In a controversial move, California’s gambling commission has decided to seek a greater regulatory presence in the state’s growing $7 billion Indian gambling industry.
In the wake of a federal appeals court ruling that the National Indian Gaming Commission does not have the authority to regulate most tribal casinos, commission Chairman Dean Shelton will pursue expanded state powers to fill that void.
Toward that end, Shelton has decided to seek the approval of an intransigent, tribe-dominated association in order to expand the state commission’s role. The Tribal-State Regulatory Association is made up of 66 tribes with gambling agreements.
The association to date has approved just three new tribal regulations, two of which were initiated by tribes. The third was a simple set of emergency evacuation standards that took four years to approve. Tribes have blocked several other proposals the commission sought.
"History has shown that it’s virtually impossible to enact any substantive regulation through the association," said Howard Dickstein, a prominent attorney who represents some of the state’s most successful gaming tribes, including Pala of San Diego County.
Even if the effort to expand the state commission’s power was successful, Dickstein said the move almost certainly would be litigated for years because of the limited role granted the association under the compacts. Moreover, the the National Indian Gaming Commission believes the question of regulatory power should be resolved at the federal level.
The appeals court ruling last fall barred the national commission from enforcing what are known as minimum internal control standards.
Those standards set minimum criteria for the security of the money flow through casinos. They cover cash handling and counting, internal audits, surveillance and the games themselves — from technical guidelines to how often card decks should be changed.
The standards were based on those in major markets such as Nevada, New Jersey and Mississippi. They were developed over several years in consultation with major gaming tribes and the National Indian Gaming Association, a nonprofit organization of Indian tribes engaged in gaming enterprises.
The national commission has until March 27 to appeal the ruling to the U.S. Supreme Court, but is not expected to pursue the case further. Instead, national commission Chairman Philip Hogen has said he will ask Congress to restore the commission’s regulatory power over more than 400 Indian casinos nationwide.
The outcome of the national commission’s struggle could be crucial in California, which has 57 tribal casinos, far more than any other state.