Affairs provided additional written

comments. The Department agreed with our presentation of the federal

tax treatment of Indian tribes and their members. It suggested that our

report should also compare revenues of Indian gaming facilities with

revenues of the various states lotteries. The letter stated that it is Interior’s

position that tribes are governments, like states, and that it is therefore

more appropriate to compare the gaming revenues of governmental

entities rather than to compare gaming revenues of Indian tribes with

those of privately owned casinos. We compared revenues from class III

Page 27 GAO/GGD-97-91 Indian Gaming Industry
B-275479 

gaming (primarily table games and slot machines) with revenues from like

gaming activities in Atlantic City and Nevada casinos. We did not compare

Indian gaming revenues with state lottery revenues because Indian gaming

does not include lotteries; therefore, such a comparison would be

inappropriate.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will send copies to the Ranking

Minority Member, House Ways and Means Committee; the Senate Finance

Committee Chairman and Ranking Minority Member; the Commissioner of

Internal Revenue; the Secretary of the Interior; the Chair of the National

Indian Gaming Commission; and to other interested parties. We will also

make copies available to others upon request.

Major contributors to this report are listed in appendix III. If you have any

questions or we can be of further assistance, please call me at

(202) 512-9110.

Sincerely yours,

Lynda D. Willis

Director, Tax Policy

 and Administration Issues

Page 28 GAO/GGD-97-91 Indian Gaming Industry
Page 29 GAO/GGD-97-91 Indian Gaming Industry
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

32

Appendix II 

Tribes and Known

Gaming Operations as

of December 31, 1996

38

Appendix III 

Major Contributors to

This Report

46

Glossary 47

Tables Table 1: 1995 Revenues, Costs and Expenses, and Net Income for

Class II and III Indian Gaming Facilities

9

Table 2: Gaming Revenue Market Shares, 1995 15

Table 3: Casino Gaming Revenue Shares, 1995 16

Table 4: Reported Indian, Nevada, and Atlantic City Gaming

Revenues, 1995

17

Table 5: Reported Operating Income of Facilities and Casinos

With Gaming Revenues of $72 Million and More, 1995

19

Table I.1: 1995 Financial Statement Filing Status of Facilities as of

December 31, 1996

33

Figures Figure 1: Indian Gaming Revenues, 1985-95 6

Figure 2: Distribution of Indian Gaming Facilities 8

Figure 3: Distribution of Class II Facilities’ Gaming Revenues 10

Figure 4: Distribution of Class III Facilities’ Gaming Revenues 11

Figure 5: Costs and Expenses and Net Income Margins 12

Figure 6: Facilities and Net Income Margins 13

Figure 7: Distribution of Funds Reportedly Transferred to 106

Tribes

14

Page 30 GAO/GGD-97-91 Indian Gaming Industry
Contents

Figure 8: Reported Class III Indian Facilities and Nevada Casinos

With Gaming Revenues of $72 Million and More

18

Figure I.1: Flow of Transfers From the Gaming Facility to the

Tribe

35

Abbreviations

BIA Bureau of Indian Affairs

IGRA Indian Gaming Regulatory Act of 1988

IRA Indian Reorganization Act of 1934

IRS Internal Revenue Service

NIGC National Indian Gaming Commission

Page 31 GAO/GGD-97-91 Indian Gaming Industry
Appendix I 

Objectives, Scope, and Methodology

Objectives Our objectives in this report were to provide (1) an updated profile of the

Indian gaming industry, (2) information on the amount of transfers to the

tribes from their gaming facilities, (3) a comparison of Indian gaming

revenues with the revenues generated by other legalized gaming activities,

and (4) a summary of the federal tax treatment of Indian tribes and tribe

members.

Scope and

Methodology

Profile of the Indian

Gaming Industry

To determine the number of tribes with gaming facilities, we reviewed

documents provided by NIGC identifying all tribes with gaming operations

as of December 31, 1996. This information included only class II and class

III gaming facilities. Information on the number of tribes with class I

facilities was not readily available because class I gaming consists of

social gaming for nominal prizes or ceremonial gaming, which is regulated

solely by the tribes.

