Gambling plan shifts some control from tribes to state

Gambling plan shifts some control from tribes to state
The gambling agreement Gov. Arnold Schwarzenegger is negotiating with four or possibly more California tribes that could bring $1 billion to the state would require them to waive some of their sovereign status as independent governments.

Last week, the governor announced he was near agreement on a deal that could bring in money from the four tribes in exchange for casino expansion.

The governor’s $103 billion budget plan released last month did not include the $1 billion from the tribes, except to note that a new agreements with the tribes would generate a “significant” one-time payout to the state above the $500 million mark.

For their part, the tribes would have to agree to accept state authority over such things as building codes, environmental impacts of development as well as worker and consumer rights.
If the proposed deal is completed, Schwarzenegger will have delivered on a campaign promise made during the recall election of Gov. Gray Davis to get a “fair share” of Indian gambling profits.

Schwarzenegger’s announcement of progress on the $1 billion deal is another example of using his considerable clout to get things done, even against tough foes like the 61 gaming tribes.

In August 2003, the Torres Martinez Desert Cahuilla Indians signed a compact that allows the state to collect up to 5 percent of slot machine earnings from its new casinos planned in Coachella and in Imperial County and to enter binding agreements with local governments before it can begin construction. Some believe that compact set a precedent on “revenue sharing” and surrendering some sovereignty now being played out in current negotiations.
Also last week, the governor said he would campaign against two gambling ballot initiatives, one sponsored by the Agua Caliente Band of Cahuilla Indians in Palm Springs.

A spokesman for the tribe said it had never expected the support of the governor.The Agua Caliente initiative would allow for an unlimited expansion of tribal gaming rights in exchange for an 8.84 percent tax on gaming earnings. Tribal Chairman Richard M. Milanovich said the tribe was prepared to spend up to $50 million to win its approval by California voters.

Industry experts believe Indian gaming is a $4 billion industry. By those figures, the state could collect up to $350 million if the Agua Caliente initiative were passed.The other initiative is sponsored by card clubs and racetracks and would require casinos to turn 25 percent of their profits over to the state in exchange for up to 30,000 slot machines in 11 card clubs and five tracks, mostly in urban centers.

Currently, the gambling tribes pay about $130 million a year into two funds to help non-gambling tribes and to offset the costs of gambling to local governments, the state and gambling addiction recovery programs. They don’t pay anything into the state’s General Fund.The new revenue the governor described Tuesday would come in two ways:

The four tribes collectively would pay $100 million a year, which would be used to secure a $1 billion bond that likely would be used to help fund state transportation projects, as the governor previously promised. This would be 10 percent of the four tribes’ net win from slot machines based on their 2003 revenues.

Tribes also would pay an escalating licensing fee as they add new slot machines, beginning with $12,000 per machine for the first new machine over the current maximum of 2,000 up to $25,000 per machine at 4,500 new machines and above, on an annual basis. The governor’s staff estimated this eventually could produce $275 million annually for the state when fully implemented in several years. This would be 15 percent of the four tribes’ revenue.
The new compact would extend the current compact period by nine years, expiring on Dec. 31, 2030.

Tribes signing the new compact would continue to pay into the fund for non-gambling tribes but would stop paying into the separate fund to offset costs associated with gambling.Beyond the monetary provisions of the bill, the proposed model compact also includes provisions to address demands by local government officials for aid in offsetting the impact of casinos on public safety, roads and other services.

For instance, tribes would have to produce an environmental impact statement with disputes subject to neutral arbitration with the arbitrator’s decision enforceable in state superior court, if necessary.In other non-economic provisions, the compact would:

Give patrons the right to seek arbitration before a retired judge in disputes over gambling operations, again with the ultimate option for judicial enforcement.Require tribes to carry $10 million in insurance, twice the current amount, to cover patron injuries.Grant the state new rights to test slot machines to be sure they meet industry standards and to force compliance with any posted payout claims.Make new or expanded tribal casinos subject to state building codes with a procedure for inspection and enforcement.

Grant a state agency the power to prohibit occupancy of a building that threatens the life or safety of anyone.
Provide for the use of card checks in employee elections on potential collective bargaining agreements, with tribal officials staying neutral.

The major outstanding issue deals with a tribe’s exclusive franchise to operate a casino in certain areas. Tribes and officials are still trying to define these areas, but the compact would be terminated if the racetrack gambling initiative were to pass in November, the governor’s staff said.

The new compact doesn’t address the issue of whether tribes have to follow state law in reporting political campaign contributions, an issue the Agua Caliente tribe is fighting in court.The governor’s staff generally said the new compact was clearer than the existing compact, which was called ambiguous.

“We are certainly much more specific,” the governor’s staff member said, “and we are … providing people a remedy, whether it is injured patrons or local government, that will result in certainty.”The four tribes known to be in talks with the governor are the Pala Band of Mission Indians, who have a casino in San Diego County; the Rumsey Band of Wintun Indians and the United Auburn Indian Community, with casinos in the Sacramento area, and Viejas Band of Kumeyaay Indians east of San Diego, who do not have a casino.