Ais 102 American Indians and the U. S. Political System Fall 2004



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Lecture 6



Gaming

In California, Tribes attempted to engage in gaming as early as 1970. In 1979, in Seminole v. Butterworth, the U.S. Supreme Court decided that state bingo laws did not apply on the Seminole Reservation in Florida. California tribes began to consider bingo and card operations.

In 1987, the U.S. Supreme Court decided California v. Cabazon Band of Mission Indians. The court decided that, even in P.L. 280 states, state gambling laws do not apply to Indian gaming. As you may recall from the reading, “the shorthand test is whether the conduct at issue violates the state’s public policy.”

In 1988, spurred by complaints from state representatives that they lost control over gaming in their states, Congress passed the Indian Gaming Regulatory Act (IGRA). IGRA classifies gaming into three classes. Class I gaming is traditional gaming. (Indians have a long tradition of gambling). Most tribes have some type of stick game, which they traditionally played. Tribes have the exclusive responsibility for regulating Class I gaming.

Class II gaming consists of bingo, games similar to bingo, and card games, which are expressly authorized in the state, or are not expressly prohibited. Both the tribe and federal government have the authority to regulate Class II gaming.

Class III gaming consists of all gaming not defined as Class I or Class II. A tribe who wants to offer Class III gaming on their reservation must enter into a compact with the state. Class III gaming is regulated by the state, tribe and federal government.

In California, tribes attempted to negotiate compacts with then Governor Pete Wilson from 1990-1992. Negotiations broke down over the scope of gaming allowed under California law and the tribes and the state of California agreed to go to federal court and litigate the question. Rumsey Indian Rancheria v. Wilson was then filed.

In the Rumsey litigation, the tribes claimed that Cabazon applied to Class III gaming. Tribes argued that Class III gaming was not against the pubic policy of the state, since the state operates dispensers of lottery scratcher tickets, sells lottery tickets from terminals, allows horse racing, and charitable bingo. Under Cabazon, if gambling is not a violation of the public policy of the state, state gambling laws cannot be applied on Indian reservations. Tribes believed that they were clearly entitled to operate modified slot machines, known as video lottery terminals (vlts), and possibly more. (Like scratcher dispensers, the tribal vlts accepted only currency and dispensed only paper).

The trial court agreed with the tribes. Relying on the trial court opinion, tribes across the state opened casinos with electronic gaming, despite the fact that the tribes still had no compacts with the state. On appeal, the 9th Circuit Court of Appeals held that Cabazon does not apply to Class III gaming. This was a loss for the tribes. The case was sent back to the trial court to determine exactly what games are proper topics for discussion between the tribes and the state. There has been a disagreement as to the question before the court. Tribes believe the question is, “Can the state operate slot machines?” The state believes the question is “Does the state operate slot machines?” This case was finally dismissed in late 2000, after eight years in the court system.

So why did the state allow electronic gaming to continue in California with no compacts? In Sycuan v. Roache, a Southern California case, the local sheriff raided Indian casinos and confiscated gaming devices. The 9th Circuit Court of Appeals held that state and local authorities have no right to enforce the provisons of IGRA. The U.S. attorneys and National Indian Gaming Commission are the only entities that have the authority to enforce IGRA.

California is divided into four federal districts with a different U.S. attorney in each district. U.S. attorneys in California ignored the casinos that were springing up on reservations without compacts, with the exception of San Diego County. In June 1994, in San Diego County, then U.S. attorney Alan Bersin entered into a handshake agreement with tribal leaders from Barona, Sycuan and Viejas, the only tribes in San Diego County operating casinos at that time. Bersin agreed that he would not take action to close the tribal casinos until Rumsey was decided, if the tribes agreed not to add any additional electronic gaming devices to their casinos. The result was that Barona, Viejas and Sycuan were given a tribal gaming monopoly for several years.

While Rumsey was in federal court, Western Telcon v. California State Lottery was filed in state court. Western Telcon was filed by horse racing interests. The horse racing interests alleged that the state lottery’s keno game was an illegal house banked game and used illegal slot machines. Rumsey was put on hold while Western Telcon wound its way through the courts because everyone believed that the court would decide the issue of whether the state could legally operate slot machines. (Which explains why Rumsey was in the courts so long). The court bypassed this issue and decided that the keno game was illegal because it was a house-banked game. The court set out how all games could be modified to fit a pari-mutuel setting.

In 1997, under political pressure to solve the stalemate with California tribes, Pete Wilson finally agreed to negotiate compacts. Pete Wilson adamantly refused to negotiate compacts with tribes engaged in illegal gaming. Governor Wilson therefore selected the Pala Band of Mission Indians in San Diego County to negotiate a compact, which would serve as a model for all tribes in California. At this time, pressure was also beginning to mount from the U.S. attorneys, who never expected the gaming situation in California to go this long without resolution.

Negotiations took place for 18 months. Initially, there were 5 attorneys negotiating with state representatives, one attorney who represented Pala, and four representing other California tribes. Two Pala tribal members were allowed to attend the negotiating sessions and representatives from other tribes in the state were permitted to observe the process. After each session, information was to be shared with all interested tribal leaders.

After several months of negotiations, Pala and the state decided to keep the meetings confidential, apparently as the result of the press publishing information exchanged during the negotiating sessions. This led to a divisiveness of tribes in California.