To develop a comprehensive list of tribes and gaming facilities, NIGC

contacted all tribes except for those in Alaska, where it contacted only the

tribes that were known to be attempting to open gaming facilities.

According to NIGC, most of the 226 tribes in Alaska are not operating

gaming facilities, primarily because of the remoteness and small size of the

tribes’ membership.1

 (A list of tribes and their known gaming facilities as

of December 31, 1996, appears in app. II.)

IGRA categorizes gaming activities as class II or class III. For purposes of

our analysis, however, we categorized facilities based on whether they had

approved tribal ordinances and tribal-state compacts. We categorized

gaming facilities without compacts as class II facilities, even though they

may operate class III games. We treated gaming facilities with class III

games and compacts in place, per BIA listing of compacts as of

December 14, 1995, as class III facilities. NICG told us that in several

states, tribes and states may no longer have valid compacts in place.

To perform our analyses on revenues, costs and expenses, and net income,

for example, we used data contained in 1995 financial statements that

1

Additionally, it is unclear whether certain lands set aside for Alaska natives under the Alaska Native

Claims Settlement Act meet the IGRA definition of Indian lands on which gaming may be conducted.

(See 43 U.S.C. 1601 et seq.)

Page 32 GAO/GGD-97-91 Indian Gaming Industry
Appendix I 

Objectives, Scope, and Methodology

were submitted to NIGC as of November 22, 1996.2 This was the date on

which we ended our data gathering to begin our analyses. For this time

frame, NIGC had financial statements from 126 tribes representing 178

facilities. The financial statements of 174 of these facilities were

independently audited, and the majority received unqualified opinions.3

We also verified our listings of financial statements received with NIGC

officials to ensure that we had received all of them. (See app. II, footnote

a.)

The sample of facilities included in our report consists of the 178 gaming

facilities represented by these financial statements. The sample is not

representative of the universe of all Indian gaming facilities. Table I.1

represents the 1995 financial statement submission status of all gaming

facilities existing as of December 31, 1996, according to information

provided by NIGC.

4

 We verified this information with NIGC officials to clarify

questions and inconsistencies. We do not know the characteristics of

those gaming facilities for which we did not analyze the financial

statements. We did not determine why some tribes did not submit financial

statements beyond what is indicated in table I.1 because such an analysis,

although important for compliance purposes, was outside the scope of this

report.

Table I.1: 1995 Financial Statement

Filing Status of Facilities as of

December 31, 1996

Filing status Number of facilities

Filed and included in our analysis 178

Filed but not included in our analysis because financial

statements were incomplete or submitted after the

completion of our data gathering 30

Did not file or received filing extensions 44

Not required to file because they were not operating for

one year as of 1995 or were opened in 1996 36

Included in our analysis but closed by December 31, 1996 (7)

Total known gaming facilities as of December 31, 1996 281

Source: GAO analysis of Indian gaming operations and financial statement submissions, based

on information from and discussions with NIGC officials.

2

The financial statements we analyzed had different fiscal year ending dates, but we considered a

financial statement to be a 1995 statement if its fiscal year ended in 1995.

3

An unqualified opinion on the financial statements generally means that the auditor concludes the

financial statements and accompanying notes present fairly, in all material respects, the assets,

liabilities, and net position of the entity at the end of the period; and the net costs, changes in net

position, and cash flows for the period then ended are in conformity with the entity’s basis of

accounting or generally accepted accounting principles.

4

NIGC updates the status of gaming facilities and financial statement submissions quarterly. The

quarter ending on December 31, 1996, was the closest quarter to November 22, 1996, the date we

completed our data collection.

Page 33 GAO/GGD-97-91 Indian Gaming Industry
Appendix I 

Objectives, Scope, and Methodology

For those facilities included in our analyses, we extracted information that

allowed us to determine gaming revenues, total revenues, costs and

expenses, operating income, and net income. We used Audit and

Accounting Guide: Audits of Casinos, published by the American Institute

of Certified Public Accountants, and spoke with industry experts for

guidance in deciding which data to extract from the financial statements

and what analyses to perform on these data. (See the glossary for the

accounting terms we used throughout this report.)

