Tribal gaming accords on the table

Times Staff Writer

Caught between the competing demands of politically powerful Indian tribes and labor unions, lawmakers return from spring recess this week to weigh a major gambling expansion.

Whether they approve or reject compacts that could triple the number of slot machines those tribes operate, the Legislature’s decision will have far-reaching implications for the state and possibly for lawmakers’ own political futures.

Five Southern California tribes have struck deals with Gov. Arnold Schwarzenegger that could increase their slot machines from 10,000 to 32,500 if the Legislature concurs.


In exchange, the tribes would give the state a share of their profits. The agreements would set the stage for casinos with twice as many slots as the biggest in Las Vegas.

The accords are expected to clear the Senate with the encouragement of President Pro Tem Don Perata (D-Oakland), whose political accounts have taken in nearly $1 million from casino-owning tribes in the last two years.

But many members of the Assembly say they are troubled by details in the pacts that govern worker unionization and by the lack of a requirement that casino profits be independently audited.

The objections are from Democrats, who have been the main beneficiaries of campaign cash from unions and tribes. Unions have made scuttling the compacts a top priority, and lawmakers’ actions could antagonize either group. Both interests can muster tens of millions of dollars to help or hurt politicians.

At stake is the growth of a tribal gambling industry estimated to reap $7 billion a year. More than 58,000 slot machines are operated in California by 54 tribes.

“This would be probably one of the largest expansions of Las Vegas-style gambling anywhere in the world, thousands of additional machines,” said Assemblyman Mark Leno (D-San Francisco), “and one has to ask whether this is what Californians had in mind when they voted to approve this kind of gambling.”


The Senate will take up the compacts -- which the Legislature does not have the authority to amend -- this week.


Would state get its share?

Schwarzenegger, who campaigned for governor on a promise to get a “fair share” of tribal gambling money for the state, negotiated the deals last summer as he ran for reelection. The Legislature declined to act on the agreements before adjourning in August.

The tribes involved are the Agua Caliente Band of Cahuilla Indians, which owns two casinos in Palm Springs and Rancho Mirage; the Morongo Band of Mission Indians near Palm Springs; the Pechanga Band of Luiseno Indians in Temecula; the San Manuel Band of Mission Indians in San Bernardino; and the Sycuan Band of the Kumeyaay Nation in San Diego County.

The tribes agreed they would give the state up to 25% of the revenue from the new slot machines. Each machine can generate as much as $300 a day.

Morongo spokesman Patrick Dorinson said that for the average Californian, the new compacts represent “up to $500 million of new revenue a year at a time when the state is struggling with chronic budget deficits. This new money could pay for critical programs that the people of the state want.”

Schwarzenegger estimates that the payments to the state, some of which would be disbursed to poorer tribes, could be $506 million next year. The nonpartisan legislative analyst’s office called the governor’s estimate far too rosy. Given the relatively slow pace at which the tribes install new slot machines, according to the analyst’s office, it could take three to 10 years for payments to top half a billion dollars a year.


Some experts say that Schwarzenegger struck a fair deal for the state.

I. Nelson Rose, a Whittier Law School professor and gambling expert, noted that under the 1988 federal law regulating tribal gambling, states cannot ask for a cut of Indian casino profits unless they offer something of value in return -- such as the “exclusivity” offered by California, which is a promise that slot machines would not be allowed at race tracks, card rooms and other businesses.

“Schwarzenegger -- I think he did a good job by getting 25%, which is a higher percentage than the state tax on casinos in Nevada,” Rose said.

Others, including many Assembly Democrats, fault the agreements.

They cite the lack of a requirement that an independent accountant review the tribes’ books. Such scrutiny is important, they say, because payments to the state would be based on a formula subject to interpretation.

“How are we calculating the net win” -- the profits from the slot machines -- “and who’s calculating the net win?” said Assemblyman Alberto Torrico (D-Newark), chairman of the Assembly Committee on Governmental Organization, which handles gambling legislation.

Tribes say that as sovereign entities, they are not required by law to report their business profits. And lawyers for the tribes say state authorities can challenge a tribe’s calculation. In addition, each tribe’s casino operations are subject to an independent annual audit for the federal government.

Another element that troubles some lawmakers is that the pending agreements do not take into account a new void in government oversight of tribal casinos, one that Schwarzenegger has described as “a critical issue.”



Oversight concerns

In an October 2006 ruling, a federal appeals court struck down the National Indian Gaming Commission’s authority to regulate most tribal casino games, saying operating rules should be worked out in agreements between states and tribes. The compacts being considered in the Legislature were completed in August 2006 and do not take the ruling into account.

Schwarzenegger spokeswoman Sabrina Lockhart said the governor stands by the compacts.

“The governor negotiated these compacts because he believes it’s a good deal for the states, the tribes and the local communities,” she said.

Schwarzenegger, Lockhart said, supports federal legislation to clarify the national commission’s authority and meanwhile thinks the California Gambling Control Commission has sufficient state oversight.

The legislative analyst’s office noted that the compacts would limit the commission’s ability to inspect slot machines and require prior notice of inspections.

Labor officials say the provisions struck with the five Southern California tribes would hinder unionization. They prefer the kind of agreements Schwarzenegger reached with several other tribes in 2004, in which the groups agreed not to threaten or punish workers for trying to organize.

Those provisions also enable a union to bargain for workers if more than 50% of employees sign authorization cards, and they require unions not to strike or picket. The pending accords do not have those provisions.



Unions fight accords

But they should, said Jack Gribbon, California political director for Unite Here, a union that organizes casino and hotel workers, because many state and federal worker protections do not apply on reservations.

The alternative, he said, is “many thousands of workers with no effective way to join together to improve their lives, in spite of the incredible profits of California’s tribal gaming industry.”

Dorinson, speaking for the Morongo tribe, noted that Unite Here already has the right to organize casino workers.

The pending accords squeeze Democratic lawmakers between generous backers at a particularly sensitive time.

Assembly Speaker Fabian Nunez (D-Los Angeles) hopes to qualify an initiative for the February 2008 ballot that would adjust California’s term limits law to allow sitting lawmakers like him to stay in office longer. Polls show tepid public support for such a measure, and a campaign mounted by unions or tribes could doom it.

After Democrats declined to act on the five compacts last year, the Sycuan, Pechanga, Agua Caliente and San Manuel spent $2.5 million helping to reelect five Republicans to the Assembly and backing a Republican for state controller.


Nunez said that regardless of what the Senate does, his house will not vote on the compacts until Democrats’ concerns are addressed, perhaps in retooled agreements.

“We will respect the sovereignty of every tribe,” he said, “but we also want to ensure that the voters of California -- that their resources and interests are protected as well.”




Proposed new slot limits

Under a proposed expansion of gambling, five Southern California tribes could more than triple their current slot machines.

*--* Current Proposed Tribe slots limits Sycuan Band of the Kumeyaay Nation 1,996 5,000 Agua Caliente Band of Cahuilla Indians 2,000 5,000 San Manuel Band of Mission Indians 2,000 7,500 Morongo Band of Mission Indians 2,045 7,500 Pechanga Band of Luiseno Indians 2,139 7,500


Sources: California Legislative Analyst, California Gambling Control Commission