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California Court Decision Lifts Slot Machine Cap

in Indian Gaming

Originally published 28 Aug, 2009 in GamblingCompliance Ltd by Peter Hecht

A court battle in California to overturn the state’s slot machine limits has ended in victory for the tribes who opposed the administration’s restrictive reading of their 1999 compacts.

California Indian tribes fighting to add slot machines without renegotiating 1999 state gambling agreements have won a court victory which could open up the Golden State market for 10,549 new slot machines. But they face two major obstacles: a weakened economy and the determined opposition of Governor Arnold Schwarzenegger.

he governor’s office announced this week that it will seek a legal stay to stop a court-ordered draw of new slot machine licenses by the California Gambling Control Commission and press on with an appeal in the case.

On August 19, US District Court Judge Frank C. Damrell issued a key ruling on behalf of a Northern California tribe, the Colusa Indian Community. The tribe was seeking to add slot machines to its casino north of Sacramento, but was blocked by a statewide cap imposed by former Governor Gray Davis.

Damrell’s ruling ordered the state to conduct a drawing to issue new slot machine licences. It followed his earlier decision that the Davis administration wrongfully set a statewide limit of 32,151 slots for 61 tribes that signed 1999 casino deals allowing a maximum of 2,000 machines each.

The statewide figure was based on the fact that many isolated tribes would only have market capacity for a few hundred slots or less.

But Damrell ruled that that the state set the slot machine limit unreasonably low and should have allowed the 1999 compact tribes a total of up to 42,700 machines.

Eleven California tribes exceeded the 2,000-per-tribe slot machine limit after negotiating amended compacts that paid the state tens of millions of dollars in revenue sharing payments in exchange for casino expansions.

Another half dozen tribes met the 2,000 limit under the 1999 compacts.

But Damrell’s ruling appears to be a huge victory for several tribes that complained they were not allowed to expand casinos under the 1999 gambling agreements. They said they were unwilling to be shaken down by the governor’s office to pay new revenues to the state for amended casino deals.

“This is an enormous vindication of the rights of the tribes obtained under the 1999 compact,” said George Forman, a lawyer who represents the Colusa tribe. “No longer can they be forced to make additional concessions in order to enjoy the benefits they have obtained.”

Damrell said the state must receive tribal applications and hold a draw for new licences within 45 days of his August 19 decision. The state tentatively set an October 2 date for the slot machine draw, but is hoping to stop it while appealing Damrell’s ruling to the US 9th Circuit Court of Appeals.

“The state will be filing an appeal and seeking a stay of the decision,” said Jeff Macedo, a spokesman for Schwarzenegger. “If a stay is granted, then the licence draw will not occur until after the 9th Circuit issues a decision on the appeal.”

Forman said it is unlikely California will see any rapid growth of casino slots due to the difficult economy and that fact that many 1999 compact tribes don’t reside in lucrative markets.

Even though the state may be forced to make more than 10,000 licences available, Forman said, “I would be surprised there would be even as many as 2,000 licences requested right now because of the economy. Once you get outside of the metropolitan areas of Southern California, the candidates that can operate as many as 2,000 slots become very rare.”

He predicted the state will see “incremental growth over a wide area” if Damrell’s decision stands.

In December, 2008, ten California tribes submitted requests for a total of 600 slot machine licenses. At the time, the state said it had only 75 licences available.

The Colusa tribe, which operates the 846-slot Colusa Casino Resort, went to court because it was denied permission to add 300 slots under its 1999 compact due to the statewide cap.

Another tribe, the San Pasqual Band of Mission Indians in San Diego County, filed a demand note for $555m it claimed it is owed because the state failed to honour its 1999 compact. The tribe wants to add 428 slot machines to reach 2,000.

San Pasqual Attorney Steven Warren Solomon, who filed a friend of the court brief supporting Colusa’s legal claim, said San Pasqual will immediately ask the California Gambling Control Commission for the additional slot machines licences, a move which will delight US slot machine manufacturers.

The Rincon Band of Luiseño Indians is seeking to add 400 slots to its casino in Valley View in San Bernardino County in Southern California.

In a statement, tribal lawyers Scott Crowell and Scott Wheat said Damrell’s ruling is “a huge victory for California tribes, likely providing enough gaming devices licences for every tribe that is seeking additional licenses”.

