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Hot
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Indian Gaming in California
Spring 2005 |
LIBRARY Institute of Governmental Studies University of California 109 Moses Hall #2370 Berkeley, CA 94720-2370 510-642-1472 (voice) 510-643-0866 (fax) |
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Indian gambling on tribal land became a significant political issue in California in the last decade. California has more gaming tribes than any other state, with 43 currently hosting some form of gambling. Gaming revenue in California grew in 2002, increasing 17.2 percent from $2.92 billion in 2001 to $3.43 billion in 2002. With huge increases in revenue, tribes have entered the political arena by donating large sums of money to both Democratic and Republican candidates. As Indian casinos grow and their political influence increases the debate over limitations to Indian sovereignty has become a hot issue in California politics. Questions remain on the amount Indian casinos should pay in state and federal taxes and whether or not they should bear the cost of environmental clean up, crime prevention and quality of life in nearby communities. After the huge budget deficit in 2003, Governor Gray Davis released a plan calling for the tribes donate $1.5 billion from their casino profits to help balance the books. In the 2003 recall election, Indian gaming became especially prominent because of large donations tribes made to political candidates. Nearly one-fifth of all recall money came from the tribes. Several tribes contributed more than $9 million to help the campaigns of Democratic candidates Governor Gray Davis and Lt. Governor Cruz Bustamante, as well as state Sen. Tom McClintock, (R-Ventura County).
A key issue in tribal gaming debate is the sovereignty of Indian tribes. Do recognized tribes have separate rights as sovereign foreign nations, or are they subject to the laws and policies of the United States? Throughout the 1800s the dispute over Native American sovereignty was a significant political issue, fought in courts and legislatures across the country. Many states maintained that Indians as individuals should be subject to state jurisdiction and that native tribal governments had no legitimacy as separate institutions. Many Indian tribes claimed to hold all of the rights to self-governance and land ownership that they possessed before the arrival of Europeans.
The U.S. government first acknowledged tribal Indian affairs in the Articles of Confederation (1781), which gave the federal government sole and exclusive authority over Indian affairs. The U.S. Constitution, drafted in 1787, gave Congress broad power under the Indian Commerce Clause (Article 1, Sec. 8) to regulate commerce with Indian tribes. The Supreme Court reaffirmed the legal and political standing of Indian nations in a set of three 19th Century court decisions known as the Marshall Trilogy, Johnson v. McIntosh (1823); Cherokee Nation v. Georgia (1831); and Worcester v. Georgia (1832). Supreme Court Justice John Marshall found that "Europeans" had rights to the land by the act of "discovery" which gave European power an ownership title to the land against all others. However, he also ruled Indians to be the rightful occupants of the soil, with the legal as well as just claim to retain possession of it, and to use it according to their own wishes. As a result of the Marshall Trilogy cases, the Supreme Court both reaffirmed the sovereignty of Indian tribes and acknowledged this as predating European arrival. Paradoxically, while the U.S. government recognizes American Indian Tribes as sovereign nations, the U.S. Congress is recognized by the courts as having the right to limit the sovereign powers of tribes. Because Indian nations lie within the boundaries of the United States, Indian tribes are delineated "domestic dependent nations."
In 1887 Congress passed the General Allotment Act, or Dawes Act, which authorized the Bureau of Indian Affairs to convert tribal lands to individual ownership. The Dawes Act severely limited tribal sovereignty, as did the 1886 Supreme Court case United States v. Kagama, which affirmed that Indian lands were strictly under control of Congress. However, the Indian Reorganization Act, passed in 1934, allowed for the formation of tribal governments under federal authority as vehicles for Indian "self-government." The Act gave Indians more power to manage their internal affairs and established a fund for land purchases and educational assistance. It remains the basic legislation concerning Indian affairs.
