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Hard Rock

An aerial view of the proposed Hard Rock Hotel & Casino in Kenosha.

Bobby Schmidt III has been a semi-pro poker player, off and on, for the last eight years.

The game has taken him to most of the major gambling hubs of the world. When he wants to play closer to his Machesney Park, Ill., home, he either heads 50 miles east to the Grand Victoria Casino in Elgin, Ill., or drives two hours north to the Ho-Chunk casino in Wisconsin Dells.

He's heard rumblings of another Ho-Chunk casino being built in Beloit but hadn't heard about the Menominee Nation's push for a casino in Kenosha, despite the recent headlines. When he heard it was going to be a Hard Rock casino, his response was, "Good play."

"People in the Chicago area like to gamble," said Schmidt, 35, a married father of a two-year-old. "They'll drive to Beloit or Kenosha."

Proponents of expanding Wisconsin's off-reservation casinos point to comments like Schmidt's when arguing that the state could pull in billions more by allowing the state's tribes to build destination casinos that cater to the 9.7 million people who live in the greater Chicago area.

But the issue involves more than economic development. It includes the impact of gambling on communities and the ability of the state's tribes to determine their futures as sovereign nations. And it's going to be part of the conversation across the state for years.

While attention to casino-related news has intensified over the last month in anticipation of Gov. Scott Walker's decision on the Menominee Indian Tribe's request to build an $800 million off-reservation casino in Kenosha, three other tribes are in varying phases of pursuing similar projects.

The decision on how to move forward in an industry that has evolved from its humble beginnings with bingo halls and slot machines largely confined to rural reservations to lavish casinos that include theaters, hotels and convention centers is a debate that doesn't divide players along traditional political party lines. Instead, like the games themselves, interests are staked out and bets are made based on regional economics. Money is the unifying factor.

"The immediacy is Kenosha," said Brian Nemoir, a conservative strategist and executive director of a group called Enough Already! WI, which does not disclose its members and is opposed to expanding off-reservation gaming in Wisconsin. "The reality is you have bigger things to think about than one (tribe's) economy and casino. It is more than Walker's one decision. A casino in Beloit could be next. It's the entire inventory of off-reservation casinos that are likely coming that needs to be addressed."

'Good neighbors'

Wisconsin has 18 full casinos with table games and slot machines and seven smaller gaming sites with slots and no table games for a total of 25 tribal gaming sites statewide, according to Stephanie Marquis, spokeswoman with the state Department of Administration, which oversees the Division of Gaming. (See a map of the state's casinos here.)

Of that number, the Ho-Chunk has the most with six across the state, including Madison. Next is the Oneida Indian Nation with five, all located on its reservation near Green Bay.

The Forest County Potawatomi may not have as many casinos as the Ho-Chunk or Oneida, but its off-reservation casino located in Milwaukee has made the tribe one of the top three wealthiest in the state. The Potawatomi Bingo Casino was the first off-reservation tribal casino built in the country. It opened in 1991.

Since then, the city of Milwaukee and Milwaukee County have each received an annual percentage of casino earnings from the Potawatomi. In recent years, that has amounted to $5.5 million annually for each. Understandably, Milwaukee Mayor Tom Barrett and Milwaukee County Executive Chris Abele, both Democrats, have lobbied against the Menominee's planned casino, which is supported by a bipartisan coalition of politicians from the Kenosha-Racine area.

Barrett said the city's relationship with the Potawatomi isn't only about the share of revenue it provides, but the tribe's other construction activities in the area. Right now, the Potawatomi are building a $150 million hotel, a $36 million data center and an $18 million bio-digester that turns waste into energy.

"They've been good neighbors," Barrett said. "We want them to continue to invest in Milwaukee."

A Menominee casino 35 miles away from Milwaukee means less casino revenue for the Potawatomi, which in turn means a smaller cut for Milwaukee and Milwaukee County. The Potawatomi and city of Milwaukee estimate the Potawatomi casino would lose $158 million in one year, $921 million over five years, and suffer 3,000 lost jobs.

The Menominee, on the other hand, say the Potawatomi would lose $62.6 million over four years at their Milwaukee location. Their report suggested the Ho-Chunk would not experience a loss, but the Ho-Chunk say they would lose $19.5 million in casino revenue over four years.

"It is budget time, and I want to protect bus routes, senior centers and other services. So for all those reasons I understand why the executives in Kenosha and Racine like the idea of another casino," said Abele. "But on the other hand, I'm weighing the benefits of a very real check in my hand."

Assembly Minority Leader Peter Barca, D-Kenosha, said the three criteria laid out by the governor — community support, no increase in overall gaming, consensus from state's 11 tribes — suggest Walker wants to be more cautious about approving new casinos.

Tribal consensus alone appears impossible to meet.

The Oneida signed on after the Menominee agreed to use the Oneida's Bay Bank to handle its casino business, according to Bobbi Webster, an Oneida spokeswoman.

