Rincon Suit a Symptom of Growing Tribal Divide

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New compacts imminent

SACRAMENTO, Calif. - The Rincon Band of Mission Indians filed a suit in
federal court on June10 accusing Gov. Arnold Schwarzenegger of unfair
compact negotiations with other tribes.

The suit claims that by allowing tribes to lift the current cap of 2,000
machines in exchange for greater state revenue, Schwarzenegger would
essentially create unfair competition, thus destabilizing tribal
governments that choose to stay with their original 1999 compacts.

Among Schwarzenegger's campaign promises last year were that he would wrest
further revenue from tribes in order to help balance the state's books.
California has been mired in a deficit for the past few years.

Since Schwarzenegger did not have the authority to simply levy a tax on the
tribes, which are legally separate governments, the best he could do to
entice tribes to the table was to offer something in return.

That offer has long been speculated to mean that he would allow tribes to
expand beyond the 2,000-machine limit imposed on them by the terms of the
original compacts signed with then-Gov. Gray Davis. Though no deals have
been finalized with Schwarzenegger yet, at least five tribes are said to be
near a deal with the governor that would lift the 2,000-machine limit.

At the heart of the Rincon suit is the fact that three of the five tribes
nearing a deal are located in San Diego County; including the nearby Pala
and Pauma tribes. Rincon, whose casino operation is limited to 1,600
machines fears that they would be subject to unfair competition essentially
because the playing field would be turned against them.

Vince Sollito, who works in Gov. Schwarzenegger's press office dismissed
allegations in the suit that the state was not negotiating in good faith
and said that tribes have a right to renegotiate their deals. Sollito
thinks the real problem is the threat of competition from neighboring
tribes making agreements and said the simple solution for Rincon would be
that they come to the table.

"The lawsuit seems to ironically stop other tribes from negotiating in
their own best interests," said Sollito.

Calls to Rincon were not returned by press time.

In this year of politics the tribes have also had to deal with a challenge
to their sole right to operate casinos in the state of California. An
initiative on the November ballot seeks to allow racetracks and card clubs
the right to operate slot machines at certain establishments.

It has been widely speculated that Schwarzenegger, who is currently very
popular in the state, would come out against the card club and race track
initiative in exchange for tribes agreeing to give up revenue to the
state's general fund. It should be noted, however, that facet of the
negotiations has not been confirmed by any official source though
speculation on the matter has been rampant.

Schwazenegger's office neither confirmed nor denied that opposition for the
race track initiative was on the negotiating table. However, attorney
Howard Dickstein, who is involved in the renegotiations confirms that
"exclusivity" for Indian gaming in the state is indeed part of the
negotiation.

"It's not only on the table, it's the main course," quipped Dickstein.

Dickstein who represents several tribes including two Northern California
tribes currently involved in the compacting process claimed that Rincon is
trying to "torpedo" the negotiating process. He dismissed Rincon's claims
of unfair advantage by pointing out the number of thriving casinos on the
Las Vegas strip that operate successfully despite their various sizes.

Furthermore, Dickstein also believes that the Rincon suit is at best
premature because "no one has even seen the terms of the new compacts,"
which he said should be completed in the next few weeks.

Another November ballot initiative backed by the Agua Caliente Band of
Cahuilla Indians could have some effect on Schwarzenegger's negotiations.
That initiative seeks to lock California's tribal gaming operations into a
fixed rate that would match the existing state corporate tax while
simultaneously lifting the 2,000-machine cap across the board. Currently
only tribes that negotiate new agreements can have the cap removed.

If passed the Agua Caliente initiative would not nullify existing
agreements but would allow tribes who have signed new compact agreements
the right to choose between their existing compacts and the new terms set
by the initiative.

At this time it is not clear whether other tribes are in support of the
Agua Caliente measure. With so many competing interests it appears that the
united front that the tribes showed in the initial campaigns to legalize
their operations in the state is now a thing of the past.

At least that is the opinion of one source who asked not be named who has
worked with several Southern California tribes. The source said that tribes
are at a crossroads as to whether to remain united or act in their own best
interests.

The dangers of remaining united, said the source, is that tribes can all
potentially "commit suicide" together by acting as a unilateral body and
refusing to accommodate the state. "This is a hard thing to say, but in
reality tribal sovereignty is really only at the will of the public," said
the source.

However, the source also feels that there are also great dangers in being
divided.

At the heart of Rincon's suit, said the source, is that some tribes will be
able to expand and eventually saturate the market making it more difficult
for nearby smaller operations to compete and thus would allow fewer tribes
to prosper than are currently.

The source admits to being a supporter of the Agua Caliente initiative and
believes that it provides a fair middle ground, at least in negotiations
with the state, by setting a few basic parameters. However, the source also
warned against taking the issue further with "cookie cutter compacts" that
ignore other important differences among each of the state's tribal
economics.

The source, however, also accuses the Schwarzenegger administration with
driving a wedge between the tribes by creating a disparity between them
through the compacting process.