Solomon said many tribes would be reluctant to pay licensing fees of up to more than $4,000 per new slot machine given the difficult economy. But he said the state should now get out of the way of tribes that want to expand under their 1999 compacts.

“You would think that the state would want to stay out of internal tribal issues and worry about the real problems we have today in California,” Solomon said.

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California Court Decision Lifts Slot Machine Cap

in Indian Gaming, News

28 Aug, 2009 / GamblingCompliance Ltd / Peter Hecht

A court battle in California to overturn the state’s slot machine limits has ended in victory for the tribes who opposed the administration’s restrictive reading of their 1999 compacts.

California Indian tribes fighting to add slot machines without renegotiating 1999 state gambling agreements have won a court victory which could open up the Golden State market for 10,549 new slot machines. But they face two major obstacles: a weakened economy and the determined opposition of Governor Arnold Schwarzenegger.

The governor’s office announced this week that it will seek a legal stay to stop a court-ordered draw of new slot machine licenses by the California Gambling Control Commission and press on with an appeal in the case.

On August 19, US District Court Judge Frank C. Damrell issued a key ruling on behalf of a Northern California tribe, the Colusa Indian Community. The tribe was seeking to add slot machines to its casino north of Sacramento, but was blocked by a statewide cap imposed by former Governor Gray Davis.

Damrell’s ruling ordered the state to conduct a drawing to issue new slot machine licences. It followed his earlier decision that the Davis administration wrongfully set a statewide limit of 32,151 slots for 61 tribes that signed 1999 casino deals allowing a maximum of 2,000 machines each.

The statewide figure was based on the fact that many isolated tribes would only have market capacity for a few hundred slots or less.

But Damrell ruled that that the state set the slot machine limit unreasonably low and should have allowed the 1999 compact tribes a total of up to 42,700 machines.

Eleven California tribes exceeded the 2,000-per-tribe slot machine limit after negotiating amended compacts that paid the state tens of millions of dollars in revenue sharing payments in exchange for casino expansions.

Another half dozen tribes met the 2,000 limit under the 1999 compacts.

But Damrell’s ruling appears to be a huge victory for several tribes that complained they were not allowed to expand casinos under the 1999 gambling agreements. They said they were unwilling to be shaken down by the governor’s office to pay new revenues to the state for amended casino deals.

“This is an enormous vindication of the rights of the tribes obtained under the 1999 compact,” said George Forman, a lawyer who represents the Colusa tribe. “No longer can they be forced to make additional concessions in order to enjoy the benefits they have obtained.”

Damrell said the state must receive tribal applications and hold a draw for new licences within 45 days of his August 19 decision. The state tentatively set an October 2 date for the slot machine draw, but is hoping to stop it while appealing Damrell’s ruling to the US 9th Circuit Court of Appeals.

“The state will be filing an appeal and seeking a stay of the decision,” said Jeff Macedo, a spokesman for Schwarzenegger. “If a stay is granted, then the licence draw will not occur until after the 9th Circuit issues a decision on the appeal.”

Forman said it is unlikely California will see any rapid growth of casino slots due to the difficult economy and that fact that many 1999 compact tribes don’t reside in lucrative markets.

Even though the state may be forced to make more than 10,000 licences available, Forman said, “I would be surprised there would be even as many as 2,000 licences requested right now because of the economy. Once you get outside of the metropolitan areas of Southern California, the candidates that can operate as many as 2,000 slots become very rare.”

He predicted the state will see “incremental growth over a wide area” if Damrell’s decision stands.

In December, 2008, ten California tribes submitted requests for a total of 600 slot machine licenses. At the time, the state said it had only 75 licences available.

The Colusa tribe, which operates the 846-slot Colusa Casino Resort, went to court because it was denied permission to add 300 slots under its 1999 compact due to the statewide cap.

Another tribe, the San Pasqual Band of Mission Indians in San Diego County, filed a demand note for $555m it claimed it is owed because the state failed to honour its 1999 compact. The tribe wants to add 428 slot machines to reach 2,000.

San Pasqual Attorney Steven Warren Solomon, who filed a friend of the court brief supporting Colusa’s legal claim, said San Pasqual will immediately ask the California Gambling Control Commission for the additional slot machines licences, a move which will delight US slot machine manufacturers.

