The Magazine

California Gambling

From the September 15, 2003 issue: Heap big casinos in residential neighborhoods.

Sep 15, 2003, Vol. 9, No. 01 • By DAVID DEVOSS
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Los Angeles

THREE YEARS AGO, an earnest young Indian chief appeared in a multimillion dollar television campaign advocating passage of an amendment to the state constitution that would give Indian tribes a monopoly to operate Las Vegas-style casinos on their reservations. Dressed in faded jeans and a work shirt, with the desiccated Sonoran desert as a backdrop, the chief explained that passage would allow impoverished Native Americans finally to become economically self-sufficient. Prompted by guilt, knowledge that most reservations were located in rural badlands, or perhaps the prospect of no longer having to drive to Nevada in order to gamble, California voters responded to the plea and approved the Indian Gaming Initiative with 64.5 percent of the vote.

Today, California is suffering from the unforeseen implications of its beneficence. Dozens of the state's Indian tribes are using profits from their desert casinos to buy new "homelands" closer to population centers. There are plans to build casinos in the Sonoma wine country, along the Ventura coast, and just outside Oakland. Three tribes have asked the Bureau of Indian Affairs to grant them federal tribal recognition so they can establish reservations inside Los Angeles. Indeed, Indian heritage has become such a bonanza that hundreds of urbanized Native Americans have suddenly discovered their roots and are petitioning the BIA to certify 54 new California tribes.

Politicians caught between the political correctness of supporting Native Americans and voters outraged by the proliferation of casinos don't know which way to turn. Three years ago, Sen. Barbara Boxer pushed through Congress a bill providing federal recognition for Northern California's Coast Miwok tribe. Boxer circumvented the Bureau of Indian Affairs after receiving assurances from the Miwoks that they would not open a casino. But this past April the tribe hired a team of influential political advisers, which included Boxer's son Doug, and announced plans for a massive casino and resort operated by Nevada financiers. Miwok chief Greg Sarris, a college English professor and Hollywood screenwriter, says he's just trying to lift his people out of poverty. But Sonoma officials say they'll remember Boxer's role in this double-cross when she runs for reelection next year.

Once the BIA acknowledges a tribe's existence and "federalizes" its property, the new reservation legally becomes a sovereign nation, exempt from local taxes, state labor laws, municipal ordinances, zoning restrictions, and environmental review. Some tribes have offered to pay mitigation fees for the disruption gambling creates, but the money seldom covers the amount counties spend on added police and fire protection. The resulting strain on municipal resources, plus the panhandling, drug use, and traffic that casinos attract, has galvanized neighborhoods where the quality of life is eroding.

In San Bernardino, the skirmish line runs across a dry creek bed, past an elementary school, and around a maze of suburban cul-de-sacs lined with ranch homes and SUVs. Several years ago, the San Manuel Band of Mission Indians added 28 acres to their reservation, promising to use the land for housing and a community recreation center. Instead, they recently announced plans to expand their casino, build an event center, and erect a six-story parking garage. The 17,000 neighbors living next to the proposed $50 million construction project are furious, but there is little they can do since the tribe is exempt from political oversight. "The San Manuel band may be a sovereign nation, but aren't we part of a sovereign nation too?" asks homeowner Rheba Hewitt. "Why can't Colin Powell come out here to represent us?"

Consisting of 194 souls, only 80 of them adult, the San Manuel Band of Mission Indians prospers only because of gambling. Its smoke-filled casino and bingo hall provides each tribal member a $91,000-a-month income. Its bleak reservation is stippled with demi-palazzos. Still, tribal chairman Deron Marquez claims it's his people who are under attack. "Nobody was interested in us until we began to make money," he says. "Our neighbors want us to be like 'Dances with Wolves,' but we'd rather be accountants and lawyers."

Thanks to the Indian Gaming Initiative--and the fact that tribes pay no property, corporate, or sales tax--California's Indians have achieved self-sufficiency and more. Each of their 62,000 slot machines rakes in over $300 in profit a day. When added with revenue from bingo, cards, and video games, the state's 54 Indian casinos earn $5.1 billion a year, a sum that exceeds Atlantic City's and is more than half that of Nevada, a state with 401 casinos.

Much of the money Indian tribes earn is spent to insure their gaming monopoly and sovereign immunity. California's attorney general has collected $500,000 in campaign donations from Indians. The San Manuel Band has been particularly generous, giving over $10 million to state and local politicians over the past three years. According to California's Fair Political Practices Commission, the Indian gaming lobby has spent $122 million on ballot measures and state elections since 1998, making it the biggest political contributor in the state.

