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Rincon Loses Attempt to Block New Compacts

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SACRAMENTO, Calif. -A federal court judge in San Diego refused an attempt
by the Rincon Band of Luiseno Indians to prevent a gambling compact
recently signed by five tribes from taking effect.

At issue were compacts signed in late June to much Hollywood-style fanfare
in which five tribes agreed to give a portion of their profits to the state
in return for allowing the tribes unlimited casino expansion.

Rincon had charged that by allowing the tribes to sign new compacts that
certain sovereignty rights were signed away, rights that the state did not
have. They also claimed that allowing unlimited expansion also violated the
specific terms of the original agreements signed in 1999 with then-Gov.
Gray Davis.

The tribe also worried about the effects that unlimited expansion of nearby
tribal operations would amount to unfair competition and hurt their own
business. Under the terms of the original compacts tribes were only allowed
to operate a maximum of 2,000 machines.

Current Gov. Arnold Schwarzenegger ran in last year's recall election on
the promise that he would wrest more revenue from the tribes as well as get
certain guarantees on environmental protection as well as impact money for
local communities from area casinos.

Last month, Rincon filed a request to block the new compacts in federal
court. In his decision, Judge Thomas Whelan wrote that it was not the
responsibility of Gov. Schwarzenegger to worry about the impacts that the
new compacts would have on Rincon's business.

"For (Rincon) to argue that the five tribes' renegotiation of their
allotted slot machines breached their contractual expectations strains
credulity," wrote Judge Whelan in his decision.

Not surprisingly Scott Crowell, an attorney who represented Rincon in the
case, was disappointed with the court's decision. He contends that the
state has an obligation to look at existing compacts and what the potential
impacts of future compacts would do to outstanding agreements.

Crowell maintained that the tribe had made financial plans because they
thought the terms of the original compacts would be in place for 20 years.

"We understood that there would be some re-negotiation of the compacts but
we did not expect a wholesale rejection of the notion of limited gaming,"
asserted Crowell.

Another problem that Crowell has with the decision is that he believes the
court acted as if this were the first round of negotiations. He contends
that different compacts could have been negotiated originally, but after 62
compacts had previously been signed, many of them en mass during the
initial 1999 round, that the tribes were thus linked.

However, both Rincon Chairman John Currier and Crowell also fault the court
and thus the state of California for selectively making parts of the
compacts applicable to all tribes and they both list several prior
instances in which the state had linked all of the tribes.

In this instance Currier said the selective process had big financial
consequences for Rincon. He said the tribe had made their financial plans
based on the idea that a certain basic framework would be in place, namely
the 2,000-machine limit.

"Rincon has invested approximately $350 million in our casino and resort
and made other business decisions based upon the tribal-state compact that
we were forced to either 'take it or leave it' in the late night hours of
September 9, 1999," Currier said in a press release prior to talking to
Indian Country Today.

Though he questioned the right of the state to make such an imposition on
the tribes because it was not in the federal 1988 Indian Gaming Regulatory
Act, he also thinks that limiting the machines to 2,000 gives more tribes a
"shot at prosperity."

Currier warned that by allowing certain tribes to expand their operations,
it will eventually create a market saturation that will result in a few
tribes with expanded operations cornering the gaming market.

One of the concessions made to the state and touted by tribal attorneys is
that the new compacts gave the tribes the right to "exclusivity" in the
right to conduct gaming. Gov. Schwarzenegger agreed, as part of the deal on
the new compacts that he would publicly oppose an initiative on the
November state ballot that would allow the expansion of gaming to select
card clubs and horse racetracks.

Currier, however, contends that exclusivity has no meaning for his tribal
operation as their nearest competitors are other tribal gaming operations.

Crowell will meet with tribal officials in the next week to decide whether
to appeal the decision. If so, it would have to go to the 9th Circuit Court
of Appeals.

Rincon is not the only tribe to take issue with the new compacts. Within
days of the Rincon suit, the San Manuel Band of Mission Indians issued a
statement in which they opposed the new compacts.

Calling the compacts the "Dickstein - negotiated compacts," a reference to
attorney Howard Dickstein who represented two of the five tribes that
signed the new compacts, San Manuel has many of the same issues as Rincon.

Though San Manuel officials did not return interview requests with their
public relations people, the tribe issued a press release stating their
reasons for opposing the new compacts.

"The language of the Dickstein-negotiated compact compromises our
sovereignty as it gives the state of California control and autonomy over
how we operate our business and work with local governments," said San
Manuel Chairman Deron Marquez in the press release.

