California Tribal Casino Compact Amendments: A bad deal for the state, local communities and most California tribes

[courtesy of California Progress Report]

By Peter Dreier, Ph.D.
Professor of Politics
Occidental College

Part 1 in a 3 part series

In August 2006, Governor Arnold Schwarzenegger completed negotiations with California’s five wealthiest Indian tribes to allow a vast expansion of tribal casino gambling in the state. If ratified by the state Legislature, the negotiated agreements, called “compacts,” would authorize the Agua Caliente, Morongo, Sycuan, San Manuel and Pechanga tribes to triple the size of their casinos, destroying the character of several local communities and relegating other California tribes to second-class status.

Worth an estimated $60 billion, the compacts are a financial windfall for the five tribes. (Office of the Governor, August 08, 2006, Press release. The press release puts the net win at $320 per day, per machine. The net win of 22,500 new machines over 23 years is thus an estimated $60.4 billion.)

But they are a bad deal for California taxpayers, local communities in which the casinos will be located and the non-compact tribes who are left out of the gambling bonanza. There is also a gaping lack of oversight of tribal casinos brought about by a recent court ruling. Although federal law grants state governors the power to negotiate with the tribes any “subjects that are directly related to the operations of gaming activities,” (Indian Gaming Regulatory Act. Public law 100-497-Oct. 17, 1988 100th Congress Sec. 2701 (32.C.vii), Governor Schwarzenegger failed to address these major shortcomings. For these reasons, the 2006 compact amendments should be rejected by the Legislature, and renegotiated to compensate the state properly for the exclusive right to operate casinos, give local communities a voice, protect the well-being of all tribes and ensure strong oversight of the tribes’ financial and other obligations.

This paper will examine the four major flaws associated with the proposed compacts:

• The amount of revenue guaranteed to the state falls far short of what other states have secured in similar agreements, and is not adequate compensation for the exclusive right the tribes are given to operate casinos in California.

• Five tribes, representing very few members, are reaping the lion’s share of the benefits of tribal gaming, while the remaining tribes struggle for economic and social survival.

• There is a lack of independent oversight of casino operations to ensure that the tribes’ financial and other obligations are met, and criminal activities are dissuaded.

In addition, this paper provides an overview of the tribal gaming industry, briefly reviews its history and examines its extraordinary political influence.