In a last-minute attempt to entice the two remaining tribal holdouts, the Menominee on Saturday sent a letter to Walker and Administration Secretary Mike Huebsch. The letter said the tribe would contribute an extra $50 million more than its tribal gaming compact requires if the Potawatomi and Ho-Chunk suffer revenue losses when the Kenosha casino opens.

"You have to read the fine print to understand what this really means. What's being offered isn't all 'new money,'" said George Ermert, a Potawatomi spokesman. "They are saying, 'Use the money we pay through our gaming contracts to make the tribes whole.'"

Barca and the Menominee point to a push toward the expansion of casinos and slot machines outside the state's borders as proof that competition can't be managed.

The Illinois Legislature is considering a bill that would expand its gaming industry, putting casinos in Chicago and four other cities and 4,000 slot machines in the greater Chicago area, including riverboats, racetracks and the O'Hare and Midway airports.

"Look, the governor can shield the Potawatomi from us by turning down the Menominee's request, but he can't shield the Potawatomi from a casino in Illinois," Barca said. "Chicago is an enormous market that we should be tapping into."

Just how much gaming money flows through each tribe via its casinos is not made public, per terms of the tribal gaming compacts with the state, said Marquis.

Statewide revenue figures, however, provide a look at earnings for both the state and tribes. Overall, for the 15-year period from 1998 to 2012, gamblers wagered more than $213 billion in Wisconsin casinos and won a total exceeding $15 billion, a 7.1 percent return.

In 2012 alone, gamblers wagered $15.9 billion with tribes paying $1.2 billion to winners and $52.1 million to the state. (Click here to see charts of revenue, payments to the state from tribal casinos.)

It's the ability to increase those revenues — off-reservation casino proponents say there is a $2 billion to $3 billion untouched market in the greater Chicago or the "giant metro-plex," as Beloit City Manager Larry Aft calls it - that has him and others pushing for casinos near the border.

"Obviously when you're talking about gambling, money is the key issue," Barrett said.

'The whole shebang'

In addition to the Menominee's push for an off-reservation casino in Kenosha, the Ho-Chunk is in the process of completing an environmental impact statement for a 32-acre casino near Interstate 90 in Beloit. According to the Ho-Chunk, 40 percent of Chicago-area traffic that comes to Wisconsin drives up I-90.

The Lac du Flambeau tribe is also considering a casino in Shullsburg, a town of 1,200, in Lafayette County, a 90-minute drive from Beloit or Madison and a 30-minute drive from Dubuque, Iowa, which has gambling and greyhound racing.

Talk of a fourth off-reservation casino became public in 2012 when The Sheboygan Press reported Claremont New Frontier Resort, owner of the Blue Harbor Resort on Lake Michigan, was exploring ideas with the Sokaogon Chippewa Community of Mole Lake. The project hit a roadblock between the tribe and the developer and activity has been stagnant.

The appeal was the location between Green Bay and Milwaukee, nearly a 60-mile drive from casinos in both cities, and the proximity to Kohler and its five-star American Club Resort.

The concept for all four casinos is to make them multi-day destinations, with development plans that include not just casinos, but hotels, theaters, shopping centers and restaurants. It's a business model already used by the Potawatomi, Ho-Chunk and Oneida.

They are all located on major thoroughfares and all except Kenosha would be located in smaller towns that stand to reap financial benefits and job growth if the casinos are approved.

That approval process can take years. Take the effort by the Ho-Chunk to expand into Beloit. Two Chippewa tribes started looking at opening a casino there in 2000. They stopped pursuing the idea when its application was turned down by the secretary of the interior under President George W. Bush.

Beloit City Manager Larry Aft said the Ho-Chunk stepped in and purchased the land from the developer. The Ho-Chunk did not return calls seeking comment for this story.

The Ho-Chunk resubmitted an application to the federal government, but not before negotiating an agreement with former Gov. Jim Doyle that stated the Ho-Chunk could have four Class 3 casinos. They currently have three.

"That's a full casino — machines, table games, roulette, poker — the whole shebang," Aft said.

The Beloit casino project will be a large-scale development, totaling $200 million in construction revenue and create 2,000 jobs, Aft said.

He said the proposed casinos in Beloit and Kenosha are not intended to absorb business from Wisconsin, but primarily from residents of the greater Chicago area.

"The greater Beloit area is 7,500 people. We can't sustain a casino that size," Aft said. "It would grab business from people traveling from the northwestern suburbs up I-90, just like the Menominee would grab from traffic coming up I-94."

Walker told the Beloit Daily News he was not aware of Doyle's agreement with the tribe until he read about it in that newspaper earlier this year. Walker told the Daily News that without that agreement he would apply the same three criteria he outlined two years ago, but will now need to look at the state's obligation to Beloit and the Ho-Chunk.

Aft expresses confidence the Ho-Chunk casino will be built.

"Clearly the Beloit project is moving forward … regardless of what additional casinos may or may not be built elsewhere," Aft said.

