Connecticut, The East

Jackpot: How a Questionable Indian Tribe Built the Richest Casino in the World and then Lost it All in Ledyard, CT

Jackpot

In 1995 Foxwood Resort Casino hit the jackpot. It was the richest casino in the world. Yet it still had to borrow money to make improvements.

In 1995 the richest casino in the world was not located in Las Vegas or Atlantic City. It was located in Ledyard, CT. Foxwoods Resort Casino operated by the Mashantucket Pequot Indian tribe enjoyed gross earnings exceeding $1 billion, with net earnings in excess of $300 million.

Because it was on Native American land, the operation paid no state or federal taxes. The land it was sitting on had been purchased for the Pequots with money held in trust by the federal government to settle land rights claims arising from a lawsuit. In other words, the Pequots had paid nothing for the land. What’s more, the Pequots had deep-pocketed investors. Just a few years earlier they had secured a $175 million loan from Malaysian investors.

By any measure, the Pequots enjoyed an idyllic situation. Huge earnings. Low costs. Lavish financing. Yet in 1995 Foxwood Resort Casino had to borrow money to pay for upgrades to its resort. How could that happen?

 

The Justice of Reparations

Pequot Indian

Large tracts of Indian land had been taken illegally by the states, including those belonging to the Pequots.

The Pequots story begins in the mid-1970’s at the high water mark of liberal efforts to address decades of injustice suffered by minorities in the United States. It began with an idealistic young attorney named Tom Tureen who saw the poverty and suffering of Native Americans and sought to correct it. It began with Tureen’s discovery of an obscure statute from 1790 signed by George Washington that forbade states from acquiring Indian land without the approval of the federal government.

As Tureen discovered, large tracts of Indian land in Maine, Massachusetts and Connecticut had been taken illegally by the states in violation of the statute. Nearly 200 years later, he set about getting those Indian lands restored to their rightful owners.

Today we would call it reparations, the making of amends by paying money or providing things to those who have been wronged. At first blush, paying reparations might seem like simple justice, but for reparations to be just those who bear the cost must be the right people, and those who get the reward must be entitled to it. And that’s not so simple.

 

The Suit

17th century map

17th century map showing Pequot land already claimed by European nations.

In the case of the Pequots, at issue was an 800 tract of unused tribal land that had been auctioned off in the 1850’s by the state of Connecticut, not in an evil land grab, as it turned out, but to buy suitable housing for the impoverished Indians who resided on the 200-acre reservation that remained. Nonetheless, the sale was in violation of the 1790 statute requiring federal approval, so in 1973 Tureen sued to recover it.

The Pequot’s case was just one of many Tureen was pursuing for Native American tribes up and down the east coast. If the tribes prevailed, hundreds of thousands of acres stood to be repossessed from private landowners and returned to the tribes, including most of the state of Maine. Tureen’s strategy wasn’t actually to get hold of all that land but to frighten the states into settling, providing compensation to the tribes in the form of money.

In the case of the Pequots, however, the land was front and center because the tribe needed to establish its bona fides by showing it required the land for tribal purposes, and that was because a question existed as to whether the Pequots were really a tribe at all.

 

How to Become a Native American

Shack in the woods

When the Commissioner of Indian Affairs approached Elizabeth George at her cabin in 1973, she was the only one living on the reservation.

In 1973 the poorest person living in Ledyard, CT was Elizabeth George. She was a White woman living on the 200 remaining acres of the Pequot reservation. She was the only one who lived there. She claimed she was descended from the Western Pequot people. When John Stevens the Commissioner of Indian Affairs traveled out to inform her of her right to reclaim tribal land, he was met in the driveway by her son, Skip Hayward, who told him he was also a Western Pequot. Hayward told Stevens there were five people living on the reservation, but in fact Elizabeth George was the only person who resided there permanently. A month later, Elizabeth George died. Thus, when Tom Tureen began his efforts to reclaim land for the Western Pequot Indians no Pequots lived on the reservation.

Prime Connecticut woodland

Skip Hayward was offered 800 acres of prime Connecticut woodland if he would reestablish the tribe.