Our analyses do not include data from the balance sheet or statement of

cash flows, such as assets, liabilities, equity, or debt payments, because

this information was not reported consistently by the different facilities.

Transfers to the Tribes To determine the amount of transfers to the tribes, we analyzed

information contained in the financial statements. The transfers as

described in this report represent the amounts in the financial statements

allocated to the tribes. IGRA provides that net revenues from tribal gaming

must be devoted to certain uses, including funding tribal government

operations. Net revenues is defined as gross gaming revenues minus prizes

and gaming-related operating expenses, not including management fees. In

figure I.1, we depict, in general, how the transfers flow from the gaming

facility to the tribe as indicated in the financial statements.

Page 34 GAO/GGD-97-91 Indian Gaming Industry
Appendix I 

Objectives, Scope, and Methodology

Figure I.1: Flow of Transfers From the

Gaming Facility to the Tribe

Gaming

revenues

Other

revenues

Total

revenues

Cost 

and

expenses

Net 

Minus Equals income

Plus

Equals

Retained

earnings 

as of

beginning

of year

Equals

Transfers

to 

tribe

Retained

earnings 

as of

year end

Minus

Equals

Distributable

earnings

Plus

Note: This flowchart has been simplified to represent, in general, the revenue flow across all

financial statements. Other revenues include, for example, revenues from food, beverages, hotel

rooms, and interest.

Source: GAO analysis of 1995 financial statements.

As noted in the Background section of this report, IGRA limits how these

transfers can be used. The transfers as described in this report represent

the amounts in the financial statements allocated to the “tribes.” The

Page 35 GAO/GGD-97-91 Indian Gaming Industry
Appendix I 

Objectives, Scope, and Methodology

amounts could have been received by tribal government or tribal

members, but we were not able to determine this because the financial

statements did not indicate how the transfers were used or who received

them. In addition, to determine the economic impact of gaming on the

tribes, several factors would need to be considered, such as poverty levels

and other revenues generated by the tribes; we did not address these

factors because they were beyond the scope of this report. We obtained

information on the amount of items, such as taxes and fees, rent and other

charges, and cost reimbursements, from the financial statements to the

extent such amounts were reported.

Comparison of Indian and

Non-Indian Gaming

Revenues

To compare Indian gaming revenues with the gaming revenues of other

legalized gaming, we used data reported in International Gaming and

Wagering Business and financial statement data submitted to the Nevada

and Atlantic City gaming commissions. We obtained the financial data on

Nevada casinos from Nevada Gaming Abstract, a report prepared by the

Nevada State Gaming Control Board for fiscal year data as of June 30,

1995. The information presented in the Abstract comes from unaudited

standard financial statements that licensees whose gaming revenues are

$1 million or more are required to file. We obtained the Atlantic City

financial data from unaudited standard financial statements that all New

Jersey casinos are required to file and from financial analyses prepared by

the New Jersey Casino Control Commission as of June 30, 1995. We did

not independently verify the data included in these reports.

We used data published in International Gaming and Wagering Business to

determine the gaming revenue shares of legalized gaming as a whole and

also the casino segment in particular. The legalized gaming categories we

included are those used in this publication. We substituted the amounts of

Indian gaming revenues for the amounts used in this publication only for

consistency with our analyses in the rest of our report. The amounts

published for Indian gaming, however, were similar to the amounts we

determined from the financial statements.

We used the financial data of Nevada and Atlantic City casinos only to

compare class III facilities. Class III facilities relied primarily on casino

games and slot machines, and this was also the case for Nevada and

Atlantic City casinos. We included only facilities with gaming revenues of

$1 million and more because the Nevada financial data were aggregated

and included only facilities with these gaming revenues. To make valid

comparisons of revenues among the Indian facilities and casinos, we

Page 36 GAO/GGD-97-91 Indian Gaming Industry
Appendix I 

Objectives, Scope, and Methodology

subtracted the amount of promotional allowances (free food, hotel rooms,

and so on given to customers as incentives) from “other revenues” for

those facilities and casinos that reported such amounts as “revenues.”

