State to Refund $14 Million to Tribes in Gambling Case

California lost a Supreme Court appeal Monday in its dispute with four Indian tribes over whether the state can charge a licensing fee on horse-race betting at off-track facilities run by the tribes.

The court, without comment, let stand a ruling that requires the state to refund about $14 million in tax revenue to the tribes.

The state’s lawyers said that the ruling amounted to a “hijacking of the state’s taxing power . . . for the dubious purpose of diverting state tax revenues to the tribes.”

The court also refused to hear arguments by Southern California Off-Track Wagering and six racing associations that they should be allowed to intervene in the case.

Mark Nichols, chief executive officer of the Cabazon Band of Mission Indians, said the Supreme Court decision left him “extremely pleased and extremely saddened.”

“I’m pleased that at last we can get another of our litigation cases behind us,” Nichols said, “but I’m saddened that we had to go through eight years of litigation when this could have been resolved through negotiation. It seems the only way the state likes to deal with Indian tribes is through litigation.”

Nichols said the tribe, located between Indio and Mecca in southern Riverside County, expects to get $3.4 million from the state within 60 days. The money was collected from casinos owned by the tribes. The rest of the $14 million goes to the Viejas Band of Mission Indians near Alpine, the Barona Band of Mission Indians near Lakeside and the Sycuan Band of Kumeyaay Indians near El Cajon.

In 1989, the state and the Cabazon band signed an agreement to allow live broadcasting of horse races from California tracks to the tribe’s off-track betting facilities. The state ordinarily charges off-track betting facilities a licensing fee of 1.5% to 4% of betting revenue.

Because the two sides could not agree on whether the fee could be imposed on tribal betting, they agreed the tribe would sue the state in federal court to get an answer.

The Sycuan tribe reached a similar agreement and also sued. The Barona and Viejas tribes were authorized to operate betting facilities, and they agreed to be bound by the Cabazon lawsuit’s outcome.

A federal judge ruled for the state in 1992. But the U.S. 9th Circuit Court of Appeals reversed the decision, saying the federal Indian Gaming Regulatory Act preempts the state from imposing such a fee.

The tribes sought to force the state to refund past licensing fees. The state refused to refund the fees, declared the off-track betting agreements invalid and threatened to cut off the live broadcast signal unless the tribes negotiated new agreements.

Last September, the 9th Circuit court again ruled for the tribes and ordered the state to refund the fees, estimated at $14 million.

The appeal acted on Monday argued that the state should not be forced to make a “windfall gift” to the tribes.

The tribes’ lawyers urged the justices to turn down the state’s “last-ditch effort to avoid complying with the deal that it struck with the tribes.”