Bonfire of the Vanities, Indiana Style
- posted by Jim Leitzel @ 8:16 PM

What is it about goods associated with vice that makes authorities of various sorts want to destroy those goods, in public or with witnesses, if possible? Bonfires in Pakistan, crushing by a "double-roller" in Oregon -- and today, we learn that an Indiana judge has sentenced a man convicted of a gambling crime to pay some restitution. Oh, and to watch as the 38 gambling machines that were taken from his nightclub are destroyed, of course.

Meanwhile, it is a legal gambling machine that has a New Mexico man in a bit of a lather, understandably. The nickel-slot machine announced that he had won a jackpot worth more than one and a half million dollars. Casino authorities soon informed him, however, that he hadn't really won. The machine was just kidding, or rather, malfunctioning, and the rule written right there on the machine says that if the machine kids, winnings are voided. The disappointed gambling man is not folding yet; he is suing, but the case is complicated by the fact that New Mexico is unlikely to have jurisdiction, as the dodgy slot machine is located on a Native American reservation. [Thanks to Overlawyered for the pointer.]

Labels: gambling, Native Americans, slot machine

 
Whiteclay Revisited
- posted by Jim Leitzel @ 11:17 PM

Fourteen people live in Whiteclay, Nebraska, it seems. Daily alcohol sales in Whiteclay amount to the equivalent of 10,000 beers: that's a Ruthian per-resident average of more than 714 beers per day.

Of course, it is not the residents who are buying all of those beers. Whiteclay is a creature of prohibition, in this case, the prohibition of alcohol sales within the neighboring Pine Ridge Indian Reservation. There are about 20,000 folks living on the reservation, and the majority of those who are in the labor force are unemployed. The alcohol problems on the reservation are staggering.

Activists have been trying for years to close the beer sellers of Whiteclay; last month, demonstrators blockaded the road linking the reservation with the village. But the alcohol continues to flow into the reservation, and it is far from certain that if Whiteclay were to disappear tomorrow, the situation would improve very much.

All of the information above is drawn from this recent story in USA Today. But it sounded sadly familiar to me, and sure enough, Vice Squad linked to a rather similar story on February 12, 2004. A quick comparison indicates that since that time, there has been a slight fall in the number of Whiteclay residents, a rise in the population on the reservation, and a rise in alcohol sales in the village.

Labels: alcohol, Native Americans, Prohibition, South Dakota

 
Vicewire, 5/31/2005
- posted by Ryan @ 7:28 PM

1) Here is a different type of "rehab" for drug and alcohol abuse: doing time in the pew rather than in jail.

2) A story about the inability of convicted prostitutes to teach in Oregon.

3) Reminiscent of the Opium Wars 150 years ago, China has put out an appeal to the public to help stop narcotics trafficking and abuse.

4) In other Oregonian news, the recent rejection of an off-reservation Indian Casino has some wondering if this of less off-reservation casinos trend is gaining momentum: "There are many members of Congress who are ... deeply concerned about the proliferation of off-reservation Indian gambling casinos" - Rep. David Wu, D-Ore.

Labels: China, drugs, Native Americans, prostitution, treatment

 
McCain Rushes In Where Supremes Fear to Tread
- posted by Jim Leitzel @ 6:58 PM

How do you know when the chairman of the US Senate's Indian Affairs Committee is launching an attack on Indian gaming? "'I don't want this hearing to be viewed as some attack on Indian gaming,' [Senator John] McCain said."

One of the main issues, it seems, is that bingo machines have evolved to where they look and act a lot like slot machines. That is a problem for states where Indian casinos are permitted to operate bingo machines, but not slot machines. And although it is not mentioned in the linked article, it is also a problem in states where Indian casinos are permitted to operate slot machines along with bingo machines. Why? You will be surprised to learn that there is a revenue angle. The pacts that such casinos sign with the states often include a provision whereby the tribes pay a per-slot-fee to the state. Federal appellate courts have ruled that bingo machines are not slot machines, and the Supreme Court has not taken up appeals -- so state gambling revenue is on the line.