In March 2004 the California Appellate Court dealt a blow to Indian sovereignty in ruling that California Indian tribes must disclose their campaign contributions publicly. In this precedent-setting decision, Agua Caliente Band of Cahuilla Indians v. Superior Court of Sacramento County, [California] Fair Political Practices Commission, the court ruled that the state's authority under the U.S. Constitution included the power to sue anyone, including sovereign Indian tribes, to enforce campaign disclosure laws. Although some tribes disclose campaign contributions voluntarily this decision would require the tribes to abide by the state's campaign disclosure laws.
Large-scale gaming sponsored by tribal governments started in the early 1980s. As state lotteries grew in popularity, several Indian tribes in Florida and California began raising revenues by operating bingo games offering larger prizes than those allowed under state law. When Florida and California attempted to close tribal gaming operations, tribes sued in federal court, Seminole Tribe vs. Butterworth (1979) and California vs. Cabazon Band (1987). In both rulings, the courts said that if state law criminally prohibits a form of gambling, then the tribes within the state may not engage in that form. However, if state law regulates a form of gambling, then the tribes within the state may engage in that gaming free of state control.
Gaming on U.S. Indian Reservations was officially regulated after Congress passed the Indian Gaming Regulatory Act (IGRA) in 1988. This legislation requires gaming tribes to have compacts with their respective state governments specifying the types of gaming permited on reservation lands (see Find Law analysis of the Act).
The IGRA divided the types of Indian Gaming into three separate classes:
Passage of the IGRA did not mark the end of disputes or controversy between the state and the tribes. In California the governor and the tribes attempted to negotiate gaming contracts as prescribed by state and federal law. At the heart of the issue was the tribes' desire to continue to offer slot machine gambling in their casinos even though it was outlawed by the California Constitution at the time. Although Governor Wilson negotiated a compact with the Pala Band of Mission Indians in San Diego County on March 6, 1998, which was to be a model compact for the other tribes, the strict limit it placed on the type and number of lottery-style machines was anathema to California gaming tribes. In record time and with record spending, the tribes qualified Proposition 5 for the November 1998 ballot, taking the issue of Indian gaming to California voters.
In November 1998 California voters passed Proposition 5, the "Tribal Government Gaming and Economic Self-Sufficiency Act of 1998," a statutory initiative, which required the governor to approve any tribal casino proposal. It placed no limits on the number of casinos statewide or the number of gambling machines and tables each casino could operate. It lowered the gambling age to 18, and allowed the tribes to continue using the video slot machines that the state and federal governments had deemed illegal. Under terms of the initiative, tribal casinos would be self-regulated, governed by a tribal-appointed gaming board. There would be no direct state or local involvement in casino operations. The initiative set up a fund designed to reimburse local governments for their costs associated with casino operations. It also allocated two percent of casino net profits to non-gaming tribes.
The campaign to qualify and pass Proposition 5 was the most expensive in history at the time--$90 million in total spending. In addition to money spent to qualify and pass the initiative, California Indians spent another $5 million backing political candidates including Governor Gray Davis, Attorney General Bill Lockyer, and Assemblyman Tony Cardenas (D-San Fernando), who became chair of the Assembly Budget Committee. Despite the fiscal investment the California Supreme Court struck down Proposition 5 on August 24, 1999. The Court said that the proposition violated the 1984 state Lottery Act, an initiative constitutional amendment that banned casino-style gambling in California.
