A sure sign of a stagnant economy that is more focused on cannibalizing existing activity than creating economic growth is the growth of Indian tribal casinos.

Sold as a way to generate revenue for those Indians who live on reservations and improve their standard of living, the casinos too often prove a source of corruption and a bust as a means of helping Indians become economically self-sufficient over the long term.

Even the biggest tribal casinos are struggling in the current economy. The Associated Press reported earlier this year that the Mashantucket Pequot tribe that owns the billion-dollar Foxwoods Resort Casino in Connecticut has halted distribution of individual payments to tribal members, been forced to restructure its debt, and is now “pursuing more revenue from an unlikely source: U.S. government grants.” A former chairman of the Pequot tribe, Michael Thomas, was convicted on charges of theft in July and his brother Steven, the tribe’s treasurer, has been indicted on charges he embezzled $700,000.

The Pequot problems help explain why Connecticut’s seven-member congressional delegation unanimously sent a letter in August to the Interior Department’s Bureau of Indian Affairs urging it to not water down the criteria for granting federal recognition to Indian tribes who might want to enter the casino business. Under the Obama administration, the Bureau has been very lenient in granting approval for new tribal casinos. In July, it further proposed loosening the standards by wanting to require only that tribes seeking federal recognition demonstrate they have continually existed since 1934.

The most visible current battle over how much the Indian casino industry should expand is being played out in Wisconsin, where Governor Scott Walker is empowered by federal law to decide if he will approve a massive new $808 million off-reservation casino in Kenosha proposed by the Menominee tribe. Last year the Wisconsin Policy Research Institute found that the Wisconsin casino market is “saturated” and the addition of new casinos would result in “no net gain” for the people of Wisconsin.

Casinos “certainly do reach that point where they just start essentially cannibalizing each other,” said Mark Nichols, of the University of Nevada-Reno’s Institute for the Study of Gambling and Commercial Gaming. “You’re seeing signs of that now.”

Governor Walker has announced three simple guidelines on which he will base his decision on the Kenosha casino: The state’s eleven recognized Indian tribes must come to a consensus that the new operation is appropriate, the residents of the Kenosha area where the new casino is proposed must also be in favor, and there must be no net increase in gaming. For example, if one new casino opens, another may have to close.

Those criteria will make it hard for Governor Walker to approve the Kenosha casino by his self-imposed deadline of late October. Three of the eleven federally recognized tribes in Wisconsin oppose the Kenosha casino, including the Potawatomi who operate a large casino just outside Milwaukee and fear a new facility to its south would siphon away the one-third of its customers who come from the Chicago area.

Critics of Governor Walker have tried to use this situation to make the case that Walker isn’t really committed to bringing jobs to Wisconsin. In fact, in an unusual alliance, Big Labor has sided with the Menominee Tribe to force Walker to approve the casino, raising the profile of the fight significantly. It should be no surprise that the price for union support was to not only make the casino the first union-operated shop in the state, but to also have it operate using card check — the tool unions use to intimidate workers.

A slowdown in the approval of new casinos would be welcome both in Wisconsin and nationally. The stagnant economy probably means they would simply transfer gamblers from one facility to another, the proposed looser federal guidelines for tribal recognition deserve scrutiny from Congress, and in the long-term more stable forms of economic development for American Indians have to be explored. Simply bringing a splash of Las Vegas glitz to a town or tribal reservation is no lasting substitute for sustained economic growth.