California tribes try to dodge state taxes

Jul 9, 2002 10:45 AM

California tribes are giving new meaning to the term "Indian Giver."

Tribal casinos want to change the definition of "net win," and save untold millions in state taxes. If successful, they could reduce their liability by as much as one-third.

State officials say the proposed new definition conflicts with existing tribal compacts and with standard accounting. Negotiations are under way, and a court test may loom.

Concurring with California, Frank Streshley of Nevada’s gaming control says that the generally accepted definition of gaming win is "wagering activity, less payouts.’’ By seeking to deduct a host of operational expenses, the California casinos would shed millions from their tax load ”” which could make them that much more formidable a competitor for Nevada gamers.

Attorneys for the Palm Springs-based Agua Caliente tribe say that current rules "fail to take into account expenses which are unique to tribal gaming today in California." They cited the cost of independent tribal gaming agencies and more pricey slot machines.

Still, the Indians aren’t exactly hurting. Since inking their compacts with Gov. Gray Davis, the tribes have run their casinos pretty much as they please. Last week, the state gaming commission again raised the statewide cap on slots to 51,000, 13 percent more than Davis authorized three years ago. It’s also 170 percent more than Davis initially promised.

California’s tribal casinos now employ 10,000 workers and carry an annual payroll topping $200 million.

In another development, California’s tribes have blocked a proposed statewide prohibition on Internet gambling. The tribes’ compact with the state current allows them to negotiate for the right to offer online versions of games already in play.

Rep. Dario Frommer, D-Los Angeles, proposed the Internet betting ban but couldn’t get even one motion to bring the matter to a committee vote. He blamed the bill’s demise on opposition from "a powerful Indian gaming group."