Page 8 - October 2004 • Southern California Gaming Guide

SOUTHERN CALIFORNIA GAMING GUIDE
Casino Player’s Voting Guide
n November 2nd, Californians will be faced with one of the longest and potentially confusing ballots in years. ere are 16 propositions to amend the constitution before voters, including two that are focused speci cally on California gaming. Candidate Schwarzenegger used
hat Are the 2004 Gaming Propositions?
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Indian gaming as an issue during the March 2004 recall election, claiming that as governor, he would be certain that California’s Indian gaming tribes would pay “their fair share” to the ailing and de cit- ridden state co ers. His reverberating sound-bite spawned these two propositions on November’s ballot. Here is a brief background of California’s gaming and a synopsis of the gambling propositions: who is backing and endorsing them, and what they may mean to California.
Card Room and Racetrack Gaming
The California constitution and statutes specify types of California’s legal gambling. In card rooms, current law allows wagering on card games where the operator has no stake in the outcome of the game. Players can play draw poker, 7-card stud and Pai Gow poker against each other and pay the licensed card room a fee. Blackjack (21) at card rooms is prohibited. There are 96 licensed card rooms in the State. Current law also allows wagering on horse races at racetracks licensed by the State. There are currently six privately owned racetracks, nine racing fairs, and 20 simulcast-only facilities.
California’s Indian Casinos
Congress passed the Indian Gaming Regulatory Act (IGRA) in 1988 that recognized Indian tribes’ sovereign right to conduct gaming on Indian lands without state or local intervention. IGRA provided a statutory basis for the regulation of Indian gaming, specifying mechanisms and procedures, and required tribes to use gaming revenue to promote their economic development and welfare. It also required states to permit “Class III” gaming (especially Las Vegas-style slot machines) by negotiating compacts with interested tribes.
California voters twice approved Indian’s monopoly on Las Vegas-style casinos with the passing of Proposition 5 in 1998, and Proposition 1A in 1999.
Federal law and the State constitution govern gambling operations on Indian land. Tribes that have compacts can operate slot machines and card games such as 21. Other games of chance such as craps and roulette are prohibited. Currently 64 tribes have compacts and 53 tribes own and operate casinos. Any new or amended compact must be approved by the California Legislature, Governor and the federal government. Sovereign nation tribes do not pay taxes on their government gaming enterprises, as mandated by the federal IGRA, which requires all revenues from tribal gaming operations be used solely for governmental or charitable purposes. But Indians pay taxes, just like all other U.S. citizens. Individual Indians are fully subject to federal income tax on all income, no matter how it is earned, and pay all FICA and Social Security taxes.
1999 Gaming Compacts
Most tribal gaming compacts were signed in 1999 as a result of the passage of the Proposition 1A, allowing Indian
casinos to have Las Vegas-style slot machines. Under these compacts a tribe may operate up to two facilities and up to a total of 2,000 slot machines. In exchange, tribes make payments to California that can only be used to o set any local infrastructure costs and for making payments to tribes that do not operate slot machines or operate fewer than 350 slot machines. ese payments total well over $100 million annually. Tribes are also required to prepare environmental studies on the impact of surrounding areas on any new or expanded facilities. In addition, above and beyond the tribes’ compacts, gaming tribes donate millions annually to their local communities in charitable contributions. ese 1999 compacts will expire in 2020.
2004 Gaming Compacts
Five tribes, including the Viejas, Pala and Pauma Tribes, signed amendments to their compacts that allow them to operate an unlimited number of slot machines, in exchange for a speci ed annual payment, with a per slot machine payment which the State can use for any purpose. ese compacts also require more detailed environmental reports, and negotiations with local governments on the impacts of new facilities. ese new agreements expire in 2030. Four more new compacts were recently signed, but have not all been approved. ere has been much legal reaction to these compacts—recently racetracks owners that want to add slot machines led a lawsuit in Alameda County to derail Gov. Schwarzenegger’s recent deals. Gov. Schwarzenegger opposes both these propositions as he prefers to negotiate and renegotiate with tribes to get as much money as he can to plug the State’s defecit. He is launching a $2 million mail campaign to send 5 million voter guides to California residents speci cally on these propositions.
PROPOSITION 68: NON-TRIBAL COMMERCIAL GAMING EXPANSION
What is it?
Proposition 68 will require Indian gaming tribes with casinos to contribute 25% of casino slot machine revenue to California state and local governments. If any one of the 64 compacted tribes (53 compacted tribes currently have casinos) refuses, 11 card rooms and ve horse-racing trackswouldgaintherighttoinstall30,000slotsmachines in their card rooms and racetracks, and would pay 33% of net revenues, approximated to be about $1 billion a year,
primarily to local governments for “additional child protective, police and re ghting services.”
Seven of the 11 card rooms that would bene t from passage of this proposition are in Southern California. Six are in Los Angeles County; one is in San Diego County. e other three card rooms are in San Mateo County and Contra Costa County. e Los Angeles County card rooms are Hustler Casino, Commerce Casino, Bicycle Club Casino, Crystal Park Casino, Hawaiian Gardens Casino, Normandie Casino, and Hollywood Park Casino. e San Diego County card room is Oceans Eleven Casino in Oceanside. ree of the ve racetracks are in Los Angeles County and include Santa Anita Racetrack, Hollywood Park Racetrack, and Los Alamitos Racetrack. e other two racetracks are in Alameda County and San Mateo County.
Who is backing Proposition 68?
California card rooms and horse racetracks owners (some of who are out-of-state interests) who want a share of lucrative slot machine revenue.
What do its critics say?
Critics say that Proposition 68 is not about gaming tribes’ paying “their fair share”, but it’s about creating huge casinos on non-tribal land throughout California. Called the “Deceptive Gambling Proposition” by critics, in short, Proposition 68 would place huge new casinos on non-Indian lands in California cities and suburbs. And no funds will go to reduce the State’s de cits. Law enforcers also say this proposition will mean more crime and higher law enforcement costs.
Who opposes Proposition 68?
More than 400 public safety, taxpayer and other leaders including the California Police Chiefs Association, California State Fire ghters Association, California District Attorneys Association, and
more than 30 County Sheri s, education leaders,
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Page 8 October 2004