Ruling Deals Blow to Indian Gaming Halls : Gambling: Federal commission issues guidelines saying that tribes must negotiate with states to permit slot machines. Tribal leaders vow to fight the order in court.

A federal commission dealt a blow Thursday to the burgeoning use of slot machines by the nation’s $1-billion Indian gambling industry.

The National Indian Gaming Commission rejected arguments used by gambling promoters to justify introduction of the devices on scores of reservations in states, such as California, that ban gambling machines.

In a set of long-awaited guidelines, submitted for publication today in the Federal Register, the commission said tribal gambling halls can include slot-type machines only if they are authorized in “compacts” negotiated with their states.

That creates a formidable barrier for Indians because officials in most states, including California, say they will not agree to the use of Las Vegas-style gambling machines.

The 26 pages of guidelines--the commission’s interpretation of key portions of the 1988 Indian Gaming Regulatory Act--still face a 60-day comment period, and possible revision, before they are official.

But they already have drawn protests from leaders of a tribal gambling industry that is rapidly expanding beyond bingo toward full-scale casinos.

“We will probably file a suit and have it decided in the courtroom,” said Manny Fierro, executive director of the National Indian Gaming Assn., the industry trade group.

“This sounds like a lot of litigation’s ahead of us,” said Vern Castro, chairman of the Table Mountain Rancheria outside Fresno, which this summer installed more than 100 gambling machines in a struggling bingo hall. “That’s where the real money’s made.”

The release of the guidelines in Washington came just one day after San Diego County law enforcement agencies raided three reservations and seized 288 gambling machines.

The targets were among eight reservations in California--and dozens of others from Arizona to Florida--that began using a variety of gambling machines despite state criminal laws that seemingly prohibit them.

Spokesmen for the tribes say they installed the devices only after growing tired of waiting for guidance from the National Indian Gaming Commission. The panel was created by Congress in 1988, but it took the Bush Administration 2 1/2 years to appoint its three commissioners.

Even before the commission was completed last spring, many tribes and their attorneys were lobbying for classification of certain machines as “technological aids” to forms of gambling, such as bingo, which are legal on reservations.

Local law enforcement officials were skeptical of such arguments, with one California sheriff terming them “just another way of trying to get around the law.” But most of them, as well, wanted guidance from the commission before conducting politically sensitive raids to seize the devices.

“I think this will finally bring some clarity and define the issues,” commission Chairman Anthony J. Hope said of the guidelines unveiled Thursday. “It’s time to draw the line. It’s going to help the tribes. It’s going to help the states.”

He and other commissioners will hold hearings around the country beginning Dec. 2 in St. Paul, Minn. Tribal leaders have been assured that the guidelines can be changed if a persuasive case is made against them, Commissioner Jana McKeag said.

The commission’s attorney, Michael Cox, said the panel was complying with the intent of Congress in telling tribes that, if they want gambling machines, “you’re going to have to go to the state and negotiate it.”

“But if they can’t get compacts, that’s going to create tension, no question,” he said.

In California, reservation leaders say their attorneys are planning a coordinated challenge to the state’s opposition to all gambling machines.

The California-Nevada Indian Gaming Assn., an alliance of tribes, condemned as “unlawful, outrageous, irresponsible and wholly unnecessary” the Wednesday seizures of machines on the Sycuan and Barona reservations and at Viejas Rancheria.

Indian gambling has grown steadily since 1987, when the Supreme Court ruled that tribes could offer high-stakes versions of any wagering legal in their state--meaning off-track betting and poker in some, and wide-ranging casino games in others.

The next year, the federal law established a two-layer system of regulation: The national commission would oversee only the milder forms of gambling, such as bingo. Other gambling would be regulated at the state level under the compacts negotiated with tribes.

Despite publication of the guidelines on gambling machines, the commission is not expected to be fully operational until next spring. It must complete several more sets of regulations, covering reviews of tribes’ contracts with gambling managers, background checks on outside investors and other procedures.

Hope said the panel decided to release the regulations on machines now because of intense interest in that issue.

The commission chairman said he will oppose any attempt by tribes to “grandfather in” recently installed machines.

“They say: ‘How can you take that away?’ But for a year and a half, I’ve given the same signal: ‘Don’t count on these,’ ” Hope said.

An influential California congressman also is backing the hard line on slot machines.

“If there’s a wholesale attempt (by tribes) to simply ignore and violate applicable state laws . . . there probably in all likelihood will be a backlash,” said Rep. George Miller (D-Martinez), chairman of the House Interior Committee, which oversees Indian issues.

The 1988 law set a simple standard for tribal gambling, he said. “If the state can do it, so can you. If they don’t, you don’t.”