We used operating income to compare the results of these operations

because operating income is a common measure used by industry experts

to analyze and compare the profitability of businesses. It discounts the

effects of capital structure and other nonoperating incomes and expenses

that are not directly related to the performance of business operations.

Summary of Legal Issues

Pertaining to the Taxation

of Indian Tribes

To describe the legal issues regarding the taxation of Indian gaming

revenues, we reviewed relevant sections of the Internal Revenue Code and

the IRS and Department of the Treasury rulings and regulations pertaining

to the taxation of Indian tribes. We also interviewed officials from

Treasury, IRS, and BIA.

Page 37 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Alabama Poarch Band of Creek Indians Creek Bingo Palace*

Alaska Klawock Cooperative Association Klawock Cooperative Association (Gaming Division)*

Metlakatla Indian Community Metlacatla Indian Community Bingo

Arizona Ak Chin Indian Community Harrah’s Ak-Chin Casino*

Cocopah Indian Tribe Cocopah Bingo and Casino*

Colorado River Indian Tribes Blue Water Casino*

Fort McDowell Mohave-Apache Indian Community Fort McDowell Gaming Center*

Fort Mojave Indian Tribe Spirit Mountain Casino*

Gila River Indian Community Lone Butte Casino*

Wild Horse Casino*

Kaibab Band of Paiute Indians Pipe Spring Resort & Casino**

Pascua Yaqui Tribe of Arizona Casino of the Sun*

Quechan Indian Tribe Quechan Bingo/Casino

San Carlos Apache Tribe Apache Gold Casino*

Tohono O’odham Nation Tohono O’odham Gaming Authority-Desert Diamond

Casino*

Tonto Apache Tribe Tonto Apache Mazatzal Casino*

White Mountain Apache Tribe Hon-dah Casino*

Yavapai Apache Tribe Cliff Castle Casino*

Yavapai-Prescott Indian Tribe Yavapai-Prescott Class II Gaming*

Yavapai-Prescott Class III Gaming*

California Agua Caliente Band of Cahuilla Indians Spa Casino*

Auberry Big Sandy Rancheria Mono Wind Casino

Barona Band of Mission Indians Barona Casino*

Big Pine Paiute Tribe of the Owens Valley Sierra Springs Casino

Big Valley Rancheria of Pomo Indians Konocti Vista Casino and Bingo*

Bishop Paiute Tribe Paiute Palace Casino*

Bridgeport Indian Reservation Kiba Casino**

Cabazon Band of Mission Indians Cabazon Simulcast Wagering Corporation*

Fantasy Springs Casino*

Cahto Tribe of the Laytonville Rancheria Cahto Casino

Cahuilla Band of Mission Indians Cahuilla Creek Restaurant and Casino

Chemehuevi Indian Tribe Havasu Landing Resort

Chicken Ranch Rancheria Chicken Ranch Bingo*

Coast Indian Community of the Resighini Rancheria Coast Indian Gaming Facility

Colusa Rancheria Colusa Casino & Bingo Enterprise Fund*

Coyote Valley Band of Pomo Indians Shodakai Coyote Valley Casino

Elk Valley Rancheria Elk Valley Casino

(continued)

Page 38 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Hoopa Valley Tribe Lucky Bear Casino