The Rincon Band of Luiseño Indians is seeking to add 400 slots to its casino in Valley View in San Bernardino County in Southern California.

In a statement, tribal lawyers Scott Crowell and Scott Wheat said Damrell’s ruling is “a huge victory for California tribes, likely providing enough gaming devices licences for every tribe that is seeking additional licences”.

Solomon said many tribes would be reluctant to pay licensing fees of up to more than $4,000 per new slot machine given the difficult economy. But he said the state should now get out of the way of tribes that want to expand under their 1999 compacts.

“You would think that the state would want to stay out of internal tribal issues and worry about the real problems we have today in California,” Solomon said.

https://ssjlaw.com/wp-content/uploads/SSJLaw-Attorneys-Logo530.png 0 0 partners https://ssjlaw.com/wp-content/uploads/SSJLaw-Attorneys-Logo530.png partners2009-08-28 09:45:232009-08-28 09:45:23California Court Decision Lifts Slot Machine Cap

Solomon, Saltsman & Jamieson File $550,000,000 Claim For Damages Against The State Of California On Behalf Of The San Pasqual Band Of Mission Indians Valley View Casino

in Indian Gaming, News

Media Contact
Stephen Warren Solomon
Solomon, Saltsman & Jamieson
(310) 822-9848

FOR IMMEDIATE RELEASE

CALIFORNIA COUNTIES LOSING MILLIONS IN CASINO INCOME AS GOVERNOR
SCHWARZENEGGER CONTINUES TO SCOFF AT FEDERAL COURT INTERPRETATION,
SAN PASQUAL TRIBE FILES GOVERNMENT CLAIM AGAINST STATE FOR $550 MILLION

(VALLEY CENTER, CA) June 1, 2009 – Today the San Pasqual Band of Mission Indians, located in northeast San Diego County and the owners of Valley View Casino, filed a $550 million government claim, a prerequisite to filing a lawsuit, against the state of California for lost profits resulting from Governor Schwarzenegger refusing to allow the California Gambling Control Commission to issue all of the slot machine licenses to which the tribe is entitled under its 1999 gambling compact with the state.

The point of contention is the number of slot machine licenses certain California casinos are currently being allowed to operate versus the number of licenses that were legally granted to them when their gaming compact was negotiated back in 1999. According to the federal court lawsuits currently pending in the United States District Courts (USDC) in San Diego and Sacramento, and the decision issued by the USDC judge in Sacramento, the state compact provides for a total of 42,700 Class III licenses to be divided up amongst the tribes. However, the state of California for many years has wrongly limited the number of licenses to 32,151—shorting the tribes out of a total of 10,549 licenses, and thus shorting the state, counties and cities as well as these tribes out of hundreds of millions of dollars.

The state, led by Governor Schwarzenegger, is refusing to issue the remaining licenses and instead is holding the licenses as leverage against the tribes to force them into new compacts that would strip tribal governments of their sovereignty. By refusing to issue these slot machine licenses Governor Schwarzenegger is also eliminating a badly needed source of income for counties and cities that would generate up to $30 million per year for those local municipalities.

Under the terms of the tribal-state compacts, every year all tribes with gaming operations pay slot license fees into certain state accounts, with the specific amount being determined by the number of slot machine licenses issued. The more slot machine licenses issued, the more these state accounts are funded. Specifically, two of these accounts are the Indian Gaming Revenue Sharing Trust Fund (RSTF) and the Indian Gaming Special Distribution Fund (SDF).

The RSTF is a state account that is paid into by all tribes that own a requisite number of gaming device licenses, like the San Pasqual tribe. These payments are made by tribes based upon how many slot machines they have, with the payments increasing with the number of slot machines. The RSTF is required to pay out $1.1 million annually to every non-gaming tribe—however, because the state has not allowed tribes to operate the full number of allotted slot machine licenses, the RSTF falls short every single year.

