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Let the games begin: California tribes have little reason to renegotiate

The success of many Class III Indian gaming operations in states where gaming was limited to the likes of lotteries and bingo has caused many of those states to look at expanding commercial gaming. If California officials have their way, Indian casinos in the Golden State could face competition from slot machines owned by commercial operators.

According to the Associated Press, an initiative sponsored by the state attorney general's office is in the works to legalize slots at privately owned card clubs (gaming parlors with only cards - no tables or slots) and horse tracks.

As currently proposed, the initiative would give California's 61 gaming tribes a choice. One option is to submit to compact renegotiations, under which they would be forced to "share" at least 25 percent of their profit with Sacramento. Or, they can refuse to renegotiate and continue to operate their slots. But, five horse tracks and 11 card rooms would be allowed to install their own slots, from which they would ship a hefty 33-percent cut of the profits to Sacramento.

Supporters hope to place the measure on the state-wide ballot this November; to do so, they must gather almost 600,000 signatures, representing 8 percent of the voter turnout in the 2002 election.

Proponents argue that a cut of the profits would be channeled directly into the state treasury, which faces a fiscal shortfall running well into the billions of dollars. Tracks and card parlors, which have suffered declining attendance since the establishment of Indian gaming in California, are in fervent support.

Tribal representatives, of course, are decidedly unhappy with the idea and are reportedly considering a lawsuit if the measure is placed on the ballot.

Indian gaming in California is conducted under a 20-year overall compact dating from March 2000. Under its terms, slot machine counts (the number of slots in operation at a particular site) and environmental impact concerns are the only two specific issues that may be renegotiated. Tribes are of course free to renegotiate specific provisions of the compact as their particular situation may dictate.

The real question is what's in it for the tribes to renegotiate? Current law says that they don't have to and their contributions to California's economy are already significant.

California's Indian casinos contribute some $130 million annually to a pair of state-administered funds - one for the benefit of non-gaming tribes and the other to both mitigate the impact of casinos on local infrastructures and communities and to pay regulatory costs. (California is the only state in which tribes to pay into such funds.)

Indian gaming in California employs over 40,000 people who pay some $400 million in federal, state and local taxes, according to the California Nations Indian Gaming Association. Add to that the business given to contractors, vendors, consultants and others, all of whom pay taxes and most of whom employ many other people.

The Indian Gaming Regulatory Act was never meant to create a revenue stream for state governments. Yet the idea of revenue sharing developed as a way to compensate a state for granting a particular right or privilege associated with gaming (not gaming itself) to an Indian nation. As things have evolved, the "privileges" that make the most sense for tribes to pay for are exclusivity and time.

Perhaps if California were to offer the tribes an incentive to renegotiate rather than trying to threaten them, arrangements could be made to satisfy both parties. But the fact that the state is not offering is perhaps a sign that it has little or nothing to offer. California's gaming tribes already have a 20-year compact, making an extension offer unlikely. And, a number of tribal officials and legal experts agree that the current compact already gives the tribes slot exclusivity at the expense of commercial operators.

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Some questions for Governor Schwarzenegger: Does your new administration propose to make California's gaming tribes pay exorbitantly now for a 20-year privilege that they were granted well over three years ago? What happened to good-faith negotiations? Why should the tribes renegotiate with you?

VLTs at OTB?

For much of the past month frigid Arctic air and abundant snowfall has clamped down on Upstate New York, as record cold temperatures have chilled the Empire State to the marrow. But never fear New Yorkers - Governor George Pataki is heating things up in the gaming arena.

Specifically, the governor is proposing, in his budget for the fiscal year beginning April 1, to further expand video lottery terminal (VLT) usage in New York by permitting them at Off Track Betting (OTB) parlors.

The October 2001 legislation that authorized six Indian casinos for the state also allowed horse tracks to install VLTs. The Saratoga Raceway will be the first of those to finally open on Jan. 28 with 1,300 machines. Finger Lakes Racetrack in Canandaigua is expected to open its 1,100-machine VLT room on Feb. 11.

Pataki obviously wants more gambling revenue to plug Albany's budgetary gaps, but he may be looking as well to pressure tribes competing for three Catskill casinos into concessions in areas of sales tax collection and land claims, issues linked to the award of the three casinos.

[Aside: The New York Times, in its Jan. 20 edition, cited unnamed state sources as saying the Catskill casino front-runners at this point are the St. Regis Mohawk Tribe, the Cayuga Nation and the Stockbridge-Munsee Band of Mohicans from Wisconsin. Other tribes in the running include the New York and Wisconsin Oneida nations and the Seneca Nation.]

Oklahoma compact legislation

An Oklahoma lawmaker wants Indian gaming compacts in that state to be approved by the state Legislature. Rep. Forrest Claunch, R-Midwest City, plans to introduce a bill requiring a simple legislative majority to approve Class III compacts.

Currently, compacts in Oklahoma need only the approval of the governor and the Joint Committee on State-Tribal relations. The 10-member committee is comprised of appointees selected by the leaders of the Senate and the House and charged with overseeing and approving tribal-state agreements.

Claunch told the Associated Press that he objects to major public policy being decided by a small group of non-elected officials. A state negotiator countered that such a law would require legislative approval for revising or renewing compacts, requiring "special sessions all the time."

According to the AP, Governor Brad Henry has said he would submit any negotiated compact for the Legislature's approval. While it has a thriving Class II gaming scene, Oklahoma does not yet have Class III Indian casinos. Compact negotiations have been stymied by a dispute between the Cherokee and Choctaw nations over Choctaw ownership of a horse track within lands once occupied by the Cherokees.

State officials estimate their take from Class III gaming in Oklahoma could be in the $70-$80 million range.