When Tom Tureen sat down with Skip Hayward to explain how he was entitled to 800 acres of prime Connecticut woodland, Skip Hayward was making $229 a week. He had no savings and a terrible credit history. On job and license applications he had filled out in the past he had routinely referred to his race as White. Now he was entitled to claim land belonging to others as long as he could convince the authorities he and his family were Native Americans.

At Tureen’s suggestion, Hayward gathered twenty members of his extended family, some of whom did not know him, and some of whom had never stepped foot on the Pequot reservation, and pitched them on drafting a tribal constitution. He also urged them to move onto the reservation in order to establish themselves as a tribal entity so they could join Tureen’s litigation. Most importantly, he urged them to stop identifying themselves as “Caucasian” and start referring to themselves as “American Indian”. The tribe they reconstituted was henceforth to be known as the Mashantucket Pequots.

 

Stacking the Deck

Women's movement of the 1970's

Women’s movement of the 1970’s. Social reform was in the air.

The land they were trying to siege was in private hands. Twenty-seven landowners were named as defendants in Tureen’s suit. Some had had the land in their families for generations. They were completely blindsided. Some knew Skip Hayward from high school and had no idea he was an Indian, much less entitled to their land. At first they scoffed at the ridiculous claim he was making, but they had another thing coming.

The mood of the country in 1976 was very much in favor of righting past injustices. The Civil Rights movement had occurred less than a decade earlier. Women’s Rights and Gay Rights were constantly in the news. And now Native Americans would get their chance at redress. Money poured in to help Hayward and his newly reconstituted tribe. The Connecticut Department of Economic Development awarded them a $20,000 historic preservation grant. The Catholic organization Campaign for Human Development gave them $45,000. HUD loaned them $1 million. The governor was on their side. When the landowners appealed to the federal government to intervene on their behalf, they were rejected.

For the Mashantucket Pequots it was easy enough to rebuff any objections. Whenever Skip Hayward and his family were questioned as to their motives or their legitimacy, they played the aggrieved minority card, claiming any opposition was yet another attempt by the White man to strip them of their land. It was hard to make an argument against that. Before long, it became obvious what was going to happen. The landowners were not going to win. The deck was stacked against them. Even their lawyer thought so.

 

The Settlement

Senator Lowell Weicker

Senator Lowell Weicker of Connecticut supported the legislation that would give the tribe the land.

Attorney Jackson King was savvy enough to understand that even if his clients won in court they were going to lose. After a long legal battle, they might win the right to retain their land, but then they would have to pay King and his colleagues out of their own pockets. Better they should settle.

The settlement he came up with proposed using money appropriated by Congress to purchase the defendants’ land on behalf of the Pequots. It would be a win-win for everybody; the landowners would get paid, the attorneys would get paid, and the Mashantucket Pequots would get 800 acres free of charge. Only the taxpayers would get shafted. It was masterful. Enlisting the support of Senator Lowell Weicker of Connecticut, legislation was introduced. But Skip Hayward and his family weren’t satisfied. They wanted more.

Working with Tom Tureen and Jackson King, they crafted an agreement that removed regulatory authority from the state government on the reservation, which left open the door for gambling. Skip Hayward had big plans for the reservation. He planned to build a gambling mecca in Connecticut, a state that prohibited gambling.

 

Stolen Land

The Mashantucket Pequot reservation on a map of Connecticut

The Mashantucket Pequot reservation on a map of Connecticut

On October 18th, 1983, after years of back and forth negotiations, the US Congress passed the Settlement Act appropriating $900,000 for the purchase of land by the Mashantucket Pequot Indians without ever checking to see if the tribe met the legal requirements to be identified as an Indian tribe. According to the Bureau of Indian Affairs, for a group to be identified as a Native American tribe it had to have identified as a tribe on a continuous basis since 1900. Skip Hayward and his family had not identified as Native American, and the tribe had not even had a constitution, until it became expedient for filing a lawsuit in 1973.

In addition, the law required a tribe to have an uninterrupted chain of existence going back through history. A study of genealogical records by the author Jeff Benedict for his book Without Reservation: How a Controversial Indian Tribe Rose to Power and Built the World’s Largest Casino found that Hayward’s claim through his mother Elizabeth George to Pequot ancestry was shaky at best. Almost everyone in Elizabeth George’s line had identified as White or Black, which was to have interesting ramifications for the tribe in the years ahead.