The Wilson compact required tribes to apply state environmental laws to tribal casinos; waived tribal sovereign immunity for injuries at the casino or on roads leading to the casino; applied the California Environmental Quality Act to tribal casinos; gave the state extensive regulatory jurisdiction; applied many state and local laws to the casinos that were otherwise inapplicable to the tribes; called for the tribes to negotiate with the county in which they are located to mitigate off-reservation impacts of gaming; required tribes to improve roads that lead to state highways; and required a local vote in the county in which the tribe was located as to whether citizens wanted gaming in their county. Any concerns expressed by county residents had to be taken into consideration when negotiating for off-reservation impacts. The Wilson compact also required tribes to allow labor unions at the casinos. The unions were permitted to speak out against management, but casino management was required to remain neutral.

Unlike the games described by the court in Western Telcon, the gaming devices outlined in the Wilson compact had to be played like lotteries with remote video screens showing what prizes had just been won in each game. Devices could not make any noise, have any lights on the top of them, called candles, and required that a card be inserted in the machine each time a game was played. Aside from requiring more restrictive games than the California Supreme Court clearly allowed, each Tribe was given the right to operate only 199 gaming devices. Tribes could operate up to 975 devices, but only if they purchased another tribe’s right to operate the devices.

Many tribes found the intrusions of tribal sovereignty and the machine limits unpalatable, but U.S. attorneys put pressure on the tribes to accept the compact. Tribes were given 2 options: 1) sign the Pala compact, or 2) close their casinos and negotiate their own compact with the governor (which the governor indicated would be materially identical to the compact entered into with Pala). The tribes added a third option, which several tribes accepted: do nothing and let the U. S. attorneys take them to court to shut the casinos down.

A few tribes, faced with closure of their casinos, signed the Wilson compact. U.S. attorneys moved against those tribes operating casinos that did not sign the Wilson compact. Lawsuits were filed, but the tribes’ next attempt at legitimacy was successful in holding off enforcement action.

Faced with the threat of imminent closure, tribes launched the Proposition 5 initiative, and were successful in getting the initiative on the 1998 ballot. Proposition 5 set up funds for non-gaming tribes and local community needs. It protected tribal sovereignty, giving tribal gaming commissions the final decisions in regulatory matters. It did not apply state laws to Indian reservations and contained no labor provisions. Games were to be played using the pari-mutuel format set out by the court in Western Telcon. Proposition 5 was placed on the ballot as a statutory initiative, which means that it changed only a law enacted by the legislature that prohibited certain games. The California Constitution also has a provision that prohibits “casinos of the type operating in Nevada and New Jersey.” Tribes did not believe that their casinos fell into this prohibition since it did not allow for any house-banked games, so they did not attempt to amend the California Constitution.

Proposition 5 was passed by the voters in California and was immediately challenged in the California Supreme Court by the Hotel Employees and Restaurant Employees Union and a homeowners’ association which borders a Northern California Indian reservation. In August 1999, the California Supreme Court found that Proposition 5 was unconstitutional.

By the time Proposition 5 was overturned, Gray Davis had taken the place of Pete Wilson as governor and negotiations began once again. The Governor’s representatives suggested that an initiative be placed on the March, 2000 ballot that would amend the California consitution and allow tribes to operate house banked card games and slot machines. (Proposition 1a passed overwhelmingly). Compacts were negotiated on this basis. In late August or early September, during the compact negotiations, the U.S. attorneys once again advised tribes that further closure action would be taken if they did not have a compact in place by mid-September. Facing closure once again, the state and tribes negotiated compacts, which allow each tribe to operate up to 2,000 machines. Like the Wilson compact, tribes must purchase the right to operate machines over and above their initial allocation, which is the number of machines the tribe operated on September 1, 1999, or 350 machines, whichever is greater. The funds from these license fees will be distributed to non-gaming tribes.

The compacts require payments to the state of California based on a percentage of gross revenue. (Pete Wilson asked for no money for the state). The compacts allow labor unions to organize at tribal casinos; require many of the same state laws to apply to tribal casinos as the Wilson compact, but allow the tribes to retain some degree of sovereignty. Rather than adopt state laws, tribes must pass their own laws that are at least equivalent to state and federal laws.

Proposition 1a has also faced legal challenges. Larry Flynt (publisher of Hustler magazine and owner of a card room in Loa Angeles) filed suit as did Artichoke Joe’s card room on the grounds that the compacts gave Indian tribes an illegal monopoly on Blackjack and slot machines. The suits were not successful and Proposition 1a was upheld.

Gray Davis used these legal challenges as grounds not to negotiate compacts with any tribes that did not sign a compact in 1999. Prior to his recall, he relented and signed three new compacts which contained more onerous provisions than the earlier compacts.

Several tribes are currently negotiating with the governor’s office to obtain new compacts or amend existing compacts. Meanwhile, three initiatives have been filed for the November, 2004 ballot, one of which appears in the external links. Additional intitiaves have been filed by both the Agua Caliente Band of Cahuilla Indians and Stand Up for California, an anti-gaming group. Signature gathering campaigns for the initiatives should be starting in the next several weeks.

Gaming doesn’t come without a price, not all of which is monetary. To engage in gaming, California tribes have had to submit to a broader application of state laws on Indian lands than at any time since the Marshall trilogy was decided. At the same time, gaming has given many tribes more resources than they have had since they were placed on reservations.



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