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Tribal Land in Arkansas Draws Scrutiny

4 min read

Two Indian tribes have made successful forays into Arkansas to reclaim historic ties through land ownership. One was made with the aid of a gift and the other through acquisition thanks to profits from casino operations in Oklahoma.

Neither property has served as a launching point for gambling ventures in Arkansas, where Oaklawn Park in Hot Springs and Southland Park in West Memphis hold state-granted monopolies.

If any tribes were to pursue a gambling development in Arkansas, the federal government would oversee the proposal and have final say. The review process to make such a possibility into a reality is not an overnight one.

Meanwhile, the eastward real estate moves by the United Keetoowah Band of the Cherokee and the Quapaw Tribe of Indians in Oklahoma continue to draw wary attention from some quarters.

“People talk and start rumors about opening a casino,” said Sean Harrison, a spokesman for the Quapaw Tribe.

The Quapaw purchased two adjoining 80-acre tracts south of the Little Rock Port Industrial Park in successive deals in October 2012 and April 2013 for a combined $1.3 million, cash.

The land was home to members of the tribe until a series of treaties disenfranchised the Quapaw and culminated in the move to Oklahoma in 1833. “Now that the tribe has the means, the tribe was excited to reconnect with the community down there,” Harrison said. “There’s a strong desire to own a piece of the tribe’s historic homeland. It’s a homecoming.”

The Quapaw gained the means to buy ancestral land in Arkansas through its $360 million Downstream Casino & Resort in northeast Oklahoma. Opened on July 4, 2008, the 350,000-SF casino is home to 60 gaming tables and more than 2,000 slot machines and is supported by two hotel towers with a total of 374 rooms and 2,000 ground parking spaces.

The project generated an unintended tiff with state officials in Kansas spurred on by Penn National Gaming Inc., which had hoped to manage a proposed state-owned casino near Downstream Casino.

Driven by competitive concerns, Penn National unsuccessfully “engaged in efforts to stop the development of the Quapaw casino.”

“Those efforts included investigating whether the proposed casino development was in violation of applicable environmental regulations, and participating in and financing a federal lawsuit against the United States Department of Interior, in which it was alleged that the federal government had improperly acquired and conveyed portions of the Quapaw’s Oklahoma land, such that the land could not legally be used for gaming purposes,” said Judge Richard D. Rogers of the 10th U.S. Circuit Court.

The establishment of a land trust, in which tribal land is transferred to the federal government, is an important economic and political consideration for Indian commerce.

“This issue of land trust is a politically hot topic and has intensified in the gaming realm,” said Stacy Leeds, dean of the University of Arkansas School of Law in Fayetteville.

Land held in trust for a tribe falls under federal jurisdiction and is exempt from state and local taxes as well as local land-use regulations. As sovereign nations, tribes don’t pay taxes of any sort on business conducted on trust land.

The trust process grew out of an effort to right past wrongs. Between 1887 and 1934, the federal government took nearly two-thirds of reservation lands from the tribes without compensation.

The trust process was created to help tribes regain original land bases. The Quapaw Reservation in Oklahoma originally totalled 56,000 acres, but tribal lands are a tiny fraction of that today.

The land trust process is conducted through the Bureau of Indian Affairs, an arm of the U.S. Department of Interior. Land trust applications are submitted, subjected to public commentary and considered under two headings: gaming and other purposes.

Indian gambling became a growing source of revenue on tribal land after it was codified by federal law in 1988.

The take from class 2 gambling (bingo, pull tabs, lotto and punch boards) on tribal land isn’t subject to state and local taxation. However, class 3 gambling, featuring poker or blackjack with actual cards, traditional roulette wheels and real dice, is treated differently.

Under federal law, a compact between tribe and state is required before class 3 casino-style gambling is allowed on tribal land. That arrangement, reviewed by federal officials, yields a negotiated financial payout for the state.

If there were an Indian casino in Arkansas, the operation would be entitled under federal law to offer all the forms of gambling allowed at Oaklawn and Southland.

Off-reservation casinos are a rarity that the United Keetoowah Band of the Cherokee tried but failed to accomplish in Arkansas seven years ago.

The tribe hoped to establish a land trust on 10 acres provided by Sebastian County businessman Benny Westphal to establish a casino. Federal officials ruled that land was too far removed from the Keetoowah’s Oklahoma base 90 miles away near Tahlequah.

The Fort Smith casino proposal was preceded by the tribe’s effort to establish a Cherokee reservation in Arkansas in the early 1990s.

The Keetoowah tried without success to acquire land around Arkansas that it intended to put into a land trust for a reservation until receiving a gift of 4 acres in Scott County from Wanda Gray in 1994. The land is about 2 miles north of Waldron, off U.S. 71.

“There’s not been anything to date that we’ve put there,” said Tim Good Voice, executive director of tribal operations. “There has been some gas exploration, but that didn’t pan out.”

Between 1817 and 1828, the Cherokee owned a large patch of the Arkansas Territory, including land near Fort Smith, before the federal government relocated the tribe to Oklahoma.

The private ownership by the Keetoowah and Quapaw is the only direct tribal connection to Arkansas land.

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