Bits and Pieces from Indian Country - October 2004

California again is an illustration of the spectrum of Indian gaming. The tribes in urban areas operate very successful casinos, while card rooms and race tracks have seen their business decline, or at the very least not keep up with the phenomenal growth of tribal casinos, and the governor needs money to balance the budget and fund the programs the voters want. The tribes want to protect their revenues, the card rooms and tracks want more revenue, the governor wants tax money and along those lines the battle was fought. The three parties spent over 100 million dollars on the election campaign. The tribes had an initiative, the card rooms and tracks had an initiative and the governor opposed both; 11.7 million people voted, 73 percent of the 16.5 million registered voters in the state and that is about eight dollars and fifty some cents a piece. 76 percent voted against proposition 70, the Indian gaming measure and over 80 percent voted against proposition 68, the racetrack/card club initiative.

Where does that leave gaming in California? While the racetracks and card clubs seem to be out of luck, at least in the short term, the tribes are in a different position. Tribes without a compact will be forced to negotiate with the governor and will have to share revenues at levels much higher than the 9 percent proposed in proposition 70. Tribes with a compact are in a very different position, the issue is the number of slots. Current Compacts allow a tribe to have up to 2000 slot machines; the governor believes that the tribes will be forced to negotiate if they wish to have more than 2000 machines. Many tribes disagree. Rather than give the state up to 25 percent of the slot revenue, they would rather use Class II games that are not subject to a Compact.

Governor Arnold Schwarzenegger may have misjudged the Class II issue, as the Class II games have been very profitable for tribes in Florida and Oklahoma. They may not make as much per day as the best of Class III games, but if you are not paying a 25 percent tax you can afford a little less in daily win. And, and it is big. All of the major manufacturers are working on new Class II games, hoping to duplicate the success of the best of their Class III games.

The Class II-Class III controversy is not going to be limited to California. In any state tribes could use Class II games to avoid limits on the number of games, revenue sharing and many other limitations that states have placed on Indian gaming.

The election is over, now the wars begin. In California the governor will try to force negotiations. In Florida opponents will most likely go to court over the last minute "found votes." In Michigan there are plans to introduce racetrack slot legislation and test the voters' resolve to limit gaming. In Illinois there is still a license in doubt, a mayor that would like the city (Chicago) to own a casino, and a tribe from Minnesota shopping for a community to put a casino. In Minnesota the governor is going to continue to attempt to force the tribes to pay more to the state, using a threat of allowing non-Indian gaming competition as a hammer. In Pennsylvania the law is subject to change and clarification, sites have to be identified and a time-line developed. Class II games are getting better and could start to appear in more jurisdictions as tribes resist moves to impose a higher "participation fee," such as those in California and Minnesota. So, while there may not be much expansion in the works, there is lots of expansion in the works.