San Manuel said in the same press statement that they had made an offer,
along with four other unspecified tribes, an offer of $1 billion "up front"
to the state, but for reasons that are not clear were rejected by the
state, presumably over sovereignty issues.
At issue were compacts signed in late June to much Hollywood-style fanfare
in which five tribes agreed to give a portion of their profits to the state
in return for allowing the tribes unlimited casino expansion.

Rincon had charged that by allowing the tribes to sign new compacts that
certain sovereignty rights were signed away, rights that the state did not
have. They also claimed that allowing unlimited expansion also violated the
specific terms of the original agreements signed in 1999 with then-Gov.
Gray Davis.

The tribe also worried about the effects that unlimited expansion of nearby
tribal operations would amount to unfair competition and hurt their own
business. Under the terms of the original compacts tribes were only allowed
to operate a maximum of 2,000 machines.

Current Gov. Arnold Schwarzenegger ran in last year's recall election on
the promise that he would wrest more revenue from the tribes as well as get
certain guarantees on environmental protection as well as impact money for
local communities from area casinos.

Last month, Rincon filed a request to block the new compacts in federal
court. In his decision, Judge Thomas Whelan wrote that it was not the
responsibility of Gov. Schwarzenegger to worry about the impacts that the
new compacts would have on Rincon's business.

"For (Rincon) to argue that the five tribes' renegotiation of their
allotted slot machines breached their contractual expectations strains
credulity," wrote Judge Whelan in his decision.

Not surprisingly Scott Crowell, an attorney who represented Rincon in the
case, was disappointed with the court's decision. He contends that the
state has an obligation to look at existing compacts and what the potential
impacts of future compacts would do to outstanding agreements.

Crowell maintained that the tribe had made financial plans because they
thought the terms of the original compacts would be in place for 20 years.

"We understood that there would be some re-negotiation of the compacts but
we did not expect a wholesale rejection of the notion of limited gaming,"
asserted Crowell.

Another problem that Crowell has with the decision is that he believes the
court acted as if this were the first round of negotiations. He contends
that different compacts could have been negotiated originally, but after 62
compacts had previously been signed, many of them en mass during the
initial 1999 round, that the tribes were thus linked.

However, both Rincon Chairman John Currier and Crowell also fault the court
and thus the state of California for selectively making parts of the
compacts applicable to all tribes and they both list several prior
instances in which the state had linked all of the tribes.

In this instance Currier said the selective process had big financial
consequences for Rincon. He said the tribe had made their financial plans
based on the idea that a certain basic framework would be in place, namely
the 2,000-machine limit.

"Rincon has invested approximately $350 million in our casino and resort
and made other business decisions based upon the tribal-state compact that
we were forced to either 'take it or leave it' in the late night hours of
September 9, 1999," Currier said in a press release prior to talking to
Indian Country Today.

Though he questioned the right of the state to make such an imposition on
the tribes because it was not in the federal 1988 Indian Gaming Regulatory
Act, he also thinks that limiting the machines to 2,000 gives more tribes a
"shot at prosperity."

Currier warned that by allowing certain tribes to expand their operations,
it will eventually create a market saturation that will result in a few
tribes with expanded operations cornering the gaming market.

One of the concessions made to the state and touted by tribal attorneys is
that the new compacts gave the tribes the right to "exclusivity" in the
right to conduct gaming. Gov. Schwarzenegger agreed, as part of the deal on
the new compacts that he would publicly oppose an initiative on the
November state ballot that would allow the expansion of gaming to select
card clubs and horse racetracks.

Currier, however, contends that exclusivity has no meaning for his tribal
operation as their nearest competitors are other tribal gaming operations.

Crowell will meet with tribal officials in the next week to decide whether
to appeal the decision. If so, it would have to go to the 9th Circuit Court
of Appeals.

Rincon is not the only tribe to take issue with the new compacts. Within
days of the Rincon suit, the San Manuel Band of Mission Indians issued a
statement in which they opposed the new compacts.

Calling the compacts the "Dickstein - negotiated compacts," a reference to
attorney Howard Dickstein who represented two of the five tribes that
signed the new compacts, San Manuel has many of the same issues as Rincon.

Though San Manuel officials did not return interview requests with their
public relations people, the tribe issued a press release stating their
reasons for opposing the new compacts.

"The language of the Dickstein-negotiated compact compromises our
sovereignty as it gives the state of California control and autonomy over
how we operate our business and work with local governments," said San
Manuel Chairman Deron Marquez in the press release.

San Manuel said in the same press statement that they had made an offer,
along with four other unspecified tribes, an offer of $1 billion "up front"
to the state, but for reasons that are not clear were rejected by the
state, presumably over sovereignty issues.