Part 1 - Look Who's Cashing In At Indian Casinos - Hint: It's not the people who are supposed to benefit
Wheel of Misfortune
Who Gets the Money
The Moneymen
The Great Land Rush
Whose Tribe Is It, Anyway?

Part 2 - Playing the Political Slots - How Indian casino interests have learned the art of buying influence in Washington

Short Articles

Facts

As a result, tribes are pretty much free to cut financing deals as they like.  Sometimes investors' names surface; sometimes they don't.  Tribal leaders don't have to disclose executives' pay or management arrangements, report their profits, issue audited financial statements or divulge self-dealing contracts to the public or their tribe's members.  Not all these deals work out for the moneymen, but the ones that do yield spectacular returns.  A few of the outside investors have distinctive - some would say controversial - pasts.  Here are profiles of three:

The Poker Player.  Say what you will about Lyle Berman - and people have called him a lot of things: a pit bull, an intimidator, a fearsome competitor - but no one has ever accused him of modesty.  Of his casino-development company, Lakes Entertainment Inc., Berman once told reporters, "We're the most successful company in Indian gaming."  Because of the secrecy surrounding gambling on Indian reservations, it's impossible to know whether that's true.  But Berman has clearly done quite nicely since he began developing and managing Indian casinos more than a decade ago.  Among his real estate holdings: a ranch in Telluride, Colo.; a house in Palm Springs, Calif.; an estate called Casa Berman Palmillia on the Mexican Riviera; a condo in Las Vegas; and a $5 million estate in Wayzata, Minn.  By his account, as of September 2001, he was worth almost $69 million.

A born entrepreneur, Berman first revealed his flair when he turned the family wholesale-leather business into the nation's largest retailer of leather apparel, now known as Wilsons the Leather Experts Inc.  But Berman's true passion is gambling: he has won three national poker titles, and is a member of the Poker Hall of Fame at Binion's Horseshoe in las Vegas.  At a poker table, Gaming magazine once wrote, Berman plays "with the insight of a psychiatrist and the determination of a club fighter."

Of all the bets Berman has placed, the smartest was to gamble on Indian gaming with his 1990 decision to join forces with a Minnesota tribe, the Mille Lacs Band of Ojibwe Indians, and build a casino on its reservation 70 miles north of Minneapolis.  In return for managing the place, Berman and his partners got 40% of the profits for seven years, after which the tribe took over.  Eager to duplicate the model, Berman backed three more Indian ventures: the Grand Casino Hinckley, also in Minnesota, and two casinos in Louisiana.  In 1999 a predecessor company, Lakes Gambling Inc., which was publicly owned, earned $54.7 million in management fee income and had a net profit of $28.8 million.  Berman has done so well that in 1997 executive compensation guru Graef Crystal called his compensation package for the previous year - which totaled $18 million in salary and stock options - the "third most outrageous" in the U.S.

But not everyone has fared well from Berman's business ventures.  In the mid-'90s, his firm, then called Grand Casinos Inc., invested heavily in a hyped Las Vegas casino and resort, Stratosphere, that ended in bankruptcy court nine months after a ballyhooed opening.  Stockholders lost millions.  As for Berman, he unloaded a block of stock before it plummeted.  Disgruntled shareholders sued, claiming they had been misled over potential profits.  The suit was settled for $9 million, but in the agreement Berman denied the charges.

Today Berman has deals to develop five more Indian casinos: three in California, one in Massachusetts and one in Michigan at a prime spot just 70 miles east of Chicago.

The African Connection.  They don't make them more controversial than Solomon Kerzner.  There's the over-the-top casino he built on a South African homeland, taking advantage of apartheid; the money scandal that linked him to a Prime Minister who had to resign; the succession of wives, including a former Miss World; and these days the Mohegan Sun, a billion-dollar casino in Connecticut that he made happen.

