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Tribal Casinos Fast Tracked in California State Senate: Why?

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By Cheryl A. Schmit
Founder and Director of Stand Up for California

The California State Senate, without a single committee vote, is on the verge of approving the largest expansion of gambling in U.S. history. Despite the fact that it’s a $60 billion package locked-in for 23 years, most Californians still know nothing about it.

It goes without saying that casino expansions are mostly an unsavory business, and this one does not disappoint. $1 million from the same tribes seeking permission from the Senate have been contributed to the leadership, according to the LA Times. And that’s just the tip of the iceberg: Newly elected Lou Correa, Alex Padilla, and Jenny Oropeza, have all been beneficiaries of a vast web of connected committees that received more than $4 million from the expansion-minded gambling tribes in the last cycle.

Not only does the proposed gambling expansion resemble an LA noir, it could spell wider trouble for the industry as state elected officials are apparently willing to look the other way following a recent federal court decision eliminating virtually all independent oversight of the rivers of cash flowing through tribal casinos.

Remember stories of the mob in Las Vegas? In the wake of the federal ruling, there is no independent watchdog minding tribal casinos in California. State lawmakers could easily insist that protections be written into the expansion deals, just like other states have done, but the Senate would rather just approve the deals.

So far, the Senate has failed to resolve four critically important public policy matters of the highest importance to the State and its residents. Instead of locking us in without committee votes, the Senate should refuse to ratify the five compact amendments with the southern tribes until the four public policy questions are thoroughly addressed.

First, there is presently no independent, external control on the operation of tribal casinos in California, unlike any other form of casino gambling in the United States. In the wake of the DC Circuit’s Colorado River decision eliminating federal oversight of Las Vegas style tribal casinos, ratification of these compacts puts all California residents at risk. The only realistic and effective solution is to require the governor and the tribes to go back and address this problem in the compacts.

Second, there is a newly emerging and unresolved question over whether new charity bingo devices violate the exclusivity clause of the compact and therefore will allow tribes to escape the revenue sharing provisions in the compact. The unresolved matter of charity bingo machines places the entire issue of revenue sharing in jeopardy. The compacts should not be ratified until the matter of charity bingo is resolved.

Third, exclusive rights to Las Vegas-style gambling has produced a windfall in profits for a small number of tribes that have in turn, spent nearly $250 million on politics in California since the industry’s inception. The question whether tribes must comply with our State’s campaign finance rules is still not settled. The same tribe disputing its obligation to follow our state’s political rules is now before the Senate, seeking permission for an extremely lucrative expansion. Now is the time to tie up this matter, but neither the governor nor the Tribe has done so. The Senate must insist on the integrity of our state’s political process before it ratifies this deal.

Fourth, the 2006 revenue sharing formula creates an incentive for the installation of the maximum number of slot machines—maximizing the environmental impacts of the new casinos without maximizing revenues to the state General Fund. The proposed new formula reverses the state’s policy adopted in the 2004 compact amendments that did not incentivize larger casinos. Because of the change, the revenue sharing formula in the proposed 2006 compact amendments will likely result in reduced revenue to the state’s General Fund when compared to amendments ratified in 2004. The difference could mean $26 million per year for each amendment, or $78 million annually in lost revenue to the state’s General Fund for the three compacts authorizing 5,500 new slots—with similar results in the other two proposed amendments authorizing 3,000 more slots.

In sum, with no regulatory oversight to protect the public safety, no clear conclusion on how charity bingo affects revenue sharing, no settlement on whether there is a single set of rules governing our State’s political process, and problems in the new revenue sharing formula, the Senate must require the governor and the tribes to address these crucial problems before we authorize what will be the largest casinos in the world. Mountains of tribal campaign donations appear capable of getting the California Senate to look the other way.

Cheryl A. Schmit is Founder and Director of Stand Up for California and has been involved with issues associated with Indian gaming for many years. Stand Up For California acts as a resource of information to community groups as well as local, state and federal policy makers. Her activism includes speaking engagements to community groups, local government and professional organizations. She has organized and hosted conferences in Sacramento. She sits on the Tribal County Advisory Committee in Placer County developed to provide a public forum and voice in the ongoing developments of the United Auburn Indian Community gaming facility.

Posted on April 18, 2007

Comments

Don't be fooled ... Cheryl Schmit of Stand Up California is for hire; much like Ralph Reed and James Dobson in the the Abramoff Scandal.

An investigation of her funding sources and records will indicate that among those serviced: Howard Dickstein; Station Casinos; and various out of state gambling syndications.

Cheryl Schimt doesn't stand up for California; show her the money and she'll stand up for you.