Labels: bingo, gambling, Native Americans, slot machine, Supreme Court

 
Vertical Integration in the Cigarette Market
- posted by Jim Leitzel @ 11:54 PM

Many Native American tribes sell cigarettes from their reservations, in part because such sales, formally or informally, are not subject to the usual array of federal and state taxes. But not many reservations actually manufacture the cigarettes that they sell. A Washington state tribe, however, intends to become a cigarette producer, using tobacco grown in the southwestern US:

The Squaxin tribe, located on a small patch of land 50 miles southwest of Seattle, will begin selling its "Complete" brand of cigarettes made by its Skookum Creek Tobacco company for $16 for a carton of 10 packs.

That's about the price of two packs of premium-brand cigarettes in New York City, and well below the $35 to $70 per carton normally charged in the United States. Premium brand and generic cigarettes can be bought on other Indian reservations for as low as $22 per carton.

Labels: federalism, Native Americans, taxes, tobacco

 
Avoiding Cigarette Excise Taxes Via the Internet
- posted by Jim Leitzel @ 7:56 PM

Today's New York Times includes this front page story on cigarette sales over the internet, and in particular, on those sales conducted from Native American reservations. Purchasers of cigarettes over the internet are legally liable to pay the relevant excise tax for the state in which they reside -- but this liability is not well enforced. The obligation to pay the taxes applies to purchases from Indian-operated businesses, too, if the buyer is not a tribe member. But the enforcement of excise tax collections from American Indian businesses is even more problematic, owing to the partial sovereignty of the tribes on the reservations. Not surprisingly, given the growth of the internet and the substantial increases in cigarette excises in many states, effectively untaxed sales from Indian-operated websites have been growing rapidly. The Times story centers on tobacco sales from the Seneca tribe, located in New York:

Yet sales from Indian reservations, particularly from the Seneca lands, clearly account for a big portion of the growing business. A study commissioned by the Seneca tribal government found that Seneca cigarette sales totaled $347 million last year. About 95 percent were sold via the Internet or phone; the balance was accounted for by sales from the smoke shops that dot Seneca lands.

Generally, sin taxes can be a pretty potent element of vice policy, decreasing consumption while raising significant government revenue. But legislated vice taxes, like other taxes, have to be sensitive to the mechanisms of tax avoidance and evasion. The internet looks as if it has, for now at least, lowered the cost of evading cigarette taxes, which will make it hard for those jurisdictions with the highest excises to maintain their high rates. [Incidentally, a reminder that I am not a lawyer and you certainly should not rely upon any of the information or misinformation in Vice Squad. Further, purchases of untaxed cigarettes over the internet are not free of all risk that a tax collector will come calling. Some individuals, who perhaps did not even know that their low-priced internet cigarette purchases were officially taxable, have been rudely surprised upon receiving very hefty tax bills months later. A federal law requires that interstate sellers of cigarettes maintain a list of purchaser names and addresses, to facilitate tax collection.]

The Times article mentions a working paper on the internet as a mechanism for cigarette excise tax evasion, by economists Austan Goolsbee and Joel Slemrod. Their paper is available here.

Labels: internet, Native Americans, taxes, tobacco

 
What Constitutes a Slot Machine?
- posted by Jim Leitzel @ 6:38 PM

Last week I mentioned an article detailing how slot machines are designed to induce us to fill them with money. Just as the pleasure pathways in our brains evolved in a world without purified cocaine or distilled alcohol, so did they evolve without slot machines. People seem to be programmed to find intermittent reward schemes to be particularly motivating: if things always turn out good or bad, there's little reason to put forth any effort. But lots of negative feedback combined with occasional, random positive reward, can be quite reinforcing, as we "search" for what we can do to reproduce the good outcome. Such an "intermittent reward" system has been brought to a state of near perfection by the designers of slot machines, and some people succumb to gambling addiction.