Nevertheless, the legislation passed. Skip Hayward and the Mashantucket Pequots were to be given taxpayers’ money to purchase land they claimed was stolen from them. On their newly expanded reservation they were planning to build a massive casino.

 

Las Vegas Nights

Craps table

The Pequots built a Class III gaming facility in a state that prohibited gambling.

The potential was breathtaking. Ledyard lay halfway between New York and Boston. Ten percent of the American population lived within driving distance of Ledyard. And the Northeast was a vastly under served geographic area in a country hungry for gambling. Everyone who was working with the Pequots saw the possibilities, including their former legal adversary, Jackson King. Hired by the landowners to represent their interests, King ended up working closely with Hayward and Tureen to craft the settlement agreement. Now he began working for the Pequots in earnest.

Foxwoods blackjack table

Foxwoods blackjack table

Empowered by top-notch lawyers, Skip Hayward rapidly expanded his gambling operation from a bingo hall to a Class III gaming facility that included poker, slot machines and table games. He did it by exploiting a loophole in federal law that says Class III gaming is only permissible on Indian lands if operations are located in states that permit such gaming for “any purpose by any person, organization or entity.”

Connecticut, while explicitly outlawing casino gambling, did have a provision allowing for charitable organizations and non-profits to conduct “Las Vegas Nights” for purposes of fund raising. Hayward’s lawyers used the loophole to win federal cooperation in allowing casino gambling on the Mashantucket Pequot reservation. Connecticut officials were outraged, but there was little they could do about it. According to the settlement agreement fashioned by Tureen and King, they had no regulatory authority over the reservation.

 

Influence

Slot machines at Foxwoods Resort Casino

The tribe appeased the state of Connecticut by offering it 25% of its slot revenues.

But Hayward and his lawyers could not have accomplished what they did without influence of friends in high places, and that influence didn’t come cheap. In addition to the millions of dollars loaned or granted to the tribe by a succession of do-gooder organizations keen to right the wrongs inflicted on Native Americans, the Pequots sought outside investors in the form of a Malaysian-based company whose principal activities included hotels, resorts, property development and the biggest casino in Malaysia. The Malaysians loaned the Pequots an additional $60 million, more than enough along with their other resources to persuade politicians at the highest levels to see things their way.

Grand Pequot Tower

Walkway to Grand Pequot Tower, the casino’s AAA Four Diamond Award winning lodging option.

But there was still the state of Connecticut to deal with, which was feeling aggrieved after losing sovereignty on the question of casino gambling within its borders. Wisely, the Pequots chose to soothe the state’s injured feelings by offering 25 percent of their slot revenues in exchange for the exclusive right to offer slots in the state, freezing out any potential competition. The state was facing a budget shortfall. The governor didn’t take long to cave.

Now everyone was onboard with the Mashantucket Pequots, and it showed on their balance sheet. Three years after opening Foxwoods Resort Casino in February 1992, it was the most profitable casino in the world. Then things started to come apart.

 

The White Indians

Skip Hayward

Skip Hayward, the mastermind behind Foxwoods Resort Casino.

Boatloads of free money handed out to people who are not really entitled to it has a way of attracting more such people. Not only were the Mashantucket Pequots highly suspect as an Indian tribe, they were amazingly loose in their requirements for tribal membership. Prior to 1973, state law required persons identifying as Native Americans to possess a minimum of one-eighth quantum of Native American blood. In an accident of timing, the state repealed the law just months before Tom Tureen met with Skip Hayward and began resurrecting the Pequots. Had the law still been in effect, Hayward’s family would not have qualified.

In the absence of such a law, the determination of who was a real Pequot Indian was more art than science. In spite of the fact that the Pequots had a requirement in place requiring one-sixteenth Pequot blood to qualify as a member, as a general rule people became tribal members because Skip Hayward said they could. In the late-1970’s all the members were relatives of Skip Hayward, and all were White. That was about to change.

