Will the Rincon Court Decision lead to more casino gambling in California?

[Alan Mendelson]

The Rincon Band of Indians in San Diego (the owners of Harrah's Rincon Casino) won a victory in the Federal Courts and a favorable decision from the Federal Government that forced a change in the Tribe's gambling compact (arrangement) with the State of California.

In short, the State of California is going to lose some revenue from the changes, and the Rincon Band will be allowed to increase its count of slot machines by a bit more than 10%.

Now, I wonder if the money-crunched State of California might be more favorable to expanding casino gambling outside of the limits of Indian casinos?

It was about seven years ago that voters in California voted down a proposal that would have allowed the various card clubs including venues such as The Commerce Casino and Hollywood Park Casino and the Bicycle Casino to add slot machines and to offer Vegas style craps and Vegas style roulette.

The State Ballot Initiative, called Prop 68, called for higher fees on the Indian casinos and if they didn't unanimously agree within 90 days, card casinos in the state would be allowed to offer Vegas style slot machines. This voter initiative was in November of 2004. The group supporting Prop 68 still has an active web page with the major points of the Constitutional Amendment:

http://www.fairshareforcalifornia.org/

And here are the major points from the legislation as stated by the proponents:

Gaming tribes would have to agree to:

• Pay 25% of slot machine winnings into the Gaming Revenue Trust Fund to be used by cities and counties to hire new police, sheriffs and firefighters and fund education programs for abused and neglected children

• Comply with the California’s Political Reform Act and Environmental Quality Act (CEQA) as all other Californians do right now

• Enter into good faith negotiations with cities or counties where tribal casinos are located to mitigate local gaming related impacts

• Comply with the Gambling Control Act and accept oversight from the California Gambling Control Commission and Division of Gambling Control

• If all Indian tribes choose not to renegotiate within 90 days of the initiative’s approval by the voters, five specific horseracing tracks and eleven card clubs would be authorized to operate a maximum of 30,000 slot machines, at those specific locations only. The race tracks and card clubs must:

• Pay 30% of their winnings to the Gaming Revenue Trust Fund to be used by cities and counties to hire new police, sheriffs and firefighters and fund education programs for abused and neglected children

• Pay 2% of their winnings to the city in which they are located

• Pay 1% to the county in which they are located

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The specified establishments are in Los Angeles, Alameda, San Mateo, Orange, San Diego and Contra Costa and the machines could not be operated in any other locations.

• Funds will be collected in the Gaming Revenue Trust Fund, overseen by a Board of Trustees appointed by the Governor. Funds do not become part of the state general fund and will be distributed as follows:

• $1.2 million to each non-gaming Indian tribe

• $3 million to be awarded to responsible gaming programs

• 50% of the remaining funds directly to county offices of education to provide services for abused and neglected children in foster care

• 35% of the remaining funds directly to local governments for additional neighborhood sheriffs and police officers

• 15% of the remaining funds directly to local governments for additional firefighters

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A permanent ban is imposed on the opening of any new card clubs in California.


At the time the feeling among voters was that Indian gaming was enough, and Governor Arnold was gloating about increased revenue from new compacts with the Indian tribes in the State. Prop 68 was voted down.

But those compacts and higher revenue agreements are all about to become unwound and that could leave the State scrambling to find replacement money. And that scramble would be on top of the current scramble to find additional money that is already needed.

So, might the solution be another try at expanding casino gambling? Might there be another State Proposition (a constitutional amendment, a voter initiative) to expand casino gambling in the state to allow card clubs to offer slot machines and Vegas-style craps (instead of card craps) and Vegas style roulette in which a dealer throws a ball onto a wheel (instead of spinning a wheel with cards defining the winning number)?

About a year ago when I talked with card club owners and managers here in the Los Angeles area the feeling was that another effort to amend the Constitution with a voter initiative would not be worthwhile. But will the climate quickly change now because of the new Rincon victory in the courts and the impact it will have on State revenue?

Here's a link to another article about the implications of the Rincon Tribe's victory in Federal Court:

http://indiancountrytodaymedianetwor...gaming-compact

[Alan Mendelson]

I just heard via email from one of the leaders of the group of card clubs in California that had been active in the campaign to expand Vegas-style gaming. I won't reveal his name but he told me that there are no plans to use the Rincon court decision to start a new campaign for slot machines and other Vegas-style gambling in California card clubs and card casinos. He wrote, in part:

"After 86% of California voters voted no on Prop 68, the Los Angeles card casinos have taken obtaining slot machines off their wish list and are focusing their growth strategy on making their card games as popular as possible."

And my email back to him:

"it wouldn't surprise me if attitudes change now."

Over the next few weeks and months, as other Native American casinos push for changes to their compacts, some folks in Sacramento are going to start looking for ways to replace revenue from the Indian casinos. And I am sure they will be looking to the non-Indian casinos which are the card clubs and card casinos. And when they do, I seriously doubt if the card club owners will say "no" to the possibility of having slot machines and Vegas-style games including craps and roulette. Some by the way do have "card craps," and if they ever got "dice craps" they would have an advantage over the Indian casinos for this element of casino gaming.

The card clubs are also in major population areas including the heavily populated Los Angeles metropolitan area, and it won't take much to quickly build up a new customer base at these card clubs.

Of course this raises speculation about what the Las Vegas companies will do to stop the growth of slot machines in its #1 "feeder market."

[JamieV]

I doubt California will ever have true Vegas style gambling because of our proximity to Vegas. The Indian casinos do an admirable job but the card clubs don't compar at all. I definitely believe someone's pockets are getting greased in California to not allow slot machines in card clubs

[Alan Mendelson]

I definitely believe someone's pockets are getting greased in California to not allow slot machines in card clubs

Since the issue will be decided by a voter initiative (the state constitution must be amended) then a lot of pockets would have to be greased. Since when do voters in California listen to anyone?

[Alan Mendelson]

Another top casino executive in the Southern California area (card club casino) read my original article (above) and sent me this comment:

I am no expert in this area but your logic is sound. Perhaps the State will look for additional revenue from the commercial card clubs by offering them the abilitiy to have slots now that they have lost their strong-arm tactics of negotiating with the tribes.