Hopland Reservation Hopland Casino

Jackson Rancheria Band of Miwuk Indians Jackson Indian Bingo and Casino*

Lake Miwok Indian Nation of the Middletown Rancheria Twin Pine Casino*

Mooretown Rancheria Mooretown Rancheria Casino

Morongo Band of Mission Indians Casino Morongo*

Pit River Tribe Pit River Casino

Redding Rancheria Tribe Win-River Casino*

Robinson Rancheria of Pomo Indians Robinson Rancheria Bingo and Casino*

Rumsey Indian Rancheria Cache Creek Indian Bingo and Casino*

San Manuel Band of Mission Indians San Manuel Mission Indian Casino

Santa Rosa Rancheria The Palace Bingo*

Santa Ynez Band of Mission Indians Santa Ynez Indian Casino*

Sherwood Valley Rancheria Black Hart Casino

Smith River Rancheria Smith River Lucky 7 Casino

Soboba Band of Mission Indians Soboba Casino

Susanville Indian Rancheria Northern Lights Casino

Sycuan Band of Mission Indians Sycuan Gaming Center

Table Mountain Rancheria Table Mountain Rancheria Casino and Bingo*

Temecula Band of Luiseno Mission Indians Pechanga Entertainment Center*

Trinidad Rancheria Cher-Ae Heights Bingo and Casino*

Tule River Tribe of the Tule River Indian Reservation Eagle Mountain Casino

Twenty Nine Palms Band of Mission Indians Spotlight 29 Casino*

Tyme Maidu Tribe of the Berry Creek Rancheria Berry Creek Rancheria Gaming

Viejas Band of Mission Indians Viejas Casino and Turf Club

Colorado Southern Ute Indian Tribe Sky Ute Lodge and Casino*

Ute Mountain Ute Tribe Ute Mountain Casino*

Connecticut Mashantucket Pequot Tribe Foxwoods Resort Casino*

Mohegan Tribe of Indians Mohegan Sun Casino

Florida Miccosukee Tribe of Indians of Florida Miccosukee Indian Bingo*

Seminole Tribe of Florida Brighton Seminole Bingo

Hollywood Seminole Gaming*

Seminole Bingo of Tampa*

Seminole Bingo Palace*

Seminole Gaming Palace - Immokalee*

Idaho Coeur d’Alene Tribe Coeur d’Alene Tribal Bingo/Casino*

Kootenai Tribe of Idaho Kootenai River Inn and Casino*

Nez Perce Tribe Clear River Casino

Its-Ye-Ye Bingo

(continued)

Page 39 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Shoshone-Bannock Tribes Bannock Peak

Gaming Enterprise Fund*

Oregon Trail Outpost

Iowa Omaha Tribe of Nebraska Casino Omaha*

Sac & Fox Tribe of Mississippi in Iowa Meskwaki Bingo and Casino*

Winnebago Tribe of Nebraska WinnaVegas Casino*

Kansas Iowa Tribe of Kansas and Nebraska Bingo Party Games*

Kickapoo Nation in Kansas Golden Eagle Casino

Prairie Band Potawatomi Prairie Band of Potawatomi Indian Gaming Trust*

Louisiana Chitimacha Tribe of Louisiana Cypress Bayou Casino*

Coushatta Tribe of Louisiana Grand Casino Coushatta*

Tunica-Biloxi Indian Tribe of Louisiana Grand Casino Avoyelles*

Michigan Bay Mills Indian Community Bay Mills Casino*

Kings Club Casino*

Grand Traverse Band of Ottawa/Chippewa Indians Leelanau Sands Casino*

Super Gaming Palace*

Turtle Creek Casino

Hannahville Indian Community Chip-in Casino/Motel*

Keweenaw Bay Indian Community Big Bucks Casino

Ojibwa Casino Resort*

Ojibwa Casino Resort-Marquette

Senior’s Bingo*

Youth Bingo*

Lac Vieux Desert Band of Lake Superior Chippewa

Indians

Lac Vieux Desert Casino*

Saginaw Chippewa Indian Tribe Soaring Eagle Casino*

Sault Ste. Marie Tribe of Chippewa Indians Kewadin Casino-Christmas*

Kewadin Casino-Hessel*

Kewadin Casino-Manistique*

Kewadin Casino-St. Ignace*

Kewadin Casino-Sault Ste. Marie*

Midjim Convenience Store Pulltabs I

Midjim Convenience Store Pulltabs II

Vegas Kewadin Bingo

Minnesota Bois Forte Band of Chippewas Fortune Bay Casino*

Fond du Lac Reservation Business Committee Black Bear Casino*

Fond-du-Luth Casino*

Grand Portage Band of Chippewa Indians Grand Portage Casino*

Leech Lake Band of Chippewa Indians Che-We Casino

(continued)

