Leading Indian businesses away from casinos

updated 3:11 p.m. ET Feb. 25, 2007

WINNEBAGO, Neb. - Rising from the bluffs of eastern Nebraska, on the sparsely populated, historically poor Winnebago Indian reservation, stands a glass-paneled office building.

The out-of-place structure is home to Ho-Chunk Inc., a $100 million business with more than 500 employees in six states, Mexico, Iraq and Afghanistan.

Ho-Chunk, the economic development arm of the Winnebago Tribe, is similarly remarkable in the world of American Indian business, because its success has little to do with gambling — besides getting seed money from casino revenue.

Employees of one of the company’s 16 subsidiaries pose as civilians on faux battlefields in Indiana so U.S. soldiers can hone their combat instincts.

A Ho-Chunk subsidiary in Mexico provides technical support for a new DNA laboratory used in criminal cases. And since 2005, Ho-Chunk subsidiary All Native Systems has had a multimillion dollar contract with the U.S. State Department to provide support for rebuilding Iraq’s governmental infrastructure.

Striving to break poverty's cycle
Ho-Chunk, derived from a Winnebago term that translates to “The People,” is trying to end the cycle of poverty that has plagued many reservations for hundreds of years. In Winnebago, median household income is around $20,000 and more than 40 percent of people don’t make enough to live above the federal poverty line.

“It’s not like we’re a rich tribe,” said Ho-Chunk CEO Lance Morgan. “We’re just one of the best of the poor tribes.”

Ho-Chunk is part of a growing trend of diversification by American Indian tribes.

Casino revenue is inherently unstable in many states. Contracts must be renegotiated with each new governor, legal fights over casino issues drain income from tribal budgets and legalized gambling in some states brings new competition.

“Tribes are finding that gaming, while it’s been successful for many, it’s not the only answer,” said Kip Ritchie, a vice president of the economic development arm of the Forest County Potawatomi Community in Wisconsin and touts a portfolio of investments and assets of more than $26 million.

Tribes ‘like emerging democracies’
Ho-Chunk and the Winnebagos are ahead of the game when it comes to sustaining a diversified economy, said Prof. Joseph Kalt, co-director of the Harvard Project on American Indian Economic Development.

“All these tribes are very much like emerging democracies and developing countries around the world,” he said.

Tribes across the country are at different stages of success in diversification, said Peter Homer, president of the National Indian Business Association.

“We are changing a culture that is a very giving culture into a hard-knocking, business-thinking,” Homer said. “We were horse traders. We never were used to making money and sticking it in our pocket.”

U.S. tribes now have more than $22 billion in annual revenues from gambling, according to government figures.

But casino profits deflated for the Winnebago Tribe after a 1994 Iowa law allowed casinos to be built just across the river from Omaha, a 1½-hour drive from the Winnebago reservation.

Fortunately, tribal members took $8 million in casino money in 1994 and 1995 and put it toward a new venture.

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