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

A Modest Proposal From Governor Davis

Whether you favor or oppose Indian casinos in California, you should take a
close look at the proposal that will be on the March 2000 ballot.
If you liked Prop. 5, you will love this proposal.  And if you disliked
Prop. 5 . . .

In 1998, gaming tribes won a tremendous victory at the polls, after the
most expensive initiative fight in history.

But in 1999, the California Supreme Court ruled Prop. 5 violated the State
Constitutional prohibition on "casinos of the type currently operating in
Nevada and New Jersey."

Governor Gray Davis immediately commenced intensive negotiations with
gaming tribes.  The result was a two-part agreement:
1.  To put a Constitutional Amendment on the 2000 primary ballot; and
2.  To sign Tribal-State Gaming Compacts that would go into effect if voters
approved the Amendment.

The deal was struck literally at the last minute -- at 1:30 a.m. on the
last day of the legislative session.

Normally, even minor bills are first analyzed by the Legislature's lawyers.
Here a major change in public policy - legalizing Nevada-style casinos - was
approved by the Governor and Legislature without any review of the
Constitutional Amendment or 38-page long Compact, let alone any public
hearings.

Due to the backroom nature of the deal, Gov. Davis has been able to get
away with saying things like, "I am not generally inclined to support
measures that allow more than a modest expansion of gaming."

Gov. Davis's "modest expansion of gaming" will, if passed, be one of the
most massive legalizations of casinos in history.  It took Nevada 40 years
to accomplish what this will do overnight.

As one example, the Compacts allow tribes to have up to 2,000 slot
machines.  There are approximately 500 full commercial casinos in this
country.  Less than 10% have that many slots, even including casinos in
Nevada and New Jersey.  There are none that large in Colorado, South Dakota
or Montana, and no more than a handful among the large riverboat and
boat-in-a-moat casinos in Illinois, Indiana, Iowa, Louisiana, Mississippi
and Missouri.

We do not know what the initial statewide limit on slot machines is.  The
Compact's formula is pure gobbledegook:
 "The maximum number of machines that all Compact Tribes in the aggregate
may license pursuant to this Section shall be a sum equal to 350 multiplied
by the number of Non-Compact tribes as of September 1, 1999, plus the
difference between 350 and the lesser number authorized under Section
4.3.1."

It does not really matter, because three years after the Compact is
approved, any tribe can renegotiate to increase the number of its slot
machines.

Tribes will immediately have the right to operate "any banking or
percentage card game" and "slot machines."  The first compacted casinos will
thus have casino-style blackjack and Caribbean Stud, electromechanical slot
machines and video poker.

No craps and roulette.  But, the state must renegotiate after 12 months if
a tribe wishes to operate any other form of Class III gaming.  This could
include Internet lotteries.

All renegotiations will be between the Tribal leader and the Governor.
Unlike the laws in many other states, this Compact will impose no limit on
the amounts of money casino companies may contribute to the Governor.

Gaming tribes have to pay a yearly fee on every slot machine, ranging from
$0 for 1-350 devices to $4,350 for 1,251-2,000 devices.  From this fund,
every other tribe in the state which does not have a casino will get $1.1
million per year.  California's tribes range from as large as a few thousand
to as small as a single individual.

Gaming tribes also have to make a "contribution" to the state, though only
"with respect to the number of Gaming Devices operated by the Tribe on
September 1, 1999."  This non-tax tax, legally a payment in lieu of taxes,
runs from 0%-13% of the average net win.  Most gaming tribes will be paying
7% on 201-500 slot machines.

The amount the state collects will actually decrease over time: as more
machines are put in the average net win per machine goes down.

In a major concession of their sovereignty, tribes agree to let their
workers unionize.  They did not agree to allow picketing.

Tribes also agree to abide by state standards for health and safety.
Legal gambling age is set at 18, drinking age is 21.
Players may not sue a tribe if there is a dispute over a bet.
Tribes are required to carry at least $5 million in "public liability insurance for patron claims."
Tribes are not required to waive their immunity from suits for patron injuries.

A tribe may create its own Tribal Gaming Agency or be part of an intertribal agency
approved by the National Indian Gaming Commission.
This Agency has the final say in many important decisions.  For example, the
Agency licenses the casino facility and every gaming employee.

The state is supposed to have some input, but not always.
Tribes will be able to employ individuals who the state has determined are
unsuitable.  This exemption applies not only to enrolled tribal members, but
to anyone else who has worked for the tribe for at least three years.  The
Compact acts like a pardon: Tribes may employ persons denied licenses by the
State Gaming Agency, if the state's decision is "based solely on activities,
conduct, or associations" that occurred prior to the person's application.

As you can see, there is something to please, and outrage, everyone.
 

©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.
www.GamblingAndTheLaw.com
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