| Title: |
Gambling On Tribal Lands. Legislative Constitutional Amendment. An act to amend Section 19 of Article IV, relating to gambling. |
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| Sponsor: |
Senate Pro Tempore John Burton |
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| Legislative History: |
SCA 11 (Burton) Assembly Floor - 74-3 Senate Floor - 31-3 |
Major Provisions:
This measure would provide that, notwithstanding the provisions
of the California Constitution prohibiting lotteries and casinos
of the type operating in Nevada and New Jersey, the governor is
authorized to negotiate and conclude compacts, subject to ratification
by the Legislature (majority vote), for the operation of slot
machines and for the conduct of lottery games, and banking and
percentage card games by federally recognized Indian tribes on
Indian lands in California in accordance with federal law.
The measure would also expressly permit slot machines, lottery games, and banking and percentage-card games to be conducted and operated on tribal lands subject to these compacts.
Background:
Since 1849, the California Constitution has generally prohibited
all lotteries and the sale of all lottery tickets in this state.
The initial State Constitution contained the ban much as it exists
today: "The Legislature has no power to authorize lotteries
and shall prohibit the sale of lottery tickets in the state."
In 1984, through the addition of article IV, section 19, subdivision
(d), the California Constitution has authorized the State Lottery.
That initiative, however, to stem criticism that it would be the
beginning of Nevada-style casinos added language to the historic
provision outlawing gaming to deny specifically the authorization
of gaming "of the type currently operating in Nevada and
New Jersey."
The California Constitution has the following restrictions on gaming:
In 1987, the U.S. Supreme decided California v. Cabazon Band of Mission Indians (1987) 480 U.S. 202, 107 S.Ct. 1083, which ruled that the laws of the states generally applied to activities in Indian country to the extent the law was "prohibitory" as opposed to "regulatory" which generally did not apply. Under the terms of the decision, California could not prohibit certain types of gaming activities, including bingo, because the state did not generally prohibit them, but instead regulated them. Some question was placed on state prohibitions on gaming in general as well.
Congress responded to the Cabazon decision by passing the Federal Indian Gaming Regulatory Act of 1988 (IRGA, or The Act) which provides the general structure within which the states may control gaming activities on Indian land within their borders. The Act divides gaming into three categories - "class I," "class II," and "class III."
Class I gaming is social games or traditional forms of Indian gaming for minimum-prize values. Class II gaming includes bingo, card games not expressly prohibited and played at any location in the state, and played in conformance with any state laws and regulations regarding hours of operations and prize sizes. Class II specifically excludes banking card games (blackjack, baccarat or chemin de fer) or electronic facsimiles thereof or any game of chance or slot machines of any kind. Class III gaming is all games not class I or class II.
Class I gaming is largely left up to the devices of the tribe. Class II, regulated jointly by the federal government and the tribes. Class III gaming is lawful only if such activities are (a) authorized by resolution of the tribe and approved by the Chairman of the National Indian Gaming Commission; (b) located in a state that permits such gaming for any purpose by any person, organization or entity;" (c) conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the state that is "in effect." (25 U.S.C. § 2710(d)(3)(A)).
The Act provided a means by which the states were ostensibly required to negotiate in good faith a compact with the Tribes for any Class III gaming activities. The Act provides that the federal courts have jurisdiction to hear a suit brought by a Tribe against a state for failure or refusal to negotiate a compact with the Tribe. 25 U.S.C. 2710(d)(7). The court is given authority by the Act to order the state to conclude a compact or to send the matter before a court-appointed mediator. If the state refuses the compact chosen by the mediator, the Secretary of the Interior is given authority to "prescribe, in consultation with the Indian tribe, procedures" consistent with state and federal law allowing class III gaming on Indian jurisdiction. 25 U.S.C. 2710(7)(vii).
In 1996, however, the U.S. Supreme Court ruled in Seminole Tribe of Florida v. Florida 116 S.Ct. 1114 (1996) that the Eleventh Amendment to the U.S. Constitution prevents Congress from authorizing suits by Indian tribes against states to enforce legislation enacted pursuant to the Indian Commerce Clause. "It is inherent in the nature of sovereignty not to be amenable to the suit of an individual without [a state's] consent." As a result, while the Act provided Tribes a means of enforcement of the Act through the Federal Courts, the U.S. Supreme Court has taken those remedies away. It is unclear whether the powers of the Secretary of the Interior to "define the compact" should a state be uncooperative has any real meaning, given the court's elimination of the enforcement mechanism via the federal courts.
A dispute arose as to what types of gaming activities were permitted under the existing Constitutional structure in California. Several Indian tribes asserted that Tribal-State compacts could authorize "stand-alone" electronic gaming devices and "live banking and percentage card games." The state disagreed with the interpretation, asserting such authority would violate existing prohibitions on Nevada-style gaming. In Rumsey Indian Rancheria of Wintun Ind. v. Wilson (9th Cir. 1994) 64 F.3d 1250, the 9th Circuit concluded that California did prohibit such activity and therefore the IRGA did not require the state to negotiate a compact allowing for those activities.
Former Governor Wilson did negotiate a compact with the Pala Band of Mission Indians for certain forms of gambling, and 10 other tribes also agreed to this compact. Legislation to ratify this agreement has been stayed subject to a referendum on the March 7, 2000 statewide primary election (reviewed elsewhere).