 

The Black Indians

Kenny Reels

Kenny Reels, he had different ideas about how things should be run.

In 1977 a woman named Juanita Reels testified before the Connecticut Indian Affairs Council that her father had told her he was born on the Pequot reservation. Her sister followed up with testimony saying that they had applied to join the Mashantucket Pequots but had been denied on the basis that they were Black. On hearing this, Skip Hayward, whose own tribal membership would not withstand close scrutiny, decided to avert any further controversy and accept Reels and her family. The decision came with baggage.

Not only did admitting them open the door to other Black relatives of the Reels claiming tribal membership, it brought people into the tribe Skip Hayward didn’t know and couldn’t vouch for. One such was Juanita Reels’ son, Kenny Reels, whose abrasive personality and sense of entitlement would be the weakness that would bring Skip Hayward down.

 

Falling Star

Gaming floor at Foxwoods Resort Casino

Gaming floor at Foxwoods Resort Casino, the casino was generating earnings of more than $1 billion a year.

Skip Hayward and his management team had always emphasized investing in further development. Prior to 1995 most casino revenues were being plowed back into the business with the object of developing and expanding Foxwoods. Skip Hayward and his family had grand plans, plans that included restaurants, theaters, shopping centers, golf courses, and a theme park. He envisioned turning southeastern Connecticut into a destination resort to equal Orlando. His Malaysian investors loved his vision. But Kenny Reels saw things differently.

The Golden Dragon restaurant inside Foxwood

The Golden Dragon restaurant inside Foxwoods with its Lucky Waving Cat in front. Foxwoods was going to need it.

As a member of the tribal council with a seat on the board, Reels objected to the way the casino was being run. From his perspective, Hayward and the other White tribal members were wasting money and enriching themselves at the expense of the newer Black members. He wanted that changed. Consequently, he endorsed a resolution restructuring the tribal government by adding two seats to the tribal council that would better reflect the tribe’s racial diversity. Hayward barely noticed.

By this time Skip Hayward was being wined and dined by the rich and powerful. The Sultan of Brunei had taken him on a cruise, Frank Sinatra had invited him to dinner, and he had spent the night in the Lincoln bedroom as a guest of Bill Clinton. In 1995 Foxwoods made more money than any other casino in US history, and Skip Hayward was the dazzling star that had made it happen. He was riding on cloud nine. Meanwhile, Kenny Reels was quietly working to undermine him.

 

Hands in the Till

Undeveloped woodland surrounding Foxwood Resort Casino in Ledyard, CT

Undeveloped woodland surrounding Foxwoods Resort Casino. Skip Hayward once had grand plans for this.

At Reels’ behest, the tribe repealed the one-sixteenth blood requirement for tribal membership, opening the door to more Black members. If anyone objected, Reels played the same aggrieved minority card Skip Hayward had used to fend off criticism of his land grab.

With the council tipped in his favor, Reels turned over the $300 million-plus in casino revenues to the tribal council to pay for expenses including council members’ salaries, benefits, private expense accounts, travel expenses and other operational costs. In addition, newly arrived tribal members, many of whom had been flirting with poverty just weeks before, were getting more than $100,000 in stipends.

As time went on, Reels aggressively increased tribal membership, welcoming in more Black members and strengthening his coalition. By 1995 Skip Hayward was one of only two White members remaining on the council, and the tribe had doubled in size. With all of them receiving generous stipends, the casino’s cash flow began to suffer. So much so that the tribe had to borrow money for construction upgrades. Then the other shoe dropped. Kenny Reels ousted Skip Hayward as tribal leader.

 

Dream Project

Mashantucket Native American Museum and Tower

Mashantucket Native American Museum and Tower, Skip Hayward’s last hurrah.

As part of the financing agreement with the Malaysians, final approval over the casino’s CEO went to the Malaysians. But Reels flatly refused to be dictated to by outsiders. As a result, he alienated the Malaysians and lost the tribe’s line of credit. Overnight, Hayward’s dreams were dashed.