The SDF is another state account to which all tribes that established gaming operations before 1999 contribute between 7 – 13% of their revenue each year. The SDF is required to use these funds to benefit counties and cities by providing badly needed monies for police, fire, roads, and other infrastructure, as well as the public health and welfare of these communities in general. This fund is managed by regional Indian Gaming Local Community Benefit Committees (IGLCBC) who ideally decide how best to utilize and distribute the money for local improvements, for example, in San Diego County alone, within the past five years over $20 million has been allocated from the SDF. These funds have been utilized for the purchase of well pumps, fire hydrants, fire trucks, helicopters, high tech communications networks and crime scene investigation equipment to name just a few. In the 2005-06 fiscal year the San Diego County IGLCBC distributed $8.3 million in grant funds alone. Unfortunately, under Governor Schwarzenegger no appropriations from the SDF were provided to counties in the 2007-08 state budgets.

What could be a huge source of revenue to counties and cities, through agreed upon slot machine license fees, is ignored by the governor in his ill-directed quest to force San Pasqual and many other tribes to renegotiate a different more expensive compact than the one that has been in existence since September 1999. The agreed upon fees for an additional 10,549 licenses would result in up to $360 million in additional funding to county and city governments over the next 12 years.

While these amounts may be small change to the governor, or even to the state, it’s huge money to local counties and cities, and their citizens, who need this money particularly in this nearly unprecedented economic downturn.

This SDF money can be a precious and significant income for county budgets, especially now when Governor Schwarzenegger is talking about budget and staffing cuts in healthcare services, police and fire services, education, welfare, parks and much more. However—in times of RSTF deficits, which happens every year, the SDF’s number one priority is to cover the RSTF shortfalls. So every year, approximately $30 million that is supposed to be benefiting counties and cities is lost, simply because the state is refusing to recognize the plain language of the 1999 compact that designates the number of slot machine licenses which has now been determined by the USDC judge in Sacramento to be 10,549 more than the state will issue.

To immediately increase funds to benefit counties and cities, Governor Schwarzenegger simply needs to allow tribes to utilize the originally agreed upon slot licenses. He would not be causing a proliferation of new casinos in the state, he would just be allowing tribes who already have casinos to operate at the level consistent with the plain language and intentions of the parties as designated in the tribal-state compact negotiated back in 1999.

“If the state would adhere to the plain language of the 1999 compact, honor its contractual
commitments and concede to the USDC judge in Sacramento, it would end the RSTF shortfalls by making upwards of $360 million available to additionally fund the RSTF over the balance of the compact term, and therefore free up as much as $30 million per year of the SDF monies to help relieve the impact of the eviscerated public services under Governor Schwarzenegger,” said Joe Navarro, president and CEO of the San Pasqual Casino Development Group, Inc., the San Pasqual tribe’s casino development arm.

Through the government claim filed today by San Pasqual, as well as the federal court lawsuits against the state pursued in San Diego by the San Pasqual Band and the Rincon Band of Luiseno Indians, along with the federal court lawsuit pursued against the state in Sacramento by the Colusa Band of Wintun Indians, Picayune Rancheria of the Chukchansi Indians, and the Tuolumne Band of Me-Wuk Indians, these tribes are standing up for all California tribes and county governments. The state of California, and its governor, should live up to the state’s agreement and immediately issue the additional 10,549 slot licenses, which will immediately benefit cities and counties throughout the entire state. With one stroke of his pen, Governor Schwarzenegger can immediately realize $360 million for the benefit of the taxpayers in California without costing them a single cent.

“We are just asking for what was established to be ours according to the language of the 1999 compact,” said Allen Lawson, chairman of the San Pasqual tribe. “Fulfilling the language of the compact will not only benefit the entire Native American community but in turn will aide the counties of California during this time when everyone could use assistance.”

This is not the first time tribes such as the San Pasqual tribe has been handed a raw deal by the state of California. After being credited for helping the U.S. Calvary defeat the Mexican army in 1846, the San Pasqual tribe faced intense hardship after the signed Treaty of Santa Ysabel, which was supposed to grant tribal sovereignty and security, was rejected by the US Senate under pressure from the California delegation in 1852. Then in 1870, a new reservation treaty signed by President Grant was swept out from under them yet again by the Senate because of Californians who wanted the land for themselves. Eventually in 1910 the San Pasqual tribe was granted a small, rocky, arid reservation over 15 miles north of their original land.

