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Calif. governor claims two tribes in violation of compacts

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SACRAMENTO, Calif. - A showdown in the form of a potential lawsuit is
brewing on the horizon between two Southern California tribes and Gov.
Arnold Schwarzenegger over the use of linked video lottery terminals and
the tribes have been given 60 days in which to comply or be shut down.

Gov. Schwarzenegger is alleging that the two tribes, the Morongo Band of
Mission Indians and the Pechanga Band of Luiseno Indians, are illegally
linking their video lottery machines together to create a bigger winner's
pool. Gov. Schwarzenegger is claiming that this is a breach of the
tribal/state compacts that each tribe is legally required to have to
operate a casino.

Pechanga chairman Mark Macarro has already stated that he will not comply
with the governor's request and said in an Associated Press story that his
tribe would sue the state over the right to use the machines.

"We are confident that the lottery games we offer are legal and authorized
under Pechanga's tribal/state compact, otherwise we would not be using
them," wrote Macarro in a press statement.

Macarro also warned against speculation on Pechanga's response to legal
issues raised and said that the tribe was still "considering a response" on
legal issues relating to the compact.

The machines at issue are similar in form to regular slot machines. In fact
on a quick glance it would be difficult to tell the difference between the
two. However, unlike a standard slot machine, video lottery terminals are
linked together via computer with other such devices and pool money
together from gambling participants. Like a state lottery, there is a set
prize list from that pooled money hence the name video lottery terminal.

Regular slot machines on the other hand play against the casino and are
paid out by the house.

It is that distinction that the tribes are claiming that the devices do not
fall under the same category as standard slot machines. The world of gaming
law is a complicated one and new technologies have not made it much easier.
The distinctions are often minute and arcane to the casual observer.
However, the way the machines pay out is at the heart of the dispute.

In letters to Pechanga and Morongo written by the governor's Legal Affairs
Secretary Peter Siggins claimed whether the machines are or are not gaming
devices, it does not matter since both scenarios run afoul of California
law.

If they are gaming devices, Siggins claims that the tribes will have
exceeded their legal limit of 2,000 machines since the total count of slot
machines and video lottery terminals exceed the 2,000-machine allowable
limit for machines under the terms of the tribal/state compacts.

If not, then Siggins claims that the video lottery terminals are in
violation of the rules governing the California State Lottery because,
among other citations, "these devices display whether there has been a win
or a loss."

And if the machines are neither gaming devices nor games authorized under
the California State Lottery, Siggins argues that they are illegal under
California law because they are not authorized in the tribal/state compact.

"The governor's main point: Both tribes are over the limit [of gaming devices]," said Schwarzenegger spokesman Vince Sollitto.

Northern California attorney George Forman, who represents Morongo,
disagrees with this assessment of video lottery terminals. He contends that
unlike a slot machine, video lottery terminals do not pay out randomly and
that it is predetermined that at least one of the participants will get a
prize, thus not making them gaming devices in the sense that a slot machine
is a gaming device.

"It's just like a lottery scratcher game and not a slot machine," argued
Forman.

Perhaps one of the most potentially interesting legal arguments for the use
of video lottery terminals comes from Michael Lombardi, the gaming
commissioner for the Augustine Band of Mission Indians.

Lombardi cites a not much talked about California ballot initiative that
passed in March 2000 at the same time that Proposition 1A, which amended
the state constitution legalizing Indian gaming. Proposition 29 also passed
and included video lottery terminals, which were first employed by tribes
to get around slot machines, which were prohibited at the time. In effect,
Proposition 29 was modeled on the Pala Compacts signed with former Gov.
Pete Wilson in the late 1990s, who opposed tribes using slot machines.

While passage of Proposition 29 does indeed allow for similar machines, it
was assumed that the simultaneous passage of Proposition 1A would supercede
Proposition 29. What the legal boundaries and whether the new video lottery
terminals are interpreted to be the same machines as those authorized in
Proposition 29 is debatable.

Schwarzegger spokesman Sollitto maintained that Proposition 29 was not the
issue and again cited that the two tribes were over the legal limit.

The next step is for the tribes to confer with the governor's office as is
spelled out in the compacts for disputes. Forman has already stated that
Morongo is willing to set up a meeting and has already informed the
governor's office. Sollitto said that Pechanga has not yet responded.