Page 40 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Leech Lake Palace Bingo*

Northern Lights Gaming Emporium*

Lower Sioux Indian Community Jackpot Junction Casino*

Mille Lacs Band of Chippewa Indians Grand Casino Hinckley*

Grand Casino Mille Lacs*

Prairie Island Indian Community Treasure Island Casino and Bingo*

Red Lake Band of Chippewa Indians Lake of the Woods Casino*

Red Lake Casino*

River Road Casino*

Shakopee Mdewakanton Sioux Community Little Six Bingo*

Mystic Lake*

Upper Sioux Community Firefly Creek Casino*

White Earth Band of Chippewa Indians Golden Eagle Bingo

Shooting Star Casino*

Mississippi Mississippi Band of Choctaw Indians Silver Star Hotel and Casino*

Montana Assiniboine and Sioux Tribes of the Fort Peck Reservation Silverwolf Casino*

Blackfeet Tribe of Indians Blackfeet Bingo

Chippewa Cree Tribe of the Rocky Boy’s Reservation 4 C’s Cafe & Casino

Chippewa PowWow Bingo

Crow Indian Tribe Little Bighorn Casino*

Northern Cheyenne Tribe Northern Cheyenne Social Club

Nebraska Santee Sioux Tribe of Nebraska Ohiya Casino

Nevada Fort Mojave Indian Tribe Avi Casino Enterprise, Inc.

Las Vegas Paiute Tribe Las Vegas Paiute Resort

Moapa Band of Paiutes Moapa Tribal Enterprises I

Moapa Tribal Enterprises II

New Mexico Jicarilla Apache Tribe Apache Nugget Casino

Vigil Family Enterprises

Mescalero Apache Tribe Inn of the Mountain Gods**

Pueblo of Acoma Sky City Casino*

Pueblo of Isleta Isleta Gaming Palace*

Pueblo of Pojoaque Cities of Gold Casino*

Cities of Gold Sports Bar

Pueblo of Pojoaque Casino*

Pueblo of Sandia Casino Sandia*

Pueblo of Santa Ana Santa Ana Star Casino*

Pueblo of Taos Taos Slot Room

Pueblo of Tesuque Camel Rock Casino

San Felipe Pueblo San Felipe Casino Hollywood*

(continued)

Page 41 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

San Juan Pueblo Ohkay Casino*

New York Oneida Nation of New York Turning Stone Casino

Seneca Nation of Indians Bingo Allegany*

Bingo Cattaraugus*

St. Regis Mohawk Tribe Mohawk Bingo Palace*

Tribal Bingo**

North Carolina Eastern Band of Cherokee Indians Tribal Bingo*

Tribal Casino*

TeePee Village Casino**

North Dakota Devils Lake Sioux Tribe Spirit Lake Casinos

Sisseton-Wahpeton Sioux Tribe Dakota Magic Casino & Resort

Standing Rock Sioux Tribe Fort Yates Pow Wow Committee

Prairie Knights Casino*

Three Affiliated Tribes of the Fort Berthold Reservation 4 Bears Casino and Lodge*

Turtle Mountain Band of Chippewa Indians Turtle Mountain Chippewa Big Casino*

Turtle Mountain Chippewa Mini Casino*

Oklahoma Absentee-Shawnee Tribe of Oklahoma Thunderbird Entertainment Center

Apache Tribe of Oklahoma Na-I-Sha Games

Cherokee Nation of Oklahoma Cherokee Nation Outpost-Catoosa*

Cherokee Nation Outpost-Roland*

Cherokee Nation Outpost-West Siloam Springs*

Loyal Shawnee Bingo

Cheyenne and Arapaho Tribes of Oklahoma Cheyenne and Arapaho Bingo-Clinton

Cheyenne and Arapaho Bingo-Watonga

Lucky Star Bingo*

Chickasaw Nation of Oklahoma Ada Gaming Center*

Goldsby Gaming Center*

Sulphur Gaming Center

Thackerville Gaming Center*

Choctaw Nation of Oklahoma Choctaw High Stakes Bingo-Arrowhead*

Choctaw High Stakes Bingo-Durant*

Choctaw High Stakes Bingo-Idabel*

Choctaw High Stakes Bingo-Pocola*

Citizen Band Potawatomi Indians of Oklahoma Potawatomi Tribal Gaming*

Comanche Indian Tribe Comanche Nation Games*

Delaware Tribe of Western Oklahoma Delaware Tribal Games**

Eastern Shawnee Tribe of Oklahoma Eastern Shawnee Tribe of Oklahoma Bingo Operations*

