The following article was originally published in Casino Executive and is presented in Gaming floor with permission of the author. Professor Rose can be reached at his web site: www.GamblingAndTheLaw.com

Will California License Mobsters?

A little-noticed provision of California's proposed casino law threatens to
close down most of the state's Indian gaming.  It may also jeopardize the
licenses of some non-tribal casinos and suppliers in Nevada and other
states.

This obscure section of the proposed Tribal-State Gaming Compact would
allow tribes to issue licenses to convicted felons and members of organized
crime.

In other states, these individuals would be found undesirable and barred
from having anything to do with gaming.  Under California's proposed
Compact, they may work in or even manage tribal casinos.

The Compact will not become law unless Californians approve an amendment to
their state Constitution at the ballot box in March.  A provision
authorizing the licensing of felons and gangsters could obviously have an
enormous negative impact on voters.

If voters reject this Compact, tribal casinos throughout the state will be
faced with federal court orders to get rid of their slot machines or be
closed down.

If voters approve this Compact, tribes may then license gangsters.  Any
Nevada gaming company working with a California tribe may face the loss of
its license for associating with organized crime.

There can be no doubt that the Compact provision was designed to license
felons and members of organized crime.  Section 6.4.4.(c) specifically
states, "the Tribe may retain in its employ a person whose application for a
determination of suitability, or for a renewal of such a determination, has
been denied by the State Gaming Agency."

The only requirements are that the person has a gaming license issued by
the tribe, does not work for any other gaming operation, has been employed
by the tribe for at least three years, and that "the denial of the
application by the State is based solely on activities, conduct, or
associations that antedates the filing of the person's initial
application..."

This means the felony or association with a member of the Mob took place
before the person applies for a state license for the first time.

To uncover the true meaning of this Compact provision, we need to know what
"activities, conduct, or associations" can be the basis for the state
denying a person's "application for a determination of suitability."

The grounds for a finding of unsuitability by the state are found primarily
in section 19850A of the California Business & Professions Code.  Of the
seven grounds listed, three cannot apply:

 Number (1) -- the applicant fails to prove he is suitable -- obviously
cannot be something that "antedates the filing."  Ditto for number (2) --
the applicant lies or withholds information during the application process.
Number (7) -- the applicant is less than 21 years of age -- is not an
activity, conduct, or association.

But there are four other grounds listed for a finding of unsuitability by
the state.  The question is why would a tribe want to hire someone who:
(3) Has been convicted of a crime as serious as a felony?
(4) Has been convicted of "any misdemeanor involving dishonesty or moral
turpitude"?
(5) Has associated "with criminal profiteering activity or organized crime"?
(6) Has willfully defied an "official investigatory body of any state or of
the United States, when that body is engaged in the investigation of crimes
relating to gambling;  official corruption related to gambling activities;
or criminal profiteering activity or organized crime"?

California's Gambling Control Act contains a few other grounds for denying
a license.  But why would a tribe want to license someone who has violated
campaign disclosure or contribution laws?  (Section 19960.2A).  Or who made
an illegal contact with a government licensing official?  (Section
19858.7A).

The provision brings the entire Compact into question.  It rejects the
standards the state uses in denying a license, but does not tell the voters
what standards will take their place.

An applicant applying for a state license has the burden of proving he is
qualified "having due consideration for the proper protection of the health,
safety, and general welfare of the residents of the State of California and
the declared policy of this state."
(Section 19847A (a)).

The state examines his "general character, integrity, and ability to
participate in, engage in, or be associated with, controlled gambling."
(Section 19847A (b)).  The state must reject an applicant if issuing him a
license would be "inimical to public health, safety, or welfare..."
(Section 19847A (c)).

I do not know if there is any way to amend this Compact before it is put
before the voters in March.  But I would strongly suggest doing so, if it
can be done.

The final ground for a state finding of unsuitability says it all.  The
voters of California are not going to like a Compact that contains a
provision allowing a tribe to overrule the state in this last case.

How, in fact, can anyone justify allowing an individual to manage a tribal
casino, after the state has denied his application, declaring that "issuance
of the license will undermine public trust that the gambling operations with
respect to which the license would be issued are free from criminal and
dishonest elements and would be conducted honestly"?
 

©Copyright 2000, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, Whittier Law School, Costa Mesa, CA.
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