Per Cap Dividends

Dear Dr. Per Cap: 

My tribe pays per cap from our casino profits twice a year.  I’ve always assumed these payments are guaranteed but my mom tells me they can stop at any time.  Is that correct?

Signed, Counting on Per Cap

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Dear Counting on Per Cap,

Your mom is right.  Per cap payments are not entitlements and tribes can discontinue or adjust them at their discretion.  It’s also important to remember that not every gaming tribe pays per cap to its members.  It’s a choice to distribute a portion of profits that some tribes make.

A good way to think of a per capita payment is similar to the dividend of a publicly traded stock.  Take Nike for example.  Four times a year, the global athletic footwear and apparel brand pays a portion of its earnings to shareholders as a dividend.  Over the last 12 months, dividend payments were made as follows:

• April 1st, 2025 (40 cents per share)
• July 1^st, 2025 (40 cents per share)
• October 1^st, 2025 (40 cents per share)
• January 2^nd, 2026 (41 cents per share)

As you can see, Nike raised its most recent quarterly dividend by one cent which reflects leadership’s confidence for the future along with its commitment to shareholders.  The company has raised dividends for nearly 25 years in a row, but, like per cap, there’s no guarantee that will continue. Moreover, Nike has what’s considered a very high dividend payout ratio of about 94%.  Meaning nearly all profits are returned to shareholders as dividends.

Forty-one cents might not seem like a lot but if you add up all four payments for the year, the annual dividend per share was $1.61.  Most Nike investors also own more than one share, so for someone who owns 100 shares, their total dividends over the past year totaled $161.

As with dividends, tribal per capita from gaming revenues are a reflection of profits paid directly to tribal members.  And just like publicly traded companies, tribes determine what their payout ratio is.  In fact, they are required to include this information as part of a Revenue Allocation Plan or RAP that must be approved by the Department of Interior if they intend to make per capita payments to tribal members.  

In its RAP (we’re not taking hip hop!) a tribe might distribute 50% of its profits as per cap and use the remaining 50% to fund programs and services like education, healthcare, and cultural activities.

That’s why per capita payments can fluctuate based on factors like rising or falling casino profits and the number of tribal members eligible to receive per cap.  During the Covid-19 pandemic when lockdowns caused the entire U.S. economy to come to a screeching halt – some tribes lowered per cap payments while casinos were shuttered for a few months and revenues ceased.

That’s why it’s important to manage per cap wisely and not assume it will always be available.  Don’t think of per cap as free money either.  You and your fellow tribal members all own your casino and just like stockholders who hold equity in companies, you assume inherent risks facing any business endeavor. 

Your sovereign tribal nation is able to distribute per cap dividends to its citizens because of its economic success.   Never disregard the legacy.