But before his plans slammed into the brick wall of Kenny Reels making, Hayward managed to get one of his dream projects built, a $193 million Indian museum and research center, housing the largest Indian library in the United States. Adjacent to the museum is a 185-foot tower with an observatory on top, the better to view the hundreds of acres the Mashantucket Pequots had acquired at taxpayers’ expense. It was the last lavish expenditure the Pequots were to make.

 

Hard Times in Ledyard, CT

Mohegan Sun

The Mohegan Sun Resort Casino opened 16 miles down the road, eating into the Pequots’ revenues.

We went to visit the Foxwoods Casino Resort in May 2021. On the day we visited, the museum and observatory had closed early for lack of interest. Foxwoods had fallen on hard times. In October 1996 Foxwoods lost its privileged status as the only casino between New York and Boston. That year the Mohegan Sun opened sixteen miles down the road, siphoning off a large share of Foxwoods’ revenues. Then the recession hit.

In 2009 Foxwoods defaulted on more than $2 billion in debt. In 2014 Standard and Poors lowered its credit rating, making it nearly impossible for the Mashantucket Pequots to borrow. In desperation, they applied for an increase in federal grant money, even though they were already receiving $4.5 million a year from the federal government due to their status as a depressed Indian tribe.

In 2020 the casino was forced to temporarily close due to the pandemic, only to reopen in June of the same year. At this point whether the Foxwoods Resort Casino can continue to operate without a steady influx of taxpayer’s money is an open question. Whether it should be allowed to is another question altogether.

 

An Invitation to Madness

A stop sign on the Mashantucket Pequot

A stop sign on the Mashantucket Pequot reservation with a translation in Pequot.

Trying to right the wrongs of the past by compensating the descendants of those who were victims is a commendable idea, but one fraught with pitfalls. There are those who will argue that the harm suffered by others in an effort to correct past wrongs is a small price to pay for justice. But that sets a precedent of inflicting a new wrong to correct an old one and produces more victims who may, in time, demand compensation. In a litigious society like ours that’s an invitation to madness.

The problem with magnanimity in the pursuit of justice is that it assumes no higher value. The cold, hard reality is that Americans hold two values dearer than justice: wealth and power. As seen in the story of the Mashantucket Pequots, well meanings attempts to compensate victims of past injustices were easily corrupted into a scheme to enrich a few at the expense of the many. That is not uncommon. One is put in mind of labor unions, among other things.

To this day many Native Americans live in abject poverty. The billions handed over to the Mashantucket Pequots have done nothing to lift them from their condition. Do those Native Americans deserve reparations for what has been taken from them? Yes. Should they be given money from the public purse to make that happen?

Well, that’s complicated.

 

Previous Stop on the Odyssey:  Ellis Island, NY
Next Stop on the Odyssey: Nantucket Island, MA

 

My American Odyssey Route Map

My American Odyssey Route Map

 

 

Sources

Benedict, Jeff. Without Reservation: How a Controversial Indian Tribe Rose to Power and Built the World’s Largest Casino. Harper Collins. 2001. Website

“Foxwood owners straining again under heavy debt,” Portland Press Herald via The Associated Press, 23 August 2014. Website

“Tribe that owns Foxwoods Resort Casino turns to federal grants for financial aid,” New Haven Register via The Associated Press, 24 March 2013. Website

 

Image credits

Foxwood Resort Casino as seen from a distance, Elfinbeinturm

Jackpot, Alxhe

Pequot warrior, Stifehler

Shack in the woods, Photo by Glenn Haertlein on Unsplash

Prime Connecticut woodland, Photo by Clay Banks on Unsplash

Women’s movement, New York Historical Society

Senator Lowell Weicker, Public domain

Pequot reservation on Connecticut map, Awmcphee

Craps table, Photo by Kaysha on Unsplash

Foxwoods blackjack table, Malcolm Logan

Slot machines at Foxwood, Malcolm Logan

Grand Pequot Tower, Malcolm Logan

Skip Hayward, Indianz.com

Kenny Reels, TheDay.com

Gaming floor, Malcolm Logan

Golden dragon restaurant, Malcolm Logan

Undeveloped woodland, Malcolm Logan

Museum and tower, Malcolm Logan

Mohegan Sun Resort Casino, Malcolm Logan

Stop sign with translation, Malcolm Logan