Californian Governor, tribes close to $1 billion gambling agreement

Californian Governor Arnold Schwarzenegger and Indian gambling tribes are close to completing a much anticipated deal that could provide the state $1 billion in new revenue this year, Associated Press reported, quoted by www.sanluisobispo.com.

Schwarzenegger said Tuesday the agreement is imminent between four tribes, and he expects several others to join soon. He declined to provide further details, but legislative sources familiar with the negotiations said the deal calls for the tribes to put up an initial cash contribution to the state that will likely be financed through the sale of bonds.

Legislative leaders meeting privately with the governor received a briefing on the agreement but declined to share details.

"I think within a very short period of time we will know much more about that," the governor said at a news conference earlier in the day. "Because the other tribes are now coming in and saying we want to be part of this, we can see that we can work together with you and with the state, and we want to be a partner of yours."

The governor's $103 billion budget plan released last month assumes that tribal gambling enterprises will agree to provide the state with $500 million of ongoing revenues.

The governor's budget also suggests that renegotiated agreements with the tribes will generate a "significant" one-time payout to the state above the $500 million mark.

The San Jose Mercury News and San Francisco Chronicle reported in Wednesday's papers that the deal would generate up to $275 million annually in exchange for the tribes' rights to unlimited expansion and their continued monopoly on casino-style gambling.

The papers said the deals would allow an unlimited number of slot machines at their casinos in exchange for an estimated 15 percent of their profits. There had been a cap of 2,000 machines per tribe.

The deals, which last through 2030, would also preserve tribes' exclusive right to run casinos in California, the papers said.

"If it is four tribes, then we will get a certain amount of money, let's say," he explained. "Then another four tribes come in and that would then double the amount of money. So we can't really tell you exactly what is the amount of money we're going to get, because we don't know yet how many tribes will join."

Sources said the proposed agreement includes the Pala Band of Mission Indians from San Diego County and the United Auburn Indian Community Rumsey Band of Wintun Indians in the Sacramento area.

In exchange for giving the state what Schwarzenegger has termed a "fair share" of the profits, tribes would receive the administration's support to expand casinos by adding additional slot machines beyond the current limit.


web page

Looks like it's official ...

Governor, Five Tribes Sign Gambling Agreement with Wide Implications

by James P. Sweeney
(Copley/The San Diego Union-Tribune)

SACRAMENTO – Gov. Arnold Schwarzenegger and leaders of five Indian tribes signed landmark gambling agreements Monday that, for better or worse, will likely transform California into the gambling capital of the world.

Three of the tribes are from San Diego County, which already is home to more Indian casinos and more tribes than any other county in the state.

The agreements, or compacts, give the five tribes and others with existing compacts an option to accept the same terms: unlimited slot machines in exchange for a large new slice of revenue for the state – $1 billion up front with up to $200 million a year in recurring income.

Tribes also will receive a 10-year extension, pushing the expiration date of their compacts to 2030, and a guaranteed monopoly on Nevada-style casinos. In return, the tribes agreed to enforceable protections for local residents, casino employees and patrons.

"This is a fair deal for the tribes and our state," Schwarzenegger said.

The five tribes are Pala, Pauma and Viejas tribes of San Diego County, the Rumsey band of Yolo County and United Auburn Indian Community of suburban Sacramento.

Anthony Pico, chairman of the Viejas tribe of east San Diego County, called the deals a "great victory for everyone involved."

"We have stepped up today to join you as partners in the economic progress of California and to support the general welfare of all of its citizens," Pico said.

The agreements will secure tribes' status as a growing political and economic force in California, where 54 Indian casinos already generate an estimated $6 billion a year, second only to Nevada's $9.2 billion.

They also fulfill Schwarzenegger's campaign promise to extract a "fair share" of tribal gaming revenues for the state, which now receives only about $140 million a year from Indian casinos.

The deals must be ratified by the state Legislature and approved by the U.S. Interior, a process that is expected to take several months. During that time, lawmakers and others will be carefully monitoring tribal opposition that emerges.