In response to failed negotiations with former Governor Wilson and the decision of the 9th Circuit, the people approved a statutory initiative designated Proposition 5, -- "The Tribal Government Gaming and Economic Self-Sufficiency Act of 1998" -- concerning gaming on Indian lands in the State of California. Prop. 5 would have required the governor to sign a specified tribal-state gambling compact, the wording of which was explicitly written in the initiative, with any tribe that requested one. However, that initiative was ruled unconstitutional by the California Supreme Court in Hotel Employees & Restaurant Employees International Union v. Davis (1999) 88 Cal.Rptr.2d 56 21 Cal.4th 585, 981 P.2d 990, 1999 Daily Journal D.A.R. 8671. The court ruled that the statutory initiative conflicted with Art. IV, Sec. 19's prohibition on gaming.
Cal-Tax opposed Proposition 5 on two grounds: (1) that expanding gaming as proposed by the compact would place substantial pressure on state, but particularly, local resources, without any guarantee that those activities would pay their fair share of services, and (2) that Proposition 5 took the compact decision making out of the hands of the state's elected leaders.
Policy Considerations:
Nevada-Style Gaming Anywhere in California: This measure authorizes Nevada-style casinos on
Indian land in California. Indian land does not mean just the
historic reservation, but any land owned or controlled by the
Indian tribe.
Should California allow more extensive gambling that could lead to large, casino-type operations? What costs would expanded gaming create for state and local governments, and is there any guarantee that those costs would be recouped?
Is it appropriate to permit Indian gaming activities otherwise prohibited to other Californians?
Local Control: Is it of sufficient statewide interest to require local jurisdictions to permit gaming if those jurisdictions might otherwise not? This initiative, once adopted, leaves the decision on location of casinos solely in the hands of the state. Consequently, localities that might otherwise oppose gaming in their area, for moral, fiscal, or other reasons (but otherwise support other jurisdictions' expansion of gaming), will not be guaranteed a voice in the decision to permit gaming in their backyards.
Does the fact that this measure authorizes the governor to negotiate gaming compacts with the Indians (for virtually any type of gaming activity), subject to ratification of the Legislature, as opposed to granting gaming rights outright, make the threat to state and local services less likely?
As the people have previously expressed support for expanding Indian gaming (Proposition 5 passed by more than 60% of the vote), does this measure provide for a meaningful way to deal with the inevitable (expanded gaming)? In other words, if Californians don't adopt this measure requiring some state oversight, might the consequence be unfettered gaming in California?
If individual compacts are the subject of gubernatorial negotiation and legislative ratification, what effects, if any, might this have on the legislative process? Can the types of gaming activities permitted differ by compact?
State-Sanctioned Monopolies: Assuming the people desire Class III gaming activities in California and/or their locality, shouldn't they be available to be provided by any business, subject to appropriate and consistent oversight for Indian and non-Indian gaming? Federal law requires three elements be met before a tribe can engage in gaming in a state: (1) authorization by the tribe and the Chairman of the National Indian Gaming Commission; (2) conducted in accordance with a Tribal-State compact that is in effect; and (3) "located in a state that permits such gaming for any purpose by any person, organization or entity."
Fair Share of Taxes: Providing that the governor shall negotiate these compacts, subject to legislative ratification, gives some level of assurance that these activities will contribute to fund the public safety, transportation, environmental, and planning costs that will naturally result from their activities. It does not, however, guarantee it, nor does it provide localities any assurance for the fair distribution of payments agreed to be made.
At their most elementary level, taxes are exactions by government from citizens to fund government programs and services. Every other taxpayer in California is subject to annual fluctuations in that tax obligation (not to mention fluctuations in administration) so as to appropriately fund government services. In years of prosperity or depression, tax obligations are modified to meet the changing needs and mission of government services and programs. A compact, even one that provides a form of payment of monies to state or local government, is more in the nature of a contract that locks in a specified amount of compensation. How could such a contract ever anticipate the needs of government services and programs 5, 10 or 20 years down the road? Not to mention the mere speculation on the heightened cost of government services produced by the very activity agreeing to a specified payment stream?
Leave it to Elected Officials: This initiative proposes to define a clear process for Tribal-State compacts to be negotiated and entered into (in addition to constitutionally authorizing types of Class III gaming). One of Cal-Tax's main objections to Proposition 5 was that it removed California's elected officials from this process. Does this solve our objections?
Fiscal Impact:
According to the Legislative Analyst's Office, this measure could
result in increased tax revenues if increased gambling activities
come at the expense of Nevada and other out-of-state sources.
If, however, increased gambling diverts money that otherwise would
be spent in California on other services and goods, it would result
in a loss of government revenues, since Indian gaming activities
are mostly free of taxation. The measure also could result in
increased state and local costs for law enforcement, regulation,
and infrastructure to support increased traffic and other impacts
of casinos. It may reduce welfare payments to tribe members.
Support Arguments:
Support arguments signed by:
Anthony Pico, tribal chairman, Viejas Band of Kumeyaay Indians;
Paula Lorenzo, tribal chairperson, Rumsey Indian Rancheria; Mark
Macarro, tribal chairman, Pechanga Band of Luiseno Indians; Carole
Goldberg, professor of law and American Indian studies; Jeff Sedivec,
president, California State Firefighters Association.
Opposition Arguments:
Opposition arguments signed by:
Bruce Thompson, member California State Assembly; Leo McCarthy,
former Lieutenant Governor of California; Melanie Morgan, recovering
gambling addict.
Cal-Tax Position:
No Recommendation. This measure is outside the scope of Cal-Tax's
mission.