The San Pasqual story is neither new nor unique, and similar injustices have been inflicted onto Native Americans throughout time and place and continue today. As of the 2000 U.S. Census, per capita income for Native Americans is less than half of the U.S. level and family poverty is three times that of the rest of the country. And now yet again, the state of California is reneging on its 1999 compact and this time, not only hurting Native Americans but the entire state by keeping funds out of the hands of county and city officials, and the people of those communities that would benefit from significant revenue increases.

For more information please contact Stephen Warren Solomon at (310) 822-9848.

Click here for a PDF version of this press release.

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Tribal attorneys say rule paves the way for state to dismiss gaming-pact cases

in Indian Gaming, News

By Chet Barfield
UNION-TRIBUNE STAFF WRITER
June 7, 2006

Attorneys for tribes challenging the state in disputes over California’s Indian gaming compacts say they’re being trumped by a legal defense all but guaranteed to get any such lawsuit dismissed.

The state has invoked this defense to quash four gaming-compact suits tribes have brought since 2004, including one dismissed last month by a federal judge in Sacramento.

“The state gets to dictate the meaning of every provision of this compact,” said George Forman, attorney for the Central Valley tribe whose suit over slot machine licenses was dismissed May 16. “There’s no way anyone can challenge the state’s calculations.”
At issue is a federal civil regulation called Rule 19. It requires any party deemed “necessary and indispensable” to be included as a plaintiff or defendant. If that can’t be done, case dismissed.

Most of California’s 61 tribal compacts are boilerplate agreements signed by former Gov. Gray Davis in 1999. In all four court challenges, the state has successfully argued that claims raised by the plaintiff tribe would affect others in California, making them indispensable parties.

The rule could apply to any or all of California’s 107 tribes, even those without casinos. The compacts include provisions for gaming tribes to provide revenue-sharing funds for all those that have no casinos or very small ones.

The pacts outline three steps to resolve disputes. First, either the governor or a tribe can demand “meet and confer” sessions to address a disagreement.

If that doesn’t do it, either side can request binding arbitration, but both must agree. The state has yet to arbitrate a compact dispute.

Litigation was supposed to be a last resort.

“What good is an agreement . . . if we’re not able to get a judicial determination of what it means?” asked Rincon attorney Scott Crowell, whose client tribe is appealing a compact challenge dismissed last year.

Another North County tribe, San Pasqual, filed suit in federal court May 3, contending the state is wrongly depriving Valley View Casino of more than 400 slot licenses.

Attorney Stephen Solomon said if the state invokes Rule 19, San Pasqual will argue that its suit would not deprive any other tribe of slots, licenses or revenue-sharing funds.

“This only adds to (the license pool); it doesn’t take away from anybody,” he said. “If you take the state’s position to its logical sequence, no tribe could ever sue the state for anything.”

Solomon, Crowell and Forman contend the Schwarzenegger administration is blocking the suits to force tribes to renegotiate their compacts and pay more money to the state, as nine tribes have done.

Schwarzenegger’s press office referred inquiries to Attorney General Bill Lockyer. A Lockyer spokesman provided a statement prepared by state attorneys.

“The rule does not apply to every dispute that arises under the 1999 compact,” it said. “Dismissal based on indispensability of parties comes into play only when the dispute involves application of compact provisions that affect some or all of the compact tribes, or some or all of the non-compact tribes.”

One tribal attorney whose view differs from most is Howard Dickstein, who represents Pala and two Northern California tribes that signed revised compacts with Schwarzenegger in 2004.

Dickstein said tribes, which have governmental immunity from most suits, have been using Rule 19 for decades to get cases dismissed in their favor. He called it ironic for tribal attorneys to complain about the state invoking it.

“What you can’t litigate are issues that are common to multiple tribes unless those tribes agree to the lawsuit,” he said. “Once you entered into compacts with many common provisions, that was very clear from Day One that that could be an outcome. I don’t know why anyone’s surprised about this.”

Chet Barfield: (619) 542-4572; [email protected]

Solomon, Saltsman & Jamieson are attorneys practicing in the areas of ABC law, ABC Appeals Board cases, and all related Land Use Matters such as City and County Conditional Use Permits, Variances, Police and Fire permits, Entertainment law, and Gambling Law; as well as Business and Personal Injury litigation. Solomon, Saltsman & Jamieson can be reached at 800 405 4222.”

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