Tribes cool tensions with state over video lottery terminals

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SACRAMENTO, Calif. - Two tribes that had faced a looming battle with the
state over video lottery machines have decided to comply with the state, at
least temporarily, by abolishing and/or changing the contested machines.

Though it does not resolve the central issue of whether the machines are
allowable or not, it drops the stakes on potential litigation.

"While we believe the lottery games are legal and expressly authorized
under our tribal-state compact, we have decided not to offer them while we
determine our next step," said Pechanga Band of Luiseno Indians Chairman
Mark Macarro, one of the tribes who had the contested machines.

Meanwhile, the other tribe, the Morongo Band of Mission Indians has signed
an agreement with Gov. Arnold Schwarzenegger to reconfigure their machines'
software to make them undisputedly Class II machines.

Though the world of gaming laws is complicated and has been made more so by
technology, to the layman a Class II game, for example, is bingo, while
Class III includes Nevada and Atlantic City-type slot machines.

The machines at issue are similar in form to regular slot machines. While
the machines look and have the feel of slot machines there are differences
in the way they pay out. Video Lottery Terminals are linked together by
computer and create a pool of money from the various participating
gamblers.

The tribes had argued that because there is a set prize list that is
generated solely from the pooled money that the machines were not in the
same category as standard slot machines, which pay out from the house.

The controversy began with a letter sent out by Gov. Schwarzenegger's legal
affairs secretary Peter Siggins in November. Siggins gave a three-pronged
response to the tribes' claims that the machines were not subject to the
compact.

Siggins wrote that if the machines were indeed gaming devices, then the
tribes were in violation of exceeding the 2,000-machine limit allowable in
their respective compacts with the state.

He went on to write that if the machines were a lottery, then the tribes
were also in violation of California lottery laws because they displayed
whether there was a win or a loss. And finally Siggins argued, if the
machines were neither Class III gaming devices nor governed by the
California State Lottery, then they were not authorized machines under the
tribal-state compact.

Meanwhile, the tribes argued that the machines were akin to lottery
scratch-off games and not to slot machines and were within the bounds of
state lottery law.

Essentially the agreement signed between Morongo and Gov. Schwarzenegger
does not solve the central question as to whether the devices are legal.
What the agreement does allow for is that, if the matter goes to court and
the tribe was to lose, they could continue to operate 750 of the machines
while pending an appeal.

Morongo tribal attorney George Forman said that no litigation involving
Morongo is planned.

Previously the state had claimed that the tribe was in violation of their
compact and said that such a violation placed the tribe's gaming compact
with the state in jeopardy.

"It [the agreement] eliminated the uncertainty and put this dispute to
rest, pending an ultimate resolution," said Forman.

Though Pechanga has not signed an official agreement with the state, the
tribe agreed to remove the machines in question of their own volition. The
tribe will continue to operate their newly-expanded casino with 2,000 slot
machine devices.

By switching to Class II devices, Morongo has managed to sidestep the issue
and does not have to remove any of their existing machines. The tribe
recently staged a large event marking their $250 million casino expansion
that was attended by several prominent politicians, including Lt. Gov. Cruz
Bustamante and former Gov. Gray Davis.