A 500-member tribe in northern San Diego County has become the first in California to abandon state oversight of its gambling operations in favor of federal oversight.
The decision by the Rincon Band of Luisino Indians ends a nearly two-decade-long legal dispute over how California estimates the cost of regulation.
It could also herald the end of state control over some tribal gambling operations, which last year put nearly $67 million into state funds to regulate tribal gambling. That money funds the staff of the California Gaming Control Commission, the Office of Gaming Control, the Office of the Attorney General, and the Office of Problem Gambling.
Rincon President Bo Mazzetti said the transfer of regulatory functions has less to do with a dispute over funding and more to do with moving toward greater tribal sovereignty for Rincon and other tribes across the state.
“We are the first to go through the entire process and help develop the process where the state has agreed to relinquish regulatory oversight of our gaming operations,” he said. “Basically, by simplifying, you’re cutting out the middleman.”
This change gives the tribe more self-governance, allowing it to administer the game through a direct nation-to-nation relationship with the federal government, rather than being sent to California as a subsidiary of the United States.
What is a gaming tribal pact?
Tribal gaming compacts are negotiated agreements between individual tribes and states that are then approved by the federal government to allow Class III gaming—slot machines, house games such as blackjack, and electronic gambling—on tribal lands.
Tribes may operate Class II gaming—bingo and non-bank gaming—without a state compact directly under the supervision of the National Indian Gaming Commission.
Although tribal gambling—primarily bingo—began in Rincon in the 1970s, it was a 1987 US Supreme Court decision that recognized a tribe’s right to operate gaming operations. The tribe entered into a gaming operations compact with the state in 1999.
Then, in 2004 – the same year Rincon opened its casino at Harrah’s Resort Southern California, near Valley Center – the tribe filed a lawsuit against then-Governor Arnold Schwarzenegger, claiming his treatment of the tribes was unconstitutional and unfair. .
In 2011, the lawsuit went to the US Supreme Court, which overturned a lower court ruling that California violated federal tribal gaming law by requiring casinos to make payments to the Special Gaming Distribution Fund. In exchange for being able to add more slot machines, the indigenous .
Since California and the tribe had failed to reach an agreement over the years, Mazzetti said Rincon reached a provisional agreement, known as the secretariat process, that allowed him to operate his casino with federal rather than state approval. allowed to operate.
On Nov. 21, the state and tribe agreed that regulatory functions would be permanently transferred to NIGC and that the tribe would no longer have to reimburse California for regulatory costs, Gavin Newsom, a spokesman for the government, said in an email. A spokeswoman for the federal agency said the agreement with the NIGC was signed on Jan.
Elizabeth L. Homer, a tribal gaming advocate in Washington DC and a former vice president of the NIGC, said that moving away from a state gaming compact could lead to increased sovereignty and self-governance. In California, he said, tribal gaming compacts often include provisions related to child support enforcement or environmental policies.
Homer said, “In reality, the compacts are only supposed to regulate Class III gambling operations and are not intended as a mechanism for the state to begin lobbying tribal governments with their policies.”
While the tribe will no longer be subject to state gaming regulation, that doesn’t mean there won’t be plenty of regulatory oversight.
All gambling on Indian lands in the United States is governed under a Tribal Gambling Commission, which Homer says oversees the casino daily to ensure that cash management, staff licensing, policing and other procedures adhere to tribal rules.
“Does that mean there’s less supervision or it’s going to be a worse regulated facility because the state isn’t doing that work? I would say not really. I think there will be solid regulation regardless of everything.”
Instead of the state conducting annual inspections, the NIGC will be required to visit sites, monitor operations and enforce regulations, according to the agreement between Rincon and the federal agency provided to The San Diego Union-Tribune.
History of Conflict Between California and Tribes Over Gambling
The change of power in Rincon’s gaming operations came last summer after a report from the state auditor’s office found that California failed to effectively administer the Special Indian Gaming Distribution Fund.
Last June it was revealed that the fund had an excess reserve with a balance of $127 million, enough to pay for four years of expenses related to the regulation of tribal gambling. California collected $34 million more in distribution fund shares in 2021 than the cost of regulation.
The report also claims that the Office of Public Health of problem gambling has not effectively monitored its treatment and prevention programs, which the fund also covers.
Although the tribe will no longer pay the state for regulation — instead it will pay NIGC — Rincon will continue to pay $1.3 million each year to the state’s revenue-sharing trust fund. Money from that fund is distributed to tribes that lack gaming operations, often because they are located in remote areas that make casino success less likely.
The tribe’s casinos are also covered by their own oversight through the Rincon Tribal Gaming Commission, which oversees all casino activities to ensure that employees receive proper background checks and that all transactions are regulated by federal law. , accommodate for state and tribal gambling laws.
“Before we had all three: our Tribal Gaming Commission, the State of California and the National Gaming Commission,” Mazzetti said. “Basically now we have displaced the state and the National Gambling Commission is going to provide the oversight that the state previously provided.”
George Forman, a tribal gambling advocate in Northern California, said it was too early to tell whether many other tribes would follow suit.
To take a similar step, a tribe must be in a position to renegotiate its treaty as its expiration date nears. After being unable to reach an agreement, a tribe would need to sue the state for failing to negotiate the agreement in good faith and win its case.
“Tribes can’t just opt out. These agreements – the most recent ones – are 25-year agreements,” Foreman said.
But Forman said some 28 tribes – among the first to sign status agreements in 1999 – have agreements that will expire at the end of the year.
Some other tribes — Foreman said there are 16 in the entire state — have already won bad-faith gambling cases against California.
Last summer, five tribes — the Hopeland Band of Pomo Indians, the Chicken Rancheria, the Robinson Rancheria, the Chemehuevi Indian Tribe and the Blue Lake Rancheria — won a lawsuit in the U.S. Court of Appeals for the 9th Circuit, according to the casetext. The decision claimed that California “problematically required that tribes agree to compact provisions related to family law, environmental regulation, and tort law” not related to gaming operations, which are not permitted under the Gaming Regulation Act. Is. indie game.
Forman said tribes that have already won their lawsuits, including four he represents, will enter into post-decision negotiations that will determine the future of their gaming operations.
“It will depend on whether the tribes that signed the new compact are able to come to an agreement with the state on the new compact, in which case the state will continue to exercise the regulatory authority that the compact grants,” he said. .
The La Jolla Tribal Council — which operates the La Jolla Trading Post-Casino about 10 miles from Harrah’s — said in a statement it was pleased that Rincon and the state agreed that the tribe could operate without state oversight. regulate its gaming operations. The tribe did not say whether it would also consider working directly with the federal agency for gaming regulation.