A new push from horse-racing interests and organized labor, coupled with a landmark federal court ruling, has complicated the road to legislative passage for five gaming-compact deals reached between Gov. Arnold Schwarzenegger and some of the state’s largest gaming tribes last year.
The deals, worth billions of dollars, represents the largest expansion of California gaming since voters first decided to allow slot machines in tribal casinos in 2000. They are expected to easily pass the Senate, but they face a much tougher road in the Assembly, where many Democrats have close ties to labor, and others fear that regulation of tribal casinos may be weakened by a recent federal court ruling.
"My caucus wants these issues resolved before these compacts are ratified," said Alberto Torrico, D-Newark, who heads the Assembly Governmental Organization Committee. His committee’s jurisdiction includes gambling.
The National Indian Gaming Commission, the federal agency that regulates tribal casinos, was dealt a legal setback by a federal appeals court late last year after the current compacts were signed.
The case challenged the commission’s jurisdiction to enforce minimum internal-control standards — known as MICS — in casinos with slot machines.
When the original gaming compacts were signed in 1999, the state established its own agency to oversee casinos in the state. But the agency, which is housed in the attorney general’s office, has been under-funded, critics charge, in large part because tribes have argued state regulation would be redundant given the federal oversight and the tribes’ own internal auditing of their casinos.
But now that federal regulators are being kept out of tribal casinos, some Democrats have voiced concerns that any new expansion should go hand in hand with beefed-up state regulation of casinos.
State regulators say they intend to step in to the regulatory role formally played by the federal commission. "We believe the commission has always had the authority to review internal controls," says Anna Carr, spokesman for the state gambling commission. "Given that NIGC had been performing that function, we didn’t take an active role. But the commission plans to fill the current void and oversee internal controls" of tribal slots.
Past audits of California casinos by federal regulators turned up more than 400 violations, including failures to secure jackpots and sub-standard surveillance.
Tribal representatives say discussion of the regulation issue should not be linked to the compacts, which already have been negotiated with Gov. Schwarzenegger and tribal governments.
"Once the compacts are passed, the Legislature can look at what they want to," says Patrick Dorinson, a spokesman for the Morongo Band of Mission Indians. "The biggest thing is the fiscal condition of the state. These compacts could bring in as much as $20 billion over the life of the compacts."