Is Deck Stacked Against Remote Tribes?

As Gov. Arnold Schwarzenegger prepares to ink an agreement Monday allowing a few Indian casinos to expand in exchange for aiding the cash-starved state, some other tribes -- especially remote groups -- fear they could be big losers.

On the back-country reservation of the Rincon Indian band, the worries of tribal Chairman John Currier come down to three words: location, location, location.

The tribe partnered with Harrah’s to build a 22-story hotel, casino and resort complex amid the oaks and grasslands of a distant valley in northern San Diego County. Their goal is to offer a menu of restaurants, rooms, slot machines, shows and scenery to lure gamblers up the long country roads leading to the reservation.

But if tribes closer to population centers build bigger casinos with more slots, Currier fears, it could drain patrons and revenue, leaving his tribe of 600 to struggle as its better-established gambling brethren reap ever more riches.

“The public was sold on Indian gaming as a way to benefit a majority of tribes, to provide self-reliance, to see tribes pull their people off welfare,” Currier said. “But allowing a few tribes to develop mega-casinos while others struggle for a decent market is not good for Indian gaming.”

After nearly half a year of negotiations, four successful casino tribes and a fifth with a gambling hall in the works agreed to give the state $1 billion to help close this year’s budget gap and about $275 million a year thereafter, Schwarzenegger’s aides said last week. In exchange, the governor would permit more slot machines in each casino operated by the United Auburn and Rumsey tribes in Northern California and the Viejas, Pala and Pauma bands in San Diego County.

The agreements, which must be approved by the Legislature, would supplant pacts negotiated by Gov. Gray Davis and ratified by voters in 2000.

In addition to allowing more slot machines, Schwarzenegger vowed to fight two gambling measures on the November ballot. One could authorize slot machines at five existing horseracing tracks and 11 card clubs, ending the Indians’ monopoly on Nevada-style gambling in California. The other, backed by the Agua Caliente Indians, would allow unlimited casino expansion on tribal land, in exchange for which tribes would pay the equivalent of the state’s 8.84% corporate tax.

Agua Caliente is among five of Southern California’s most profitable casino tribes -- the others being Morango, Pechanga, San Manuel and Sycuan -- that have attempted to craft a deal with the governor. Those tribes put their own $1-billion offer on the table in May, but have failed to reach agreement because of differences over organized labor, audits and other nonmonetary issues the tribes believe would undermine their sovereignty.

California has 107 federally recognized tribes -- more than any other state -- but only half of them have casinos, and many of the state’s tribes remain mired in poverty. Of the tribes that offer gambling, many operate small casinos. Only about 15 have the current legal limit of 2,000 slot machines.

But the state’s tribal gaming industry has become the biggest in the nation. With annual gross revenue estimated at more than $5 billion, Indian casinos in California amount to about a third of the $14.5 billion brought in nationally by tribal gambling. California has a fourth of the nation’s Indian casinos; the next closest state, Washington, has half as many.

California tribes without casinos, many of them far from interstate highways or population centers that could support one, get a cut of others’ gambling proceeds that can amount to more than $1 million a year. In recent weeks, leaders of some of those tribes have visited the Capitol to fight to protect that revenue or see it boosted.

Some leaders of tribes with big casinos also are concerned that the new agreements Schwarzenegger is set to sign may make it more difficult for smaller tribes to compete successfully. It also could prove prohibitive for established gambling tribes on California’s outskirts, such as the Twenty-Nine Palms Band of Mission Indians, a half-hour drive beyond some of Southern California’s more profitable casinos.

Gary Kovall, attorney for the Twenty-Nine Palms group, compares its casino -- built in partnership with hotel and gambling mogul Donald Trump -- to “the corner hardware store going up against Home Depot and Lowe’s.”

Some of the more profitable casinos, closer to Los Angeles and other major markets, make four to six times as much as the Trump 29, Kovall said. While such big winners have plenty of cash to share with the state, he added, Twenty-Nine Palms and other less-profitable tribes do not.

“The governor is striking a deal with the guys who are awash with cash,” Kovall said. “To a certain extent, this is about the haves and the have-nots. If you suddenly throw an extra 5,000 or 6,000 slots into these casinos to the west of us, it’s going to hurt.”

Morongo Chairman Maurice Lyons said his tribe and other big casino owners in the Coachella Valley aren’t out to hurt “our brothers and sisters in other tribes.” If Morongo is allowed additional slot machines, he said, the tribe would fashion a deal to share their wealth with the less-fortunate.

“We can use more slots, I won’t deny that -- the business is there,” Lyons said. “But we’re not going to put anyone out of business.”

Bill Thompson, a University of Nevada-Las Vegas public administration professor and gambling expert, said outlying tribes “could be hurt marginally” if casinos in more favorable locations are allowed to expand. But any tribal casino will “still make a lot of money. The question is: Who is going to make a lot more money?”

On the Rincon reservation, Currier has other worries.

The tribe and Harrah’s are building their $310-million hotel and casino just as the rules seem to be changing, Currier said. And he fears it could give his competition a leg up.

Currier surveys the market and sees the Pechanga tribe with a far more advantageous position close to the main highway, its casino packed most nights of the week. Spillover, he said, inevitably heads up the road to Pala, but doesn’t often venture all the way to Rincon, 18 miles northeast of Escondido.

“You have to ask how much money and how many slots does a tribe need for self-sufficiency,” he said. “We think 2,000 slots is a number that’s very viable. But the only winners now would be tribes that can go to 3,000 or 4,000 or 5,000 machines.”

To fight its cause, the tribe filed a lawsuit against Schwarzenegger and the state June 9 in U.S. District Court in San Diego. The suit alleges that the looming shift in tribal casino agreements threatens to destabilize California’s Indian gaming industry. The lawsuit also contends the state breached its contract with the tribe and put Rincon’s future in jeopardy.

If forced to pay more to the state, tribal members’ economic prospects could be undercut, Currier said.

The tribe plans to spend much of its gambling revenue to build its own fire department and a sports-park complex. Each member also recently received $6,000 from the tribe to upgrade household appliances and do minor home improvements. But most of the time each Rincon member each gets $1,500 a month from the casino, a paltry sum compared with the riches of the state’s most prosperous tribes.

“You can’t look at all tribes as the same,” Currier said. “Some have better locations, some have fewer members to spread the profits among, some have been in gaming longer and set down better roots.”

He would love to see his tribe attain wealth, but he would settle for simple financial security -- and a bit of certainty about the future.

“That’s our big worry,” he said. “That there’s going to be some big winners, and the rest will be losers.”