In 1987 the American Supreme Court ruled that Native American tribes could not be stopped from building casinos on their land. This was expected to transform the economics of the community as those banned from gambling elsewhere could flock to reservations for a roll of the die. The gamblers came but the money generated didn’t always do much to benefit the community writes The Economist:

• Around half of all Native American tribes operate casinos and together they generated revenues of $28 billion in 2013.
• Tribes sometimes disperse these payments to their members through “per capita payments” that can range from a few hundred dollars to over $100,000 every year.
• Some members will even receive 18 years’ worth of payments in a lump sum once they turn 18.
• This has led to the rise of a successful business in car dealerships targeting those who just celebrated their 18^th birthday.
• Despite the windfall a study found that while between 2000 and 2010 casino revenues doubled, the overall poverty rate of the tribes increased from 25% to 29%.
• Tribes that make per capita payments are at higher risk of seeing poverty rates rise.
• In contrast, tribes that use their profits to invest in other businesses and help grow the overall economy have been more successful in combating poverty.
• The reason for this seems to be that generous per capita payments, while usually not enough to live on, help recipients fall into the trap of not working.

Read more about the intriguing study here.

Source: The Economist