Gambling Machines to Play by New Rules


This month's agreement between Gov. Pete Wilson and an impoverished San Diego Indian tribe means the state is finally endorsing gambling machines on California's reservations--but gamblers won't easily detect much change from what's out there now.

Here's what would be different under the pact, which faces widespread opposition among most of the state's 40 gambling tribes:

There would be more machines on which to gamble. Tribes using approved machines would no longer fear being busted. And popular video poker games, now in widespread use, would be gone.

That said, the other differences may not be easily discerned.

There will still be flashing screens and cacophonous sounds. But whether they realize it or not, gamblers will be playing the same kinds of games now offered by the California Lottery--at a much more furious pace.

The Indians' machines are being designed to electronically produce Lotto and scratch-off games literally every quarter-second, 24 hours a day, seven days a week. As with the lottery, payouts to winners will come from a pool of other gamblers' wagers.

The games will simply be disguised to play, feel and look as much like Nevada-style slot machines as possible--but within the framework of long-standing California law that bans slots.

"These games will be as close to a slot machine as you can get, without it being one," said I. Nelson Rose, a professor at Whittier Law School in Costa Mesa and a respected authority on the gambling industry.

State law prohibits the use of machines that dispense coins directly into a hopper or are activated with a pull of an arm. Illegal slots are also defined as machines in which the gambler himself activates a random-numbers generator to determine whether he wins. Illegal, too, are machines that produce so-called "house-banked" payoffs for which the casino is liable, because the jackpot is not determined by the number of gamblers playing the machine.

California Lottery games, approved by voters in 1984, pay winnings out of the pool of money wagered by those who participate. That same rule applies to the Indian casinos, officials say.

"We've had to keep faith with our voters," said Dan Kolkey, Wilson's legal affairs advisor.

Regardless, a growing number of California tribes--40 at last count--have brought machines onto their reservations that the state says are illegal.

Tribes say they like those machines because they are cheaper to buy and easier to operate, and gamblers like the potentially larger jackpots.

The tribes have used these machines for years, even though federal law prohibits them from engaging in gambling not otherwise allowed by the state. Federal prosecutors have not shut down the casinos, waiting instead for the courts, the state and the tribes to decide, once and for all, what machines are legal in California.


Now that Wilson and the Pala tribe have reached accord--after 17 months of negotiations--federal prosecutors say they will act against tribes that do not comply.

Most tribes want little to do with this new agreement, though. They are mounting an intense publicity campaign to place an initiative on the November ballot to legalize the kinds of games they play now.

For those few small tribes supporting the Pala compact, the challenge is to acquire technologically advanced machines that operate so quickly the games won't seem like the ones played at about 19,000 liquor stores, markets and taverns around the state.

Gamblers' acceptance of the Indian casinos will also depend on how much they will win. The state returns only 51.5% of the total wagers as payoffs to winning Lottery players. Many Nevada casinos--because of the intense competition for gamblers--pay back 95% or more of the money wagered on their slot machines. The generosity of the Indian casinos will probably fall somewhere in between, although the pact does not mandate a specific return level.

At the Indian casinos, gamblers will encounter rows of bright screens, dazzling with changing colors and symbols, and electronic sounds.

When the player presses the touch-sensitive screen or the play button, he will actually be enrolling in the next number draw by the casino's central computer. That distinction is legally important because the random-numbers generator is being operated by the tribe, not the individual player.

The function of the individual machine is basically to display the player's picks, wagers, credits and the game's outcome, and to print a paper receipt of his winnings to be cashed in later. The lights and sounds--and the individual video depictions that mask the basic game--are merely cosmetic.


It is that technology--coordinating the central computer and individual terminals' video displays and accounting functions--that gaming designers are now racing to develop to meet the lucrative new California market.

There may eventually be many variations of lottery-type games. The Pala compact defines two.

One will be similar to the state's Lotto: The player selects numbers and hopes for matches with numbers generated by the casino's computer. The central computer will spit the same numbers to all the terminals, and the payoff will be based on the size of the money pool and the number of players sharing the winning numbers.

