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In unprecedented move, Rincon withdraws from California tribal … – The San Diego Union-Tribune

A 500-member tribe in northern San Diego County has become the first in California to opt out of state oversight of its gambling operations in favor of federal supervision.
The move by the Rincon Band of Luiseño Indians ends nearly two decades of legal wrangling rooted in the way California assesses regulatory costs.
It could also herald the beginning of the end of the state’s hold on some tribal gaming operations, which last year paid nearly $67 million into a state fund to regulate tribal gaming. That money funds staff at the California Gambling Control Commission, Bureau of Gambling Control, Office of the Attorney General and Office of Problem Gambling.
Rincon Chairman Bo Mazzetti said the transfer of regulatory duties is less about the funding dispute and more about moving toward increased tribal sovereignty for Rincon and other tribes throughout the state.
“We’re the first to go through the full process and help develop the process where the state has agreed to opt out from regulatory oversight of our gaming operations,” he said. “Basically, making it simple, the middleman is being taken out.”
The change grants the tribe a greater ability to self-govern, allowing it to operate gaming through a direct relationship with the federal government on a nation-to-nation basis, rather than submitting to California as a subsidiary of the United States.

Tribal gaming compacts are agreements negotiated between individual tribes and states that are then approved by the federal government allowing Class III gaming — slot machines, house-banked games like blackjack and electronic games of chance — on tribal lands.
Tribes can operate Class II gaming — Bingo and non-banked games — without a state compact directly under National Indian Gaming Commission oversight.
While tribal gaming — mostly bingo — started at Rincon in the 1970s, it was a U.S. Supreme Court decision in 1987 that recognized a tribe’s right to operate gambling operations. The tribe entered a gaming operations compact with the state in 1999.

Then, in 2004 — the same year Rincon opened its casino, Harrah’s Resort Southern California near Valley Center — the tribe filed a lawsuit against then-Gov. Arnold Schwarzenegger claiming that his negotiations with tribes were unconstitutional and unfair.
In 2011, the lawsuit advanced to the U.S. Supreme Court, which let stand a lower court ruling that California violated federal tribal gaming law by demanding casinos make payments into the Indian Gaming Special Distribution Fund in exchange for the ability to add more slot machines.
With California and the tribe unable to reach agreement in the years since, Mazzeti said Rincon entered into an interim arrangement known as a secretarial procedure that allowed it to operate its casino under federal approval instead of state approval.

On Nov. 21, the state and tribe agreed the regulatory role would permanently shift to the NIGC and the tribe would no longer need to reimburse California for regulatory costs, a spokesperson for Gov. