Two Hundred Pamunkeys, $200 Million Project

Artist’s rendering of Pamunkey casino in downtown Norfolk.

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.

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15 responses to “Two Hundred Pamunkeys, $200 Million Project

  1. Anybody watch “Yellowstone” on Paramount Network? Part fiction, part faction, as I like to call it, but a dramatization of the competing interests of native Americans, real estate developers, investors, land holders, and local government. I’ll take this bet: the loser in this deal will be the City of Norfolk and its residents.

  2. Here you go: ” The Jack Abramoff Indian lobbying scandal was a United States political scandal exposed in 2005; it related to fraud perpetrated by political lobbyists Jack Abramoff, Ralph E. Reed Jr., Grover Norquist and Michael Scanlon on Native American tribes who were seeking to develop casino gambling on their reservations. The lobbyists charged the tribes an estimated $85 million in fees. Abramoff and Scanlon grossly overbilled their clients, secretly splitting the multi-million dollar profits. In one case, they secretly orchestrated lobbying against their own clients in order to force them to pay for lobbying services.

    In the course of the scheme, the lobbyists were accused of illegally giving gifts and making campaign donations to legislators in return for votes or support of legislation. Representative Bob Ney (R-OH) and two aides to Tom DeLay (R-TX) were directly implicated; other politicians had various ties.”

  3. I always thought the advantages the Indians had with regard to casinos was their tribal sovereignty. State laws were not applicable in tribal territory; therefore they could build and operate casinos within their tribal boundaries although state law may generally prohibited the operation of casinos. This proposed casino will not be located within the confines of the Pamunkey Reservation; it will be in downtown Norfolk. So, they need state authorization to build and operate it, which has been the subject of legislation in the last session and a JLARC study this past year. So why does the developer need the Pamunkeys to front for him? Sympathy?

    • I think – the right/ability is like a reparation but most tribes are poor and lack expertise to do it so they have to team up with someone who can fund the venture and others that know how to operate casinos.

      They are fair number of them widely distributed out west. Some of them seem busy and successful but others look like failed enterprises.

      We’ve been through Cherokee, NC dozens of times as we often go down that way to canoe… and each time my senses are assaulted!!! It’s not awful but it’s clearly got “tourist trap” plastered all over it. If you are ever in need of a plastic Bowie Knife or Tomahawk, this has to be the mother lode!

    • The city has to agree to sell the land to the tribe. Once the tribe owns the land and proves its within their original ancestral territory (which I believe they have already established), they can extend “reservation” status to the land and no local, state, or federal laws apply except by treaty.

    • You are right about Indian gaming law and you ask a good question.

  4. 460 Native
    Statistics provided by the National Indian Gaming Commission (NIGC), indicate that there are 460 Native gaming establishments in the US. These casinos are operated by 240 federally recognized tribes and offer Class I, Class II and Class III gaming. Gaming is divided into 3 classes.

    • All the money is in Class III. The other classes are things like bingo parlors. In fact, a small percentage of the Class III operations generate the lion’s share of the revenue and profits. Go big or go home.

  5. Just for info: Yes, it’s true the Pamunkey Indian Reservation is ‘north of the James River’, by about 20 miles as the crow flies. More accurately however, the reservation is ON the Pamunkey River, a tributary of the York River.”
    Note also that the Mattaponi Indian Reservation lies on the Mattaponi River, the other of the two main tributaries of the York River, and both reservations are in King William County.

  6. I think that the allure for the billionaire from West Virginia has something to do with the tax exemption the tribe will get on casino revenue. They will have to pay Norfolk for the land purchase, but then they’ll own that land, tax-free, whether the casino succeeds or not. Otherwise, the billionaire wouldn’t need to get in bed with the Pamunkey tribe, he would just open his own casino next to Harbor Park. Right?

    • Interesting question. My understanding is that when a tribe buys non-tribal land the purchased land remains non-tribal and subject to state and local law. If true, I’m not sure how they get a tax exemption.

  7. Jim – I get your point about rent seeking and crony capitalism. However, I’ll side with the rent seekers and crony capitalists against the mommy state clowns in our General Assembly. If people want to gamble why do our self-defined betters in the General Assembly have any problem with that? If some billionaire wants to take his chances financing a casino that will employ thousands of people in its construction and operation why does the Imperial Clown Show in Richmond object? If I can pay a bit less of Blackface Northam’s endless tax increases because legal gambling is being taxed (instead of bookies and criminals getting all the gambling money) why is that bad?

    I dislike crony capitalism but I dislike the Nanny State more. If the Pamunkeys can break the back of the stranglehold our hapless legislature has on the behavior of adult Virginians I say good for them.

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