But today's question is, what is the definition of a "slot machine"? The reason it matters is that Indian tribes that operate casinos have to sign agreements with the state in which they are located. The agreements detail what payments the casinos have to make to the states. A typical term in the agreement is that the casinos pay to the state a percentage of the revenue earned by slot machines. But what if you have a machine that looks and acts a lot like a slot machine, but somehow falls outside the definition? Then the revenue raised by that machine doesn't fall under the slot machine provision, and you can avoid those payments to the states.

The Supreme Court of the United States, believe it or not, was recently asked to resolve the "what is a slot machine" issue, but it declined to take it up. Here's the story from SFGate.com; here's an excerpt:

States fear Indian tribes with casinos could avoid sharing revenue with them by replacing slot machines with machines that look and play much the same but are classified differently, under recent federal court rulings.

The Denver-based 10th U.S. Circuit Court of Appeals, which covers New Mexico, has ruled that machines featuring bingo- and lottery-like games are not slots under the federal Indian Gaming Regulatory Act. The 8th Circuit, based in St. Louis, has ruled the same.

The Bush administration, backed by nine states, had asked the Supreme Court to hear an appeal of the rulings, arguing the machines were "indistinguishable in any meaningful sense from any other slot machine along the casino wall." The Supreme Court on March 1 declined to hear the appeal.

Labels: addiction, bingo, gambling, Native Americans, slot machine, Supreme Court

 
Pine Ridge Indian Reservation Will Not Hold Alcohol Referendum
- posted by Jim Leitzel @ 8:06 PM

In the final chapter (for the time being) in a case that Vice Squad has been following, anti-alcohol forces showed up in force and the Oglala Sioux Tribal Council voted 10-2 not to hold a referendum on legalizing alcohol sales on the Pine Ridge (South Dakota) Indian Reservation. Problems with alcohol are endemic on the reservation, despite the ban on sales.

Labels: alcohol, Native Americans, South Dakota

 
South Dakota Alcohol Update
- posted by Jim Leitzel @ 6:21 PM

Vice Squad updates the ever-fascinating stories surrounding the evolution of alcohol regulation in South Dakota....

(1) You're 17 years old, you have a beer or a beer and a half, you drive home, you get stopped by police, you have a BAC of .02 -- and then you spend a week in jail. Or maybe you have one drag on a marijuana cigarette -- there you go, a week in jail, perhaps. Welcome to the real world of zero tolerance for youths and alcohol and drugs. The feds, however, think that .02 shouldn't cost you more than 48 hours in jail, and they are pressuring states to agree. South Dakota lawmakers are caving in to the mad leniency of the ultra-liberal central government.

(2) The state legislature refused to go along with the request by counties to raise the alcohol tax and earmark half the proceeds for the counties. So now Pennington county (and perhaps others) hope to bring about the reform via a state referendum.

(3) The Pine Ridge Indian Reservation is dry, but it also is beset by one of the most severe alcohol abuse problems in the country. There is some current movement on two fronts. First, for economic reasons, the reservation is thinking of lifting its alcohol ban -- a referendum could be scheduled for the next month. Second, if there are no alcohol sales on the reservation, how do residents acquire alcohol? No doubt through a variety of means, but one of the most popular is to travel to the nearby town of Whiteclay, Nebraska. A bill in the Nebraska state legislature aims to hold the line (or at least to slow down its forward momentum) on liquor licenses in Whiteclay. Here's a brief description of the current situation from the linked article, which is an opinion piece in the Yankton (S.D.) Press and Dakotan:

"It's no exaggeration to state that the economy of Whiteclay, Neb., is based almost entirely on an epidemic rate of alcoholism on South Dakota's Pine Ridge Indian Reservation. Whiteclay is a village of just 16 people located about a mile from the South Dakota border and from a 15,000-person reservation that bans all alcohol sales. However, there are four liquor stores in Whiteclay that sell, by one estimation, about 11,000 cans of beer per day mostly to residents of the 5,000-square-mile reservation, which has one of the highest alcohol-mortality rates in the country."