Iowa Tribe of Oklahoma Bingo Enterprise Fund*

Kaw Nation of Oklahoma Kaw Bingo*

(continued)

Page 42 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Kiowa Tribe of Oklahoma Kiowa Bingo

Muscogee (Creek) Nation Bristow Indian Community Bingo*

Checotah Muskogee Indian Community Bingo*

Eufaula Indian Community Bingo*

Muscogee Bingo*

Okmulgee Bingo*

Tulsa Bingo*

Ponca Tribe of Oklahoma Ponca Tribal Bingo

Sac & Fox Nation of Oklahoma Foxfire Bingo Casino, Inc.

Seminole Nation of Oklahoma Seminole Nation Bingo*

Wewoka Trading Post Gaming Center*

Seneca-Cayuga Tribe of Oklahoma Seneca-Cayuga Bingo

Thlopthlocco Tribal Town Thlopthlocco Bingo

United Keetoowah Band of Cherokee Indians Keetoowah Bingo

Oregon Confederated Tribes of the Grande Ronde Indian

Community

Spirit Mountain Gaming, Inc.*

Confederated Tribes of the Siletz Indians of Oregon Chinook Winds*

Confederated Tribes of the Umatilla Indian Reservation Wildhorse Gaming Resort*

Confederated Tribes of the Warm Springs Reservation of

Oregon

Indian Head Gaming Center*

Coquille Indian Tribe The Mill Casino

Cow Creek Band of Umpqua Indians Gaming Operations*

South Dakota Cheyenne River Sioux Tribe Cheyenne River Sioux Tribe Bingo

Crow Creek Sioux Tribe Crow Creek Bingo Hall

Lode Star Casino

Flandreau Santee Sioux Tribe Royal River Casino*

Lower Brule Sioux Tribe Brule Horseman Association

Brule Sioux Booster Club

Golden Buffalo Casino*

Kul Wicasa Elderly Bingo

Lakota Care Bingo

Lakota Family Dance Club

Lower Brule Health Club

Lower Brule Youth Activities

Oglala Sioux Tribe Children’s Village Bingo

Prairie Wind Casino*

Rosebud Sioux Tribe Rosebud Casino*

Sisseton-Wahpeton Sioux Tribe Dakota Sioux Casino*

Veterans Memorial Recreation Center*

(continued)

Page 43 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Standing Rock Sioux Tribe Bear Soldier Jackpot Bingo*

Grand River Casino

Yankton Sioux Tribe Fort Randall Casino/Hotel*

Texas Kickapoo Traditional Tribe of Texas Lucky Eagle Casino

Washington Confederated Tribes of the Chehalis Reservation Chehalis Tribal Lucky Eagle Casino*

Confederated Tribes of the Colville Reservation Mill Bay Casino

Coulee Dam Casino*

Okanogan Casino/Bingo*

Jamestown S’Klallam Tribe Seven Cedars Casino*

Lower Elwha S’Klallam Tribe Lower Elwha Bingo**

Lummi Nation Lummi Casino*

Makah Indian Tribe of the Makah Indian Reservation Makah Bingo*

Muckleshoot Indian Tribe Muckleshoot Indian Bingo*

Muckleshoot Indian Casino*

Nooksack Indian Tribe Nooksack River Casino*

Port Gamble S’Klallam Tribe Little Boston Bingo

Puyallup Tribe of Indians BJ’s Enterprises, Inc.