Posted by: Frank Lee at April 20, 2007 02:33 PM

C. A. Schmit presents an incorrect view of tribal gaming and its positives. Tribal governments that operate tribal casinos do so lawfully. By going online or by reading the newspapers or by communicating with their legislators, or even by communicating with California tribal peoples, the voters of California may learn enough to create a useful understanding of the amendments to the existing tribal-state gaming compacts. Every other business expands to meet its market, and the tribes only wish to do the same with their tribal casinos. Furthermore, tribal casino expansions do not constitute “an unsavory business,” but instead happen via a legitimate tribal government interaction with the state government, as required by a federal law known as the Indian Gaming Regulatory Act. On behalf of the state, the governor negotiated with the tribes to reach the present compact amendments. The State Legislature ratified these amendments. By making political contributions to state lawmakers, tribes only follow a widespread lawful practice. Tribal casinos and their “rivers of cash” face “independent oversight” from the federal government. In fact, voters familiar with American government may know that “Article I, Section 8, Clause 3 of the United States Constitution, known as the Commerce Clause, reads as follows: ‘The Congress shall have Power ...To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.’" [quote from http://en.wikipedia.org/wiki/Commerce_Clause] This clause gives the U. S. Congress plenary power over the tribes. This power applies by way of the FBI, the IRS, the EPA, the DOJ, and the Secretary of the Interior, among others. For example, the IRS several years ago set up an office in Vista for the specific purpose of overseeing tribal casino activity. As another example, tribal casinos must comply with the Bank Secrecy Act, including IRS reports of large money transactions. No other activity in the country faces as much oversight and regulation as tribal casinos. The state itself, however, cannot impose its will on a tribal government by way of forced external regulation anymore than a tribal government can do so to the state. Both entities enjoy sovereignty, and thus come to the table as equals having parity. As a matter of commonsense, readers may wish to consider that tribes will want to operate a squeaky clean casino in their own interest. This sensible outlook may explain why no responsible agency has found organized crime functioning in tribal casinos. As well, under law, tribes must set up a tribal gaming commission to regulate the tribal gaming environment, much like the state regulating its own gaming operations (church bingo, horse racing, off track betting, card rooms, the state lottery, and so on). A minor issue like charity bingo has little if anything to do with tribal casino operations. The few tribal casinos that operate bingo do so for profit, and this matter also has little to do with revenue sharing with the state. After all, Las Vegas-style slot machines serve as the primary source of the cash the tribal casinos earn and then share with the state under mutual agreements. A rational reader may suppose that if a serious issue arises concerning charity bingo in respect to tribal casinos, then the tribes and the state will timely find a resolution to it. As to reporting to the state of political spending by tribes, this issue has now resolved itself largely in favor of the state, with the tribes having to report. The alert reader may have already known that tribes generally have reported voluntarily to the state on their political spending. The wording that “a small number of tribes have . . . spent nearly $250 million on politics since . . . the inception” of tribal gaming” misleads by allowing the implication that these monies may have gone into the pockets of state politicians. Most of the money tribes have spent in furthering their interests in tribal gaming has gone to television stations, newspapers, radio stations, media consultants, voter mailers, and suchlike, during political campaigns. Tribes have a right of free speech to put their message in front of voters. The speculative numbers C. A. Schmit spits out regarding “the 2006 revenue sharing formula” seem aimed at setting a tone of negativity in order to defeat an expansion of tribal casinos. The state will gain plenty of revenue form tribal casino expansion. On this score, a reader wearing his thinking cap might ask a simple question: Would the State Legislature have ratified the compact amendments for tribal casino expansion without a bigger revenue stream to the state? This question answers itself, if one gives credit to state officials for acting with a view to increasing state revenue in the face of huge budget deficits. Besides, comparing the 2004 and the 2006 compact amendments ignores a fundamental: As sovereigns, both a tribe and the state reach an agreement reflecting their mutual needs and interests. A cookie-cutter approach or looking to the past cannot necessarily serve either a tribe or the state at a given juncture. Regarding the environment, tribes operating casinos must follow federal environmental regulations under EPA authority. The tribes have also previously agreed to follow a CEQA-like process when proposing a project that may affect the off-reservation environment. Moreover, the compact amendment packages require tribes to address local environmental concerns. A reasonable reader may also recognize another serious shortcoming in C. A. Schmit’s remarks. An expanded tribal casino will function as a stronger local economic engine, conferring benefits all around the community, by more jobs, more sales tax revenue, and more banking and business activity. Bigger tribal casinos may also induce the gambling public to spend more time in them instead of going to Las Vegas, thereby keeping more dollars in California. These omissions of positives may have proved deliberate if one believes the reader comment about C. A. Schmit working as a hired gun for the opposition to tribal casinos. Nevertheless, recent California political history and public acceptance have demonstrated that tribal casinos have found a place in the Golden State.

Posted by: anotherview at August 4, 2007 06:32 PM

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