Labels: alcohol, driving, Native Americans, South Dakota, taxes, teens

 
From Sodomy to Polygamy
- posted by Bernard Bradshaw @ 1:33 AM

Is Justice Scalia's fear manifesting? Are we seeing a wave of challenges to various states' criminal sex laws in the light of the Supreme Court's June 2003 ruling in Lawrence v. Texas? The Lawrence decision ruled sodomy laws unconstitutional (see this earlier Vice Squad blog on Lawrence.) Alexandria Sage of the AP reports that a civil rights attorney is challenging Utah's ban on polygamy in federal court. The case involves three people who wanted to enter into a plural marriage but were denied a marriage license by Salt Lake County. It seems that we have only begun to see the reach of the Lawrence decision.


Smoke Shops and Cigarettes
The AP has an article reporting that a Native American tribe is appealing a federal court decision that the state of Rhode Island correctly shut down its tax-free tobacco store after a violent raid. The federal trial court ruled that the Narragansett tribe was subject to state taxes on tobacco, while the tribe maintains that RI state officials wrongly executed a search warrant on sovereign tribal lands. The violence resulted when tribal police resisted the RI state officers' advance on the tribe's land. Arguments are scheduled before the 1st Circuit some time in May.

The AP reports that the Supreme Court refused to hear an appeal by cigarette manufacturer R.J. Reynolds Tobacco Co to challenge an award to a widow of a teacher who died of cancer. At issue was whether the Supreme Court should consider blocking a Florida law that allows lawsuits against cigarette makers over their products, because of federal regulations for the making and sale of cigarettes.

Labels: litigation, Native Americans, sex, Supreme Court, tobacco

 
Alcohol in South Dakota
- posted by Jim Leitzel @ 6:44 PM

Vice Squad's loyal reader keeps asking, "Hey, where are the South Dakota alcohol stories?" From that prodding comes these two quick links on potential changes to alcohol policy in parts of the Mount Rushmore State. First, the Oglala Sioux Tribe is thinking of legalizing purchase and sale of alcohol on the Pine Ridge reservation; second, for the thirteenth straight year, Pennington County in South Dakota wants the state to impose (and earmark for county use) a 5 cents alcohol excise tax increase. Currently, the county receives no alcohol tax revenues, though it runs serious expenses in locking up under-the-influence offenders. The linked report notes: "Commissioners say at any given time alcohol use and abuse accounts for about 80-percent of the Pennington County Jail population."

Labels: alcohol, Native Americans, South Dakota, taxes

 
Native Americans as Suppliers of Vice
- posted by Jim Leitzel @ 3:35 PM

The September/October edition of the recently founded magazine Legal Affairs
holds much of interest for vice policy enthusiasts, including this article
concerning Native American casinos. "Today 221 tribes operate 348 casinos
in 30 states, making more than $14 billion a year." (Those interested in
Native American gambling should also see this report prepared in the late
1990s for the National Gambling Impact Study Commission.)

How did Native American tribes end up as major players in the gambling
industry? This was a case of almost accidental public policy. The genesis
was a 1987 Supreme Court decision that prevented states that allowed
legal gambling from outlawing gambling operations on tribal lands
within their borders. A year later, Congress passed the Indian Gaming
Regulatory Act, which regularized the growth of Native American gambling
but, contrary to the hopes of some of its supporters, did little to curtail
it. The growth of the Native American casino industry, in turn, increased
pressure in nearby states or jurisdictions with stricter gambling controls
to expand legalized gambling, to grab a share of the significant tax revenues
that legal gambling can generate.