Puyallup Tribe Bingo Palace*

Spokane Tribe of Indians Brigman’s Casino

Double-Eagle Casino

Kieffer’s Store

Lile Chief’s Casino

Pappy’s Corner

Snack’n Chat

Spokane Indian Bingo

Two Rivers Casino

Wooden Nickel Casino

Squaxin Island Tribe Little Creek Casino

Suquamish Tribe Port Madison Enterprises-Bingo Operations Division*

Port Madison Enterprises-Suquamish Clearwater Casino

Swinomish Indian Tribal Community Swinomish Casino & Bingo*

Tulalip Tribes of Washington Tulalip Casino*

Upper Skagit Indian Tribe Harrah’s Skagit Valley Casino

Wisconsin Bad River Band of Lake Superior Chippewa Indians Bad River Casino

Forest County Potawatomi Community Northern Lights Casino*

Potawatomi Bingo*

Ho-Chunk Nation Ho-Chunk Bingo*

Ho-Chunk Casino*

Majestic Pines Bingo*

(continued)

Page 44 GAO/GGD-97-91 Indian Gaming Industry
Appendix II 

Tribes and Known Gaming Operations as of

December 31, 1996a

State Tribe Name of operation

Majestic Pines Casino*

Rainbow Bingo*

Rainbow Casino*

Lac Courte Oreilles Band of Lake Superior Chippewas Lac Courte Oreilles Casino*

Lac du Flambeau Band of Lake Superior Chippewa

Indians

Lake of the Torches Casino*

Bingo Enterprise Fund*

Menominee Indian Tribe of Wisconsin Crystal Palace Casino*

Menominee Nation Casino*

Menominee Tribal Bingo*

Oneida Tribe of Indians of Wisconsin Class II Gaming Operations*

Red Cliff Band of Lake Superior Chippewas Isle Vista Casino*

Sokaogon Chippewa Community Grand Royale

Mole Lake Bingo

Regency Resort

St. Croix Chippewa Indians of Wisconsin Hole in the Wall Casino*

Little Hartel Casino

Sand Lake Bingo

St. Croix Casino*

Stockbridge-Munsee Community Mohican North Star Casino*

Wyoming Northern Arapaho Tribe of the Wind River Indian

Reservation

789 Bingo

aA single asterisk denotes the facilities included in our analyses (178), the names of which were

taken from the financial statements submitted to NIGC. Other facility names were obtained from

other NIGC data. A double asterisk denotes the facilities included in our analyses that were not

operating on December 31, 1996.

Note: This information may not agree with NIGC’s records because of differences in the

methodologies used to identify and count facilities.

Source: GAO analysis of 1995 financial statements filed with NIGC and NIGC lists of gaming

facilities.

Page 45 GAO/GGD-97-91 Indian Gaming Industry
Appendix III 

Major Contributors to This Report

General Government

Division

Harriet Ganson, Assistant Director, Tax Policy and

 Administration Issues

Nilsa I. Perez, Assignment Manager

Keith Steck, Evaluator

Bryon Gordon, Evaluator

Pam Pavord, Evaluator

Office of General

Counsel

Rachel DeMarcus, Assistant General Counsel

Kansas City Field

Office

Doris Hynes, Evaluator

Page 46 GAO/GGD-97-91 Indian Gaming Industry
Glossary

Costs and Expenses Payroll, management fees, depreciation, amortization, the interest portion

of debt payments, and others. Under generally accepted accounting

principles, the principal portion of the debt payments is not an expense

and thus is not included in costs and expenses.

Gaming Revenues Dollars wagered minus payouts.

Net Income Total revenues minus all costs and expenses.

Net Revenues IGRA defines “net revenues” as gross gaming revenues minus prizes and

gaming-related operating expenses, not including management fees.

Operating Income Revenues minus costs and expenses that were related to the primary

business activities, such as salaries, advertisements, rents, and other

expenses. It did not include revenues or expenses that were not related to

the primary business activities, such as interest income; gains on sales of

assets; and depreciation, amortization, and interest expenses.

Other Revenues Sales such as food, beverages, and hotel rooms.

Total Revenues Sum of gaming revenues and other revenues.

(268761) Page 47 GAO/GGD-97-91 Indian Gaming Industry
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