Proposition 29

Title:			Referendum Vote to Overturn Previously Approved Gaming Compacts.
Sponsor:			Richard M. Milanovich (Agua Caliente Indian Tribe)
Legislative History:			SB 287 (Burton-Maddy) (Chp. 409, Stats. 1998) Assembly Floor 52-24 Senate Floor 21-7

Major Provisions:
This is a referendum vote on the state's adoption of a compact negotiated in 1998 with the Pala Band of Mission Indians and 10 other tribes. That compact was ratified in SB 287 (Chp. 409, Stats. 1998). That compact is now void unless a majority of voters approve it by voting in favor of this proposition.

SB 287 provided, in pertinent part:

• The compact was exclusive to the signatories and not a compact to be applied to other Indian Tribes.
  
  
• Deemed ratified any other state-tribal compact executed after adoption of SB 287 that was identical to the compact ratified in SB 287, unless rejected by a 2/3 vote of both houses within 30 days of submission to Legislature.
  
  
• Acknowledged the right of federally recognized tribes to negotiate different compacts with the state if approved by the Legislature.
  
  
• Designated the governor as the state officer responsible for negotiating and executing Class III gaming compacts with the tribes pursuant to the federal Indian Gaming Regulatory Act (IGRA).
  
  
• Authorized the governor to waive the state's immunity to suit in federal court in connection with any state-tribal gaming compact or any action brought by a tribe under IGRA.
  
  
• Specified that the bill is not to be interpreted as an imposition of any statewide limit of lottery devices or allocation of lottery systems. Each tribe may negotiate separately with the state over these matters.

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:

• The Legislature has no power to authorize lotteries and prohibits the sale of lottery tickets in California.
• Authorizes the California State Lottery, notwithstanding the general prohibition.
• Authorizes the Legislature to provide for the regulation of horse races and permits wagering thereon.
• Allows the Legislature to permit cities and counties to permit charitable bingo games.
• Provides the Legislature has no power to authorize, and shall prohibit, casinos of the type currently operating in Nevada and New Jersey (1984 Amendment).

In 1987, the U.S. Supreme Court 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 courts 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. This compact was codified in SB 287 which is now the subject of this referendum.

Policy Considerations:

• Is opposing the proposition (voting against of the Pala Band compacts) supporting expansion of gaming activities beyond that provided by the ratified compacts?
• Do the Pala Band compacts provide sufficient assurance that the gaming activities will pay their fair share of government services and programs?

Fiscal Impact:
According to the Legislative Analyst, if Prop. 1A is approved, Proposition 29 will have no fiscal impact on state and local governments. If Prop. 1A is not approved, Proposition 29 would result in unknown, but probably not significant fiscal impacts on state and local governments.

Support Arguments:
(Arguments in Support of the Proposition - support of SB 287 and the Pala Band Compacts)

• Prop. 29 is the best possible compromise. It ratifies the 1998 Tribal-State Compacts. These compacts were carefully negotiated, willingly signed by 11 Tribes, signed by the governor and ratified by the Legislature. They were not forced on anyone.
• The 1998 Compacts give local control over the location of casinos. They grant local government power to mitigate traffic, public safety and environmental problems. They ban gambling by 18-year olds, prohibit gambling on credit and provide for state audits. By way of contrast, Prop. 1A will permanently open the floodgates to massive gambling in California by authorizing 107 Tribes to operate two casinos each.
• Prop. 29 strikes a good balance between Indian sovereignty and the public interests of all citizens. It's a reasonable, limited and fair approach to Indian gambling. It keeps faith with Prop. 5 - self sufficiency plus economic development for native Americans.

Support Arguments Signed By:
Harvey Chinn, California director, National Coalition Against Gambling Expansion; Art Croney, executive director, Committee on Moral Concerns; Cheryl Schmit, co-chair, Stand Up for California.

Opposition Arguments:
(Arguments Against the Proposition - opposition to the compacts):

• Fortunately, after voters overwhelmingly passed the Indian gaming initiative (Prop. 5 in November of 1998), the new Legislature and governor negotiated new compacts with California Indian tribal leaders. The new compacts are fair to the Indians and the state. They are on your ballot as Prop. 1A, and almost every California Indian leader strongly supports this important measure. Prop. 1A will replace the unfair compacts that are included in Prop. 29.
• Proposition 29 would end the ability of Indians to maintain and improve their current gaming facilities; thousands of Indians and non-Indians from working in gaming businesses; taxpayers being off the hook for the financial costs of native Americans; the opportunity for Indians to support themselves and their families; basic-service needs for many who are living in the most desolate Indian communities; the more than $4 billion in economic activity and $120 million in tax revenues for the California economy, which have provided funds for new schools, medical clinics and roads.
• The compact contained in Prop. 29 is no longer needed because the overwhelming majority of California Tribes have negotiated a subsequent agreement that addresses concerns, such as worker safety, the impact on local communities, licensing, and many other issues relating to fairness and the public's rights.

Opposition Arguments Signed By:
Richard M. Milanovich, tribal chairman, Agua Caliente Band of Cahuilla Indians.

Cal-Tax Position:
No recommendation. This measure is outside the purview of Cal-Tax legislative priorities.