Kerzner, 67, was ideally placed to make a killing as a financier in Indian gaming.  He has succeeded in gaming systems with loose rules before.  His native South Africa once banned gambling but allowed it in tribal areas carved out by the apartheid era white government for blacks to inhabit.  Kerzner, who began his career as an accountant, opened the first hotel-casino in 1977 in Mmabatho, the capital of the homeland of Bophuthatswana, about 150 miles from Johannesburg.  That year he began planning what would become the opulent Sun City resort-casino-entertainment-theme-park complex.  When it opened in 1979, Sun City - with four hotels, a 6,000 seat arena and a 46-acre manmade lake for water sports - became a favored destination for whites in Johannesburg and pretoria who wanted to escape their nation's moral restrictions and gamble, view soft porn movies and watch topless showgirls, white and black.  Dubbed the richest man in South Africa, Kerzner got into trouble in 1986 when he won permission for a hotel and casino in another homeland, Transkei.  To acquire an exclusive gaming license, he had paid more than $900,000 to Transkeian Prime Minister George Matanzima, who was forced to resign and was later jailed for fraud.  Kerzner maintained that Matanzima extorted the money, and the South African government declined to prosecute him.  Kerzner moved his base of operations to Britain, and from there he expanded his hotel and casino empire to France, Morocco and the Bahamas, where he opened the very profitable Atlantis Casino and Resort.

In 1994, as soon as the Bureau of Indian Affairs (BIA) formally recognized the Mohegans as a tribe, Kerzner and several partners reached an agreement to develop and manage the tribe's proposed casino.  Their fee: more than the legally allowed 40% of net revenues.  The deal with the NIGC was negotiated in private, and then chairman Harold Monteau rubber-stamped it.  The other two commissioners and several staff members objected, complaining that Monteau had worked out the generous package in secret.  Monteau is now a lobbyist on casino issues for more than a dozen tribes.

The Mohegan Sun replicates the outrageous sensibility of Sun City.  Its profitability is equally immoderate.  This year it became Connecticut's and Indian country's second billion-dollar casino (after Foxwoods) when annual revenue hit 10 figures.  The 32% increase over last year follows the opening of a second complex, which makes the Mohegan Sun's total gaming area larger than the combined area of the Mirage, Stardust and Tropicana casinos on the Las Vegas Strip.  Kerzner, the Mohegans and the NIGC will not release details of the full management agreement, but based on financial data drawn from government records, Kerzner will ultimately walk away with an estimated $400 million.  His partners will split another $400 $00 million.  And Kerzner is going after more.  He and his partners have entered into an agreement with the Wisconsin-based Sockbridge-Munsee Band of Mohican Indians to develop a casino in the Castskills.

The Malaysian Billionaire.  The biggest winner to date in Indian gaming is surely Lim Goh Tong, the 85-year-old Chinese-Malaysian businessman who bankrolled Foxwoods in northeastern Connecticut.  Foxwoods, the country's largest gaming venue, is actually a constellation of five casinos about 10 miles down the road from the Mohegan Sun.  On an average day, 40,000 people pass through what was a quiet, mostly rural patch of New England.

Lim knows how to compete for government favors.  He and his fortune as a contractor constructing huge infrastructure projects for the Malaysian government.  In the mid-'60s while building a hydroelectric dam in the country's Cameron Highlands, he dreamed of developing a resort and casino in the area, which is easily accessible to Kuala Lumpur, the capital.  Even though Malaysia is a predominantly Muslim country and Islam forbids Muslims to gamble, he secured the government's approval in less than a day.  In the more than three decades since, his exclusive agreement for what is still Malaysia's only casino has been a license to print money.

His deal in 1991 to underwrite the development of Foxwoods for the Mashantucket Pequots, a tribe of fewer than 200 members at the time, has proved similarly lucrative.  While financial details have not been made public, one can estimate the tycoon's windfall.  Lim provided two loans, one for $60 million, the other for $175 million.  His company, Kien Huat Realty Ltd., will receive interest on the loans for years to come.  But Lim really hit the jackpot with a clause that reportedly gives him 10% of Foxwoods' net income until 2018.  Foxwoods' gross revenue is more than $1 billion a year.  Assuming no downturn in the casino's fortunes, Time estimates, Lim and his family will walk away with $1 billion over the life of the agreement.  The U.S. tax bite?  As a foreign investor, Lim will pay at a steeply discounted rate - below that levied on an American family earning less than $20,000 a year.