California Tribes & Gambling - Part 2
Have you noticed when you play slots at Indian Casinos, that many of the machines have a small Bingo card somewhere on your screen’s display? Did you ever wonder why? Are we playing slots or are we playing Bingo when we play these machines? Are we playing both? Is there a connection between these games and IGRA (the Indian Gaming Regulatory Act)? What is it? Will we win more or less money playing these slots, and is our win figured the same way? We’ll try to answer some of these questions in Part 3, but first we have a little more history to cover. We need to know why we even have these machines.
Under IGRA, all tribal gaming falls into one of three categories, or classes, with varying levels of tribal, state, and federal regulation.
Class I Games: These are social games or traditional Indian games usually related to tribal ceremonies or celebrations. There is a description of several tribal games of the Chumash people at santa ynez chumash. if you are curious about this tribe’s traditional games of skill or chance. These games are subject to regulation only by the tribes themselves.
Class II Games: These are games of Bingo, whether or not electronic, computer, or other technological aids are used in playing the game. If played in the same location as the Bingo game, Class II games also include pull tabs, punch boards, tip jars, instant bingo, and other similar games. They also includes non-banked card games like poker. (Non-banked games are card games that are played exclusively against other players rather than the house). IGRA provides for regulation of these games by both tribal ordinance that must meet federal guidelines and by the approval of the National Indian Gaming Commission (NIGC).
Class III Games: These are sometimes called Nevada-style games or Vegas-style gaming. They include all other forms of gambling, including slot machines, blackjack, craps, roulette, and dice games not prohibited under state constitution and laws. These games are regulated by the tribes and states pursuant to tribal ordinances and tribal-state compacts.
Gaming Compacts.
Federal law (IGRA) requires that all tribes who want to engage in Class III gaming (Vegas-type slots) must enter into a compact of agreement with the state in which the tribe is located before gaming can occur. On September 10, 1999, 56 tribes led by the Pala Band of Mission indians entered into Tribal-State Gaming Compacts permitting Class III video gaming devices on tribal lands. These compacts were subject to approval by California voters on Proposition 1A - the Indian Self-Reliance Initiative - which appeared on the March 2000 state ballot. With 64.5 percent of California voters casting a “yes” vote, the initiative amended the State Constitution’s ban on casinos to allow gaming on tribal lands subject to the terms of the compacts.
I am always hesitant to quote statistics in what I write because they are so quickly outdated. The figures here come from the California Legislative Analyst’s Office and were published in LAO Tribal Gaming, May 20, 2015. The LAO office is the one that writes the analysis of voting propositions for CA each election. Much of the information in this post comes directly from that source.
A tribe can open a casino with Class III games only if (1) the Governor and the tribe reach an agreement on a tribal-state compact, (2) the CA Legislature approves the compact, and (3) the federal government approves the compact. According to the LAO, the Legislature has ratified tribal-state gaming compacts with 73 of California’s 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos in 26 counties. The industry generates about $7 billion in revenue after paying winnings.
Financially, it is in the State’s interest to enter into compacts with the tribes. In accordance with the terms of various tribal-state compacts, the General Fund is projected to receive $330 million in revenue in 2014-15. An additional $30 million in revenue will support state regulatory and problem gaming costs. (Where does this money come from? Take a look in the mirror. Where else but from its players would a casino get the money to pay the state of California the share it demands?)
(My source comparing the old (1999) compacts and the newer (2004) compacts that have been ratified also comes from the LAO 2/02/07 )
Under the 1999 compacts, casinos were each authorized to have up to 2,000 machines with a statewide limit of 61,957. Payments were made to the state Revenue Sharing Fund on a per machine basis. These payments were a way to share revenue with the 73 tribes that did not operate casinos. Tribes with casinos paid nothing to the State for their first 350 slot machines. They paid $900 per machine for machines 351-750 , $1,950 for machines 751-1250, and $4,350 for machines 1250-2000. There were other payment made to the State under these compacts as well which we will touch on next time.
Today under the revised 2004 compacts the State takes an even bigger cut of casino profits. Each casino could have an unlimited number of machines, but payments of $8,000 to $25,000 per machine to the General Fund were required. 2006 compacts have been proposed according to LAO allowing tribes to operate over 2000 machines at one, two, or three facilities on tribal lands after negotiating payments for road improvements and repairs, increased fire and police protection, etc. And, yes, after paying more per machine. We’re just skimming the surface with these figures. Read the LAO report to learn more.
Compacts are required for Class III gaming. What happens if the Tribe and State negotiate an agreement, but the Legislature fails to ratify their compact? There are several options. (a) The tribe could request renegotiation with the governor, (b) It could sue in Federal Court claiming the state acted in “bad faith,” (c) A compact could be imposed on the state by the federal government.
When working on “Spin to Win”, I learned that Harrah’s Rincon (now called Harrah’s Resort Southern California) had this problem. Feeling that the State was taking advantage of the economic desperation of the tribes trying to climb out of poverty, Rincon sued Governor Schwarzenegger for “illegal taxation” and “bad faith” in 2004 renegotiations. The tribe finally prevailed after 7 years of litigation, and theirs became the first California compact agreement negotiated with oversight of the federal courts.
So now we have a little understanding of how much money the casinos must pay to the State to operate their machines. This is in addition to all the other expenses of operating their gambling houses. We know why they are looking to cut costs wherever they can. We know why we are winning less and doing it less often.
In the next section, we’ll look at the differences between Class II and Class III machines, and see how the casinos save money buying or leasing these Class II Bingo slots instead of paying for Vegas-style Class III machines. We’ll look at the difference in how they play and how they pay. And we’ll answer many of your questions about why we are seeing so many of these Class II “Bingo” slot machines in our local Native American gambling venues. More to come in Part 3.
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