Amid Confusion, State Drops Tribes’ Slot Machine Deadline

Gambling regulators have canceled today’s much-ballyhooed deadline for Native American casinos to install hundreds of lucrative slot machines--a deadline they say never existed but developed out of confusion over California’s new casino gambling compact.

The decision by the California Gambling Commission, announced in a letter Monday, was eyed warily by Native American leaders who question whether the agency even has the right to control slot machine licenses. And it reflects uncertainty in some quarters over how to implement portions of the governor’s landmark compact with the tribes.

The compact took effect after last year’s gambling ballot initiative, Proposition 1A, amended the California Constitution to allow Native Americans to offer slot machines and other Las Vegas-style games at their casinos. The compact, especially portions opening the door to new slot machines, is expected to revolutionize gambling--and finances--at California’s 40 Indian-operated casinos.

But specifics of the agreement between 61 Indian bands and Gov. Gray Davis are evolving, sometimes awkwardly, as tribes and the state sort out conflicting notions of government regulation and Native Americans’ sovereign rights.

“It’s not quite as vague as the U.S. Constitution, but it’s close,” said Howard Dickstein, a Sacramento attorney who represents Indian tribes. “It’s a very complicated document. It’s going to be amended many times and interpreted many times.”

Exactly one year ago, after the passage of Proposition 1A, Native American bands hired a Sacramento-area accounting firm to handle an auction of sorts. By fax and phone, and with a veil of confidentiality, dozens of Indian bands ordered licenses for hundreds of slot machines.

The bands then wrote checks for licensing fees of $1,250 per machine.

“The state didn’t object to that at the time because there was no state mechanism” to license the new slots since the Gambling Commission wasn’t yet in place, Dickstein said. “The tribes couldn’t be expected to wait to take action.”

The gambling compact says Native American casinos have a year after they receive slot machine licenses to install the games, and many tribe leaders assumed that year began on the date of the Sacramento “draw”--May 15, 2000.

So some casinos have scrambled to install the machines in recent months. Other bands, prompted largely by the deadline, have built new casinos. The Agua Caliente Band of Cahuilla Indians, for example, opened its second casino near Palm Springs last month.

But last year’s licensing draw at the Sides Accountancy Corp. of Fair Oaks, near Sacramento, was improper, the Gambling Commission has now decided. Instead, in its letter to Native American leaders and casino executives, the commission has assumed control of licensing slot machines.

The commission, so new that it is still hiring staff, assumed that power through a series of executive orders issued by Davis this spring. One of those says the panel “must control and monitor the gaming-device licensing and financial accounting processes on a continuing basis.”

Commission Will Issue Licenses

So the commission will issue the licenses itself, said Robert Traverso, its interim executive director. Casinos will then have a year from the moment they receive the licenses to install the slot machines, he said--meaning casinos could have until next summer to do what many scrambled to do by today.

In the meantime, the state plans an audit of the slot machine licenses each of the casinos believes it is entitled to, Traverso said.

That hasn’t been easy, he said. Despite repeated pleas for information, about 30% of Native American bands have not responded. So the state still doesn’t know how many slot machines are operating in California, nor how many the tribes plan to install, Traverso said.

“There has never been any accounting provided as to who paid what fees, for what purpose,” he said. “So the commission is independently seeking to identify who’s paid what fees for what number of devices.”

Reflecting further confusion, Davis’ office has said the compact caps the statewide number of slot machines at about 45,000. But another California governmental entity, the legislative analyst’s office, has estimated that the compact could allow about 113,000 slot machines.

That has opened the door to the inherent tension between government oversight of the gambling compact and the notion of sovereign rights for Native Americans. Once the audit of slot machines is complete, Traverso said, it will become public knowledge, which some Native American bands are uncomfortable with.

“Everything was completely secret before the compact,” Dickstein said. “Everything [Native American bands] gave was considered an infringement on their sovereignty, so tribes weren’t willing to discuss numbers.”

Some bands fear that the new procedure will delay the installation of the slots--eating into the profits of casinos, a portion of which is used to provide money to non-gaming tribes for government services, from health care to schools.