Larger jackpots would be possible if various tribes decide to link their casino computers together, thereby expanding the money pool.

In the other game, gamblers play video versions of the state's paper scratch-off games. The outcomes might show on the screen as the culmination of a spinning reel, or a screen of icons laid out in tick-tack-toe fashion. Each player's terminalis sent its own "virtual scratch-off," and the prize amounts are preset.

With either game, the player can watch the game unfold before him, or he can enroll in multiple games and check his winnings later by inserting his receipt into any of the machines to be scanned.


While the pact endorses reservation casinos, it also sets a limit on the machines' proliferation, which can be renegotiated next year, not coincidentally after Wilson is succeeded by a new governor perhaps more friendly to Indian gambling. The agreement arbitrarily calls for a maximum of 19,900 gambling machines on California's reservations--about 50% more than are being operated ow without the state's blessing.

By comparison, there are about 18,700 slot machines in downtown Las Vegas, and about 54,000 slot machines on the Las Vegas Strip.

Each Indian casino will be granted permission to operate 199 machines--and to lease the rights to machines allocated to Indian tribes that are not well situated to open casinos, up to a maximum of 975 machines. Four Indian casinos in California currently operate more than 1,000 machines--the San Manuel's near San Bernardino, the Morongo's near Cabazon, the Pechanga's near Temecula and the Barona's in San Diego County.

A gaming tribe can secure the rights to another tribe's machines for $5,000 each, per year.

Federal prosecutors say tribes will have to play by the new rules or face enforcement action. They have until May 12 to decide.

Many tribes complain furiously that the Pala pact is philosophically and economically flawed.

They have complained so loudly to U.S. Interior Secretary Bruce Babbitt--who is supposed to sign off on the Pala-Wilson agreement--that a meeting is scheduled in Sacramento on April 6 so the tribal leaders can air their complaints to Babbitt's Indian Affairs staff.

Meanwhile, the tribal leaders are lobbying state legislators to reject the Pala agreement. State law is unclear on whether Wilson needs the Legislature's blessing on the agreement, but his office has said he would seek it anyway.

Finally, California's gaming tribes decided last week to pursue the initiative drive to approve the gambling devices now deemed illegal by the state.

Among the many issues angering the tribes is the fact that they are being asked to commit to a new, untested gambling device that players may not like, jeopardizing the kind of revenue their current machines generate.


Whether the games will prove as popular among gamblers as conventional slots remains to be seen, but experts say that, with the technological advances in electronic and video gaming, the line between slots and non-slot machines continues to blur.

Indian leaders say gambling revenue is vital to their future.

The Cabazon band of Mission Indians, with just 45 members, has built a $23-million casino alongside Interstate 10 near Indio on the strength of its machines. The tribe introduced video gambling machines in 1992 and last year made about $4.8 million--77% of that from its 820 machines.

"Gaming has provided to us what was previously unavailable to us--the capital that we can invest in other economic enterprises," said Mark Nichols, the tribe's chief executive officer.

Tribal leaders also resent the fact that Wilson has set a 19,900-machine statewide cap. That limit, Nichols and others say, reflects Wilson's deference to Nevada's gambling industry.

"What Wilson has told us is that we can have a little gambling, but we can't exercise our right to make as much as we possibly can," Nichols said. "It's like, we can commit a little sin, but not a big sin."

The fact that Wilson negotiated the gambling agreement with only the Pala band--and is now thrusting its conditions on others--infuriates many tribes. But Wilson would only negotiate with a tribe that had not already begun illegal gambling.

The Pala tribe, with 857 members, currently makes about $1.5 million a year by leasing land to an aggregate rock company and by operating a 90-acre avocado ranch in the rolling hills of northern San Diego County.

Robert H. Smith, the tribal chairman, makes no apologies about agreement.

"We got the best deal we could for our people," he said. "You can refuse to negotiate--and go nowhere--or you can go the other way and get what you want and deserve. That's what we've done. We are protecting and creating opportunities for our self-sufficiency and economic growth."

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