An intertribal agreement was struck between the Ho-Chunk, Beloit and Rock County in 2012. The Ho-Chunk is in the process of completing the required environmental impact study for the Bureau of Indian Affairs and expects it to be completed by early 2014, Aft said.

"Ten years ago, casinos were looked at through a jaundiced eye," Aft said. "Then people started to walk in these places and realized Al Capone wasn't shooting up the place or robbing the cook. Suddenly people realized these horror stories weren't true. Oftentimes, what surprises people is the number of senior citizens in there."

'They want to come home'

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Nemoir, with Enough Already! WI, said the group opposes all off-reservation casinos, including the Ho-Chunk casino in Beloit. He said the expansion of the state's economy through off-reservation gaming is "not the right direction."

"Tribal gaming is one of the worst examples of income redistribution," Nemoir said. "You are largely taking from a population that can ill afford to gamble and are giving it to another population."

According to census data for 2012, Menominee County, located midway between Wausau and Green Bay and comprising the same geographic area as the Menominee Reservation, is one of the poorest counties in the state. The average per capita income was $15,346, 56 percent of the state average of $27,192. The median household income was $32,017, or 61 percent of the state average of $52,374.

Of the 4,340 residents, 85 percent are Menominee Indian. Nearly 30 percent of the county's total population lives below the federal poverty level. That is almost two-and-a-half times Wisconsin's overall poverty percentage.

Craig Corn, chairman of the Menominee Tribe, said the need to pull the tribe out of poverty has led to plans for the Kenosha casino. It is estimated a Menominee casino would create 3,300 full-time jobs, with average incomes of $46,000 to $48,000 annually, plus health insurance.

Corn said despite the Menominee reservation's location 160 miles from the Kenosha casino, tribal members would be given priority for casino jobs – if they choose to move – and the entire tribe would benefit from the influx of revenue that could be funneled back into rebuilding the reservation.

"As tribal chair I always hear they want to come home (to the reservation)," Corn said. "But what do they have to come home to?"

The tribe's current economic state stands in sharp contrast to its prosperity more than 50 years ago.

The Menominee tribe was one of the country's wealthiest in the 1940s and 1950s. Their wealth came from lumber and forestry operations; their spiral into poverty was a result of the political atmosphere in post-World War II America.

A "termination policy" that aimed to strip tribes of their status as sovereign nations gained traction as lawmakers saw tribal values of communal ownership as too similar to communism.

Government officials instead wanted to assimilate the tribes into American society, saying it was time to free or emancipate them, with many equating the movement to the Emancipation Proclamation that freed the slaves during the Civil War.

In 1953, a federal resolution was passed that stated "tribal termination" was the new policy. The Bureau of Indian Affairs began compiling a list of tribes believed to have the economic prosperity to sustain themselves.

The Menominee Indian Tribe was at the top of the list, not just for Wisconsin but for the country. The Klamath tribe of Oregon was the only other tribe that was "terminated" by the federal government. The experiences of both tribes were so negative that other tribes strongly resisted, resulting in the federal government halting the program in the late 1950s.

But for the Menominee and Klamath it was too late. The only thing the two tribes could do to regain their tribal status was petition the federal government.

In 1973, President Richard Nixon signed a bill restoring the Menominee's status as a sovereign tribal nation, but not before the tribe's finances were drained and in-fighting over a faster approach to ending tribal problems led to violence.

In 1975, Menominee County reverted back to its reservation status, a new tribal constitution was completed in 1976 and in 1979 a new tribal government took office.

"That was a dark time for the tribe," Corn said. "This decision (to grant a casino) ranks right up there with Nixon's decision to restore our tribal status."

Thus, the Menominee fell from being one of the wealthiest tribes in the country to one of its poorest, while the Potawatomi, Oneida and Ho-Chunk, the state's wealthiest, are flexing their political muscles to maintain the status quo.

"The Potawatomi and Ho-Chunk are far wealthier than the Menominee. The Potawatomi are one of the wealthiest in the country," said Richard Monette, director of the Great Lakes Indian Law Center at the University of Wisconsin Law School. "They should have gotten together to help the Menominee run the casino, not let Hard Rock in and debate portions of the revenue."

Despite the offer by the Menominee to help make up any shortfalls, the Ho-Chunk and Potawatomi never changed their anti-Menominee casino position.

"The Potawatomi have said all along that they don't take opposing this project lightly," Ermert said. "But when they look at this, this just doesn't add up. So many pieces of the pie are already being eaten up by out-of-state interests that there isn't much left for the people this is supposed to benefit."

When asked why the Potawatomi or another Wisconsin tribe with profitable casino experience couldn't instead step in to assist the Menominee in running its casino, Ermert said the Potawatomi had to look out for its best interest.

"There are some rifts between the tribes on this issue," he said. "These types of things happen. There are 11 different sovereign nations in the state. They don't always agree on every issue."

The intense issue of gaming only makes agreement challenging, particularly when the stakes are seen as very high.

"Until gaming came along the tribes were impoverished," Monette said. "Should they be diversifying? Yes. But

for many tribes, gaming is the only way out."