by James A. Bacon
The population of the Pamunkey Indian tribe, which traces its lineage to Powhatan and Pocahontas, numbers about 200. Most members live on or near their 1,200-acre reservation north of the James River. Among other ways of making a living, they operate a shad hatchery, produce traditional pottery, and cater to visitors in their museum. For the most part, from what I can gather, they enjoy a working/middle-class standard of living. I have come across no evidence of any wealthy Pamunkeys. But if the General Assembly legalizes casino gambling this year, the tribe would strike it rich.
In 2016 the Pamunkeys won federal recognition as an Indian tribe, a status that entitles them to all manner of benefits not available to other Americans. A veritable industry has grown up around these entitlements, the most visible of which is the development and operation of casinos. Running casinos is not a skill set that Pamunkeys have acquired on their reservation. Nevertheless, the tribe is pursuing development of a casino on Norfolk’s waterfront in a project originally pegged at $700 million. Although the project has since been scaled back to $200 million, that still averages out to an investment of $1 million per Pamunkey.
News reports provide few details on how the little tribe proposes to finance the casino. But going to go out on a limb and suggest that the Pamunkeys are not putting up the equity for the project themselves. Just as the Eastern Band of Cherokee are backed by a major developer in their proposal to build a casino near Bristol, so, too, do the Pamunkeys have sugar daddy. According to news reports, that backer is Franklin, Tenn.-based billionaire Jon Yarbrough.
“I have worked with countless tribes and I know what it takes for a project like this to be successful,” Yarbrough told the Richmond Times-Dispatch. “I am confident that with the Pamunkey tribe’s strategic approach, resolve and sense of community, coupled with our financial strength, they can bring about a number of projects of which the tribe and the Commonwealth can be proud.”
Forbes magazine estimates Yarbrough’s net worth at $2.2 billion. He started a casino gaming company, Video Gaming Technologies in 1991, and sold it in 2014 for $1.3 billion. Major customers were tribal casinos. Yarbrough has worked with 35 tribes in more than 100 locations over the years. “These days,” says Forbes, “he manages his investments, which include real estate and tech stocks, through his family office Yarbrough Capital.”
So, here’s my question. What’s the Pamunkey’s split from the casino, and what’s Yarbrough’s cut? The Pamunkeys bring to the table virtually nothing other than its federally privileged status and its sympathetic image as a little Indian tribe trying to create economic opportunity for its young people and access to housing and health care for its elderly. Yarbrough’s team is providing the capital and the expertise — and I feel safe in surmising that Yarbrough will reap most of the financial benefits. He is not pursuing this project out of the goodness of his heart.
How does this thing work? What is the legal structure and the history of Indian casinos? Who actually makes the money from the casinos — the Indians or their investment partners? What is the political economy of the casino biz? The American Gaming Association, located in downtown Washington, D.C., includes in its membership 10 tribal casino operators ranging from the Cherokees, Choctaws and Chickasaws to the Seminoles and the Pechanga Band of Luiseño Indians. Presumably, one of the association’s jobs is to influence legislation and regulation affecting the flow of casino boodle to the Indian tribes.
Look, I love America’s market-based economic system. I love profits. Profits are glorious. Just one caveat: I’m not a fan of profits stemming from a business’ ability to manipulate the political system. That’s called rent-seeking, and an economic system built upon rent-seeking is called crony capitalism. Indeed, this Indian casino business smells like crony capitalism. But I don’t know the details, so I can’t say so for sure. Perhaps some enterprising Virginia journalist will find out.