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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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.