Native American reservations are also big players in the tobacco market,
a condition driven primarily by their ability to avoid or evade the
significant excise taxes most states place on tobacco products. An attempt
by New York state to close the tax loophole is currently being challenged
by the Seneca Nation; Oklahoma recently entered into an agreement with the
Choctaw, Seminole, and Chickasaw nations that requires them to turn over
one-quarter of the state tax on their cigarette sales.

Labels: casino, gambling, Native Americans, tobacco

 
Internet Gambling
- posted by Jim Leitzel @ 11:38 PM

Access to legal gambling has accelerated in recent decades, particularly in the United States.
State lotteries, effectively forbidden during the 20th Century until 1964, spread rapidly in the
1970s and 80s, and now 38 states offer lotteries. Casino betting, spurred in part by
legislation in 1988 that codified the rights of Native American tribes, also skyrocketed; by the
end of the 20th century, more than half of the US states housed legal casinos, whereas only
a quarter-century earlier, Nevada was the sole state offering casino gambling. Developments
in many other countries also tended towards liberalization of gambling, as exemplified by the
introduction of the British National Lottery in 1994 and the expansion of casino gambling in
Britain, Australia, and Canada.

Somehow, in overall terms, this enormous increase in legal gambling opportunities has taken
place with rather limited controversy. For the most part, I would say, folks accept the new
status quo and are not that anxious to roll back legal gambling to the situation of the 1960s
or even the 1970s. Further, one of the major remaining legal constraints, that forbidding
betting on sporting events (except in Nevada, basically), is widely and almost openly evaded.

Nevertheless, a major battleground remains, and that concerns gambling via the Internet.
Gambling websites are essentially illegal if they are housed in the US, but in many other
countries they are legal, licensed, and welcome. These sites offer betting in various forms to
US citizens, both over the phone and over the web. That Internet wagering sites are quite
popular with Americans is evidenced by the fact that they make billions of dollars in revenues
from US-based bettors.

Senator Jon Kyl (R, AZ) has been waging a battle against Internet gambling for some time
now. The recent suggestions from his Republican Policy Committee (which can be
downloaded as a PDF from this page) are aimed at preventing financial
institutions from facilitating payments from bettors to Internet gambling operations. (Thanks
to my primo research assistant, Ryan Monarch, for digging up the linked document.) This
proposal is an improvement over Sen. Kyl’s preferred legislation circa 1997, which would have
made gambling over the Internet a federal crime, creating the specter of grandmothers who
played a few hands of Internet video poker being arrested by federal agents. A bill to make
the consumption of Internet gambling a federal crime actually passed overwhelmingly in the
Senate in the late 1990s.

And are we really all that worse off because that bill did not become law (so far, at least)?
Like most vices, Internet gambling is prey to what I call the three and one-third standard
vice concerns: kids, addicts, externalities, and (the one-third component) harms to
non-addicted adult indulgers themselves. But the existence of the three and one-third
concerns does not imply the desirability of a prohibition backed by criminal penalties,
whether the vice that we are discussing is gambling or pornography or heroin consumption.
(And of course, lots of folks take some pleasure from gambling.)

The three and one-third vice concerns, as well as "harm reduction" measures, will
undoubtedly be recurring themes as the Vice Squad blog develops. For now, let me just note
that the approach of many other countries towards Internet gambling is less punitive than that
envisioned by Sen. Kyl. The British, in particular, are moving towards a regulatory structure
for Internet gambling, and are liberalizing their gambling restrictions more generally. With
respect to the Internet, British citizens can already legally gamble from their homes. Websites
based in Britain currently cannot offer gambling, but the government intends to change
that. A British licensing system will be established that will
attempt to ensure that licensed on-line casinos meet high standards of quality. (The Internet
is not the only method to bet from home in Britain. Recently, wagering via interactive television
has become popular in the UK.)

By the way, the New York Times Magazine from a month ago (August 17, 2003)
contained a fine article ("Bookies in Exile" by William Berlind) on American web gambling
operators based in Costa Rica.)

Labels: Britain, casino, gambling, internet, Native Americans