In response to the nullification of Proposition 5, Governor Gray Davis negotiated new tribal-state compacts with nearly 60 tribes allowing them to expand current gambling operations, allowing Nevada-style gambling in California, legalizing video slot machines, allowing casino employees to unionize and providing up to $1.1 million annually for non-gaming tribes. Indians would also make quarterly payments based on the number of slot machines they owned to reimburse the state for gambling addiction programs and the impact of casinos on local jurisdictions. The compacts were contingent on the passage of Proposition 1A, an initiative constitutional amendment which appeared on the March 7, 2000 ballot. California voters approved the measure by a 65% margin. The tribes spent approximately $30 million on the campaign as opposed to the nearly $70 million the tribes spent on Proposition 5. The Nevada casinos did not mount an anti-Proposition 1A campaign, as they did against Proposition 5. In April 2000 four Bay Area card clubs and two Northern California charities, fearful of losing business to full-fledged casinos, asked the federal government to declare Proposition 1A invalid on the grounds that it offers preferential treatment based on ethnicity and was therefore unconstitutional. On December 22, 2003, the Ninth U.S. Circuit Court of Appeals upheld Proposition 1A finding that federal law allows states to grant Indian tribes a monopoly on Nevada-style casinos, Artichoke Joe's California Grand Casino, et al. v. Gale A. Norton, Secretary of the Interior, et al.
Since the passage of Proposition 1A Indian gaming has generated revenues of $5.1 billion per year in California and California Indians have become the largest contributor to California political campaigns. Gaming has become so lucrative that hundreds of Native Americans are petitioning the Bureau of Indian Affairs for recognition of new California tribes in order to buy land and build casinos.
On January 7, 2004, Governor Schwarzenegger appointed a former appeals court judge and Governor Wilson's chief counsel, Daniel Kolkey, to renegotiate compacts with casino-owning tribes. One of the critical negotiating issues was whether to increase the number of slot machines allowed per tribe in return for more state revenue from gaming operations. Under existing compacts each tribe was limited to 2,000 slot machines which could pay up to $300/day/machine.
While Kolkey negotiated with the tribes, a coalition of eleven California card clubs and five California racetracks qualified an initiative for the November 2004 ballot, the "Gambling Revenue Act of 2004," which became Proposition 68. Proposition 68 would require all 53 gambling tribes to pay 25% of their net slot machine revenue to the state. Refusal by even one tribe to pay would trigger a provision allowing racetracks and card clubs to install slot machines at their sites, thus breaking the tribes' monopoly on casino-style gambling. The racetracks and card clubs would pay 33% of their revenues, estimated to be about $1 billion/year, into a trust fund which would support law enforcement, firefighters, and programs serving abused children.
The tribes countered this measure on two fronts. Several tribes agreed to spend $1.5 million each to defeat the measure in November, and the Agua Caliente Band of Cahuilla Indians qualified a competing November initiative measure, the "Indian Gaming Fair-Share Revenue Act of 2004," which became Proposition 70. This initiative would require the gaming tribes to pay 8.84%/year in taxes on their gambling revenue, equal to the state's corporate tax rate, and would remove all limits on the scope and size of gambling the tribes could offer in their casinos. Governor Schwarzenegger initially took no public stand on the two ballot measures, then announced his opposition to both.
On June 21, 2004, Governor Schwarzenegger announced a set of compacts with five leading gaming tribes. The governor took the position that the new compacts were a better deal for the gaming tribes and California taxpayers than the two November ballot propositions. The compacts preserve the tribes' monopoly on casino-style gambling, but require the tribes to make an initial $1 billion payment to the state, which Schwarzenegger pledged to allocate to transportation, and thereafter annual payments estimated to range between $150 million and $275 million. Under the compacts tribes may exceed the 2000 limit on the number of slot machines, but must pay increasingly more to do so. Tribes must also submit to various environmental, labor relations, and building safety constraints. Significantly, tribes must abide by binding arbitration in certain kinds of disputes with local governments and customers. The compacts were approved by the state legislature, as all such compacts must be. The governor negotiated five additional compacts in August 2004, and the legislature approved all but one involving a controversial casino expansion in the city of San Pablo. Voters rejected both Propositions 68 or 70 in the November 2004 election. The passage of either proposition would have undone all of the compacts negotiated by the governor. See the related Hot Topic, Propositions 68 & 70: Tribal Gaming, for more on the two propositions.
| Prepared by the staff of the IGS Library. Send comments to igsl@uclink.berkeley.edu. |
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