Earlier this year, the FPPC filed civil suits against the Agua Caliente and Santa Rosa tribes for failure to report a combined $9.8 million in political contributions in a timely manner. Both groups immediately appealed, insisting sovereign immunity shielded them from state law. "Nobody opposes tribes' participating in the political process, but with that right comes the responsibility of obeying the law," says FPPC chief of enforcement Steven Russo. "We can't have the state's largest political contributors refusing to comply with the political reform act."

In the past, Indian consultants approached state legislators, urging them to support pro-gambling laws. Now lawmakers seek out Indian tribes, offering to do whatever is necessary to get on the payroll. This summer, one state senator, who sits on a committee that has jurisdiction over gambling legislation, emailed several tribes offering his services as a paid public relations adviser. When confronted with his incriminating emails, the senator declared his offer "completely above board and proper" since his private consulting company, not he himself, would be doing the work.

Until recently, the biggest beneficiary of Indian largess has been Gov. Gray Davis, whose office helped write the constitutional amendment. Davis has accepted $1.5 million from the tribes since he took office in 1999, and gambling interests altogether account for about $2.5 million of the $78 million his fundraisers have collected. In return, Davis signed compacts with Indian tribes that allow their casinos to operate untaxed in return for a paltry fee of less than 10 percent of their slot machine revenue, as opposed to the 25 percent demanded by Connecticut and most other states. Even this amount doesn't go directly to the state treasury. Instead, the money goes into a fund that's divided between smaller gaming tribes and tribes that don't have casinos at all.

Neither Davis nor his appointees to the state's Gambling Control Commission require Indian casinos to pay out a fixed percentage of their slot machine revenue, as do the states of Nevada and New Jersey. Slot machines in New Jersey, for example, return to gamblers around 92 percent of the money inserted. Indian slots in California pay back around 70 percent.

Having contributed generously to the governor, tribal leaders were stunned earlier this year when Gray Davis suggested they pony up $1.5 billion to help reduce California's $38 billion budget deficit. Several chiefs called his request "ludicrous" and a violation of their sovereign immunity. "Why should we pay for Davis's incompetence?" rasps Marquez. "It's his deficit."

CONFRONTED BY a recall initiative that could end his political career, Gray Davis not only has backed away from his request that Indian casinos pay a gross receipts tax, he's even apologized for making the suggestion. Davis still wants money, of course, but now he asks it be sent to one of the committees established to defeat the October 7 recall.

In truth, all of the leading gubernatorial candidates save Arnold Schwarzenegger have asked for Indian contributions. But Davis's pandering has been unseemly even by the pay-to-play standards of his five years in the governor's office. Recently Davis promised the California Nations Indian Gaming Association that if he retains the governorship, they'll be allowed to name two of the five members on the state commission that regulates Indian gambling. And yet so far, little Indian money appears to be going to Gray Davis to fight off the recall.

Nor has the casino industry jumped on the recall bandwagon. Encouraged by the silence, Davis keeps coming up with tantalizing offers for California's Indians. Last week he promised to sign a bill on the eve of the election that would protect sacred American Indian sites in California. A laudable goal--except for the fact that the bill allows a Native American Heritage Commission to select the sacred sites, which it can then keep secret. Anyone wanting to develop land near sacred ground ("near" carefully being left undefined) would be required to pay for the cultural distress they might cause. Whichever way the recall goes, California's Indians will still be on a roll.

Indians may keep mum on the recall itself, but some of their money is riding on Lt. Gov. Cruz Bustamante. During the last election cycle Indian casinos gave the Fresno Democrat nearly $500,000. Last week, his gubernatorial campaign pocketed an additional $2 million courtesy of the Viejas band of Kumeyaay Indians, a tribe with 300 members that controls gambling east of San Diego. The contribution followed by a few days an $800,000 donation from two other tribes. "Cruz Bustamante is our friend," Viejas vice chairman Bobby Barrett explained. "He has sat down with our elders, learned our stories and our values."

Having mastered state politics, California Indians are ready to try their luck inside the Beltway. Last March, the Viejas and three other tribes broke ground on a $43 million Washington hotel development. Tribal leaders say the structure will be a preview of coming attractions. Of course, politicians in the nation's capital may be better negotiators than those in California. But I'm betting the next casino-studded Indian reservation will be located on land once known as Rock Creek Park.

David DeVoss heads the East-West News Service in Los Angeles.