California Must Offer More Slot Licenses to Tribal Casinos
Saturday, Oct. 3, 2009, The Sacramento Bee, Page 3A by Peter Hecht

In a legal victory for Indian tribes that refused to pay financial concessions for new gambling deals, California must offer licenses Monday for 10,549 additional slot machines for tribal casinos.

Amid the economic downturn, casino tribes are expected to vie for only a fraction of the licenses in a drawing by the California Gambling Control Commission.

Still, the sudden availability of new licenses is seen as a triumph for tribes including the Colusa Indian Community near Sacramento, the San Pasqual tribe near San Diego County and the Rincon Band of Luiseño Indians near San Bernardino. 

They had complained they were unfairly pressured to negotiate new revenue-sharing payments with Gov. Arnold Schwarzenegger to get slots they insisted they were entitled to under 1999 gambling compacts.

Sixty-one tribes signed the 1999 deals with Gov. Gray Davis that allowed them up to 2,000 slot machines each. At the same time, the state imposed an overall cap of 32,151 slot machines statewide, on the calculation that few tribes had the market capacity for major casinos.

But the tribal gambling industry exploded, quickly reaching that limit. Schwarzenegger saw an opening to negotiate new deals - allowing individual tribes to bypass the state slot cap in exchange for hefty payments into California's revenue fund.

Schwarzenegger negotiated tens of millions of dollars in payments in new gambling compacts from wealthy tribes that wanted to exceed the 2,000-slot limit to build large casinos that could compete with lavish Las Vegas resorts. Those deals benefited tribes such as the United Auburn Indian Community, which runs the lucrative Thunder Valley Casino in Placer County.

Using the statewide cap as leverage, the governor also attempted to get additional revenue-sharing payments from smaller, often rural tribes that wanted to add slots but not exceed the 2,000 per-tribe limit.

Colusa, San Pasqual and other tribes refused to negotiate new deals and filed legal claims against the state.

In August, U.S. District Judge Frank C. Damrell ruled that dozens of tribes operating under 1999 gambling deals can add slot machines without new state compacts.

Ruling on behalf of the Colusa Indian Community, Damrell said the California slot limit should have been set at 42,700 machines. He said the 32,151 figure didn't fairly reflect the number of slots that could have been anticipated under the 1999 deals.

Damrell denied the state's request to postpone the draw for new licenses while it appeals the case. On Thursday, the 9th U.S. Circuit Court of Appeals also refused a stay.

So, the draw will go on Monday, but the Schwarzenegger administration warns that tribes may have to remove any new slots they're awarded if the state's appeal is successful.

"We are still moving forward with our appeal and expect to win," said Schwarzenegger spokesman Jeff Macedo.

San Pasqual attorney Stephen Warren Solomon said the tribe is happy with the slot machine draw. "The state can say whatever they want. At this point, we have prevailed," he said.

Solomon said the Gambling Control Commission has assured the tribe that it will get licenses for 428 slots to reach its 2,000-slot limit. The licenses cost about $4,000 each.

The Colusa tribe, which runs the 846- slot Colusa Casino resort, is seeking 300 new licenses. The Rincon Band in San Bernardino County wants to add 400 slots.

Nevertheless, said George Forman, a lawyer who represents the Colusa tribe, it is unlikely California will see rapid casino growth, given the stalled economy and the fact that many tribes don't reside in lucrative markets.