Appeals Court Deals Setback to Indian Casinos

In a long-awaited ruling that deals a major setback to burgeoning casinos on Indian lands throughout California, a federal appeals court Tuesday rejected the claim of dozens of tribes that the state must allow them to offer wide-ranging forms of gambling, including electronic slot machines.

Agreeing instead with the position of state officials, who have fought for years to limit the growth of Indian gambling, the U.S. 9th Circuit Court of Appeals said the tribes cannot conduct forms of casino gambling that are banned on non-Indian lands.

“A state need only allow Indian tribes to operate games that others can operate, but need not give tribes what others cannot have,” said the 3-0 ruling issued in San Francisco.

The ruling came after state Atty. Gen. Dan Lungren refused to include the lucrative slot-type gambling in “compacts” that are supposed to be negotiated with tribes under the national Indian Gaming Regulatory Act. Lungren said such devices--the centerpieces of casinos worldwide--clearly are banned under the California Constitution.

But Indian casinos throughout the state began installing thousands of the video gambling machines anyway after U.S. Dist. Judge Garland Burrell last year agreed with tribal attorneys that the technology in the state’s own lottery--particularly in terminals for its then-new Keno game--had “opened the door” to more expansive gambling by the tribes.

Tuesday’s ruling largely overturned Burrell’s decision, and Lungren immediately claimed vindication in what has been a long and frustrating battle for his office.

“The thousands of video slot machines now being operated in Indian casinos in California are illegal, and action should be taken in compliance with today’s ruling,” the attorney general said in a statement. He suggested further that federal prosecutors now seek removal of the devices--more than 2,000 of them in San Diego County alone.

Tribal attorneys immediately warned that any curtailment of gambling could have a devastating effect on the state’s small Native American communities, many of which have come to depend on income from casinos in the last decade.

With revenues from tribal casinos now estimated to exceed $1 billion in California, an appeal to the U.S. Supreme Court seems a certainty. First, the case must return to Burrell’s court for a further hearing requested by the appeals panel on what types of electronic slot machines may, in fact, be allowed in the tribal facilities because they closely parallel lottery games.

But Lungren predicted that those criteria will clearly rule out video poker and other electronic slot machines, which have created a Las Vegas-type atmosphere in tribal casinos clustered in areas from the resort region around Palm Springs to Lake County north of San Francisco.

“We are highly confident that we can successfully argue that slot machines and the electronic terminals operated by the lottery are not the same thing,” Lungren said.

As in much of the nation, Indian gambling in California has grown amid a tangle of legal cases. Burrell’s earlier decision was based on the logic of a series of past decisions that the general public policy of a state toward gambling--not necessarily the exact types of wagering allowed--dictates what can be offered on Indian lands.

But the appeals court said that the Indian Gaming Regulatory Act, adopted by Congress in 1988, gives states the power to prohibit specific types of gambling on Indian lands unless the same types of gambling--not merely similar types--are permitted elsewhere in the state.

Whatever happens in this case, several types of gambling remain indisputably legal in the state and thus available to the tribes, namely bingo, poker and off-track wagering on horse racing.

The revenue from none of these, however, approaches the take from electronic gambling, in which a single machine can generate $400 profit a day. A tribal casino in Connecticut, where such gambling has been sanctioned by the state, is expected to earn more than $300 million just from machine gambling this year.

The California tribes are now expected to argue that many types of video gambling machines are basically the same as the terminals the state uses for Keno.

During a hearing in March, 1993, Burrell, the Sacramento judge, had sympathy for such an argument, telling a packed courtroom: “At least some of the games the (tribes) propose seem indistinguishable from games offered by the state lottery.”