California gives up regulating five casinos

6 March 2024

By I. Nelson Rose

The Attorney General of California has agreed that the state will now have no role in regulating five tribal casinos. More Indian casinos may follow.

A federal trial court, and then, the Ninth Circuit Court of Appeals had ruled that California lost its right to negotiate tribal-state compacts to co-regulate these casinos. The state had insisted that the tribes agree to enforce child and spousal support orders, abide by state environmental standards, and allow injured patrons to sue.

But, these are not topics listed in the federal Indian Gaming Regulatory Act. The courts ruled that, by even asking the tribes to discuss topics that were not directly related to the regulation of casino gambling, the state had not been negotiating in good faith.

A majority of the Court of Appeals went so far as to declare that nothing the state could offer the tribes in return would undo the state’s bad faith.

California Attorney General Rob Bonta has now agreed to abide by the courts’ decisions. There will be no tribal-state compacts. Instead, for the first time, tribes in California will be dealing solely with the federal government for controls normally found in the tribal-state agreements.

It appears that the Chicken Ranch Rancheria of Me-Wuk Indians, near Yosemite, and four other tribes, will now be able to operate an unlimited number of slot machines, in as many casinos as they wish, on their reservations.

This fight has been going on in the courts for more than ten years. But a few days ago, the state and tribes agreed that the case should be dismissed, with prejudice. This means the case can never be reopened.

And because the state was found to not be negotiating in good faith, the government of California can never have any say in the future as to how these tribal casinos are operated.

The IGRA was enacted to regulate gambling on Indian land. Tribes are domestic nations, meaning that they have enormous power to govern what takes place on their lands. But all reservations are also physically located within states, and the state governments wanted to be able to co-regulate tribal casinos. So, Congress adopted the idea of compacts, agreements between governments – in this case, between the states and the tribes within their boundaries.

The main author, Senator Daniel Inouye of Hawaii, wanted to protect tribal sovereignty. He didn’t trust the states to stick to only the regulation of gambling. So, he included the state-must-negotiate-in-good-faith provision in IGRA.

Incidentally, Sen. Inouye also carefully included provisions making sure that native Hawaiians were not Indians, so they could not get casinos under IGRA.

What surprises me most about the court rulings is how unrealistic they are, in the real world of negotiations.

For decades, I taught law school classes in negotiations. We always discussed the concept of making outrageous demands. Of course, you almost never get everything you want in a negotiation. But the danger of asking for much more than the other party is willing, or even able, to give is that the other side will simply walk away.

This may be the first case in history where asking for too much resulted in a court finding a negotiator was legally acting in bad faith.

Of course, in this case, what the government of California was asking from the tribes was of great interest to the state.

For decades, or even centuries, tribes have been America’s third-world local embarrassments. Nobody really cared about enforcing orders from state family courts against tribal members living on reservations, when the unemployment rates were 80%.

Indian casinos have often brought jobs and wealth to tribal members, along with new problems. States do have a real interest in protecting the children and ex-spouses of tribal members who now can afford to give support. Pollution created by tribal resorts does not stop at the reservations’ boundaries. And thousands of outside visitors inevitably mean more auto accidents and injured patrons.

But the Governor and Attorney General of California have now learned that when negotiating tribal-state compacts for Indian casinos, they cannot discuss any issues that are not directly related to the control of gaming. They not only got their hands slapped. They lost, forever, their right to have any say over these five Indian casinos.

And probably at least a half-dozen more.