One San Diego County tribe, the Rincon band, already has gone to court to block the new compacts. Rincon believes its more remote casino could be hammered financially if nearby casinos with better freeway access get unlimited slot machines.

"We will seek an injunction preventing them from going into effect," Rincon attorney Scott Crowell said.

Rincon's complaint underscores an irony other tribes also have discovered. While the big gaming tribes would get guaranteed protection from commercial competition, the compacts offer little protection for remote reservations from the big, better-positioned tribes.

The Schwarzenegger administration opened negotiations with twice as many tribes and hoped more of the big gaming tribes would be on hand Monday. A group of the holdouts have submitted their own compact proposal, which could deliver another $1 billion up front to the state.

Several of those tribes were sharply critical of the new compacts.

"This is a slap in the face to many of us that deal with these issues on a daily basis," said Deron Marquez, chairman of the San Manuel, which operates a big casino near San Bernardino. "Many of our people who suffered and died so our people could be where they are today would not appreciate us signing (this) document."

Richard Milanovich, chairman of the Agua Caliente band of Palm Springs, said he found many of the new provisions unacceptable. Milanovich said his tribe will "maintain the course" on a November ballot measure that offers tribes unlimited gambling if they agree to pay the state's 8.8 percent corporate income tax rate.

Schwarzenegger opposes that initiative as well as a measure that could give slot machines to a select group of mostly urban racetracks and cardrooms. If it passes, the tracks' initiative would nullify the new compacts. Agua Caliente's measure could trump the deals and all existing tribal gaming compacts in the state.

Another influential leader of a holdout tribe has sounded a more conciliatory note in recent days. Maurice Lyons, chairman of the Morongo, which operates a wildly successful casino adjacent Interstate 10 in Riverside County, said he's prepared to resume serious negotiations with the administration.

"Let (the governor) work with us now, so we can get one, too," Lyons said Monday. Morongo is part of a group of tribes that has proposed an alternative compact that the administration has twice rejected.

"At one time I had 18 tribes looking at it," Lyons said. "We can bring in quite a few tribes."

Schwarzenegger's negotiators were seeking a large cash infusion to help balance the state budget. But they also were trying to clean up serious shortcomings in compacts hastily negotiated nearly five years ago by former Gov. Gray Davis.

The administration secured at least three provisions that may prove controversial:

– Labor unions will be permitted to organize casino workers without interference or resistance from the tribes in exchange for a no-strike promise.

– Compensation and other mitigation for off-reservation impacts of gaming operations must be negotiated with local governments and resolved in binding arbitration, if necessary.

– Binding arbitration also may be invoked to settle patron disputes and liability issues.

Administration officials described the package as "a model agreement" and said all but the monetary terms are likely to be included in other deals offered by Schwarzenegger.

There is one conspicuous omission, however, the absence of any language addressing tribal compliance with the state's Political Reform Act. The law outlines limits on campaign contributions and requires timely disclosure of donations as well as lobbying activity.

Gambling tribes have become one of the state's biggest political players, putting up more than $135 million over the past five years for initiative and legislative campaigns. Most comply with the fund-raising and disclosure rules, but at least two – Agua Caliente and the Santa Rosa Rancheria of Lemoore – forced the state to take them to court.

Although the state has won some early rounds, legal expects believe the litigation could go either way.

Unlike most, if not all, other states that receive a slice of Indian gaming revenues, the new compacts also do not require tribes to disclose their net win from slot machines. The agreements were specifically structured to keep that information secret for the immediate future.

Cheryl Schmit, the leader of a grass-roots watchdog group known as Stand Up for California, applauded the accords.

"The '99 compacts were failed agreements and left little leverage for the governor's office to negotiate," Schmit said. "When I look at what they have been able to accomplish, I am just amazed."

But another prominent gambling critic privately urged Schwarzenegger to pull the deals back.

"Please look at the impact of large-scale casino gambling on the social, educational and economic profiles of Nevada citizens, which are substantially attributable to the pervasive influence of gambling in that state," former Lt. Gov. Leo McCarthy implored the governor in a letter sent late last week.

"Your proposal," McCarthy warned, "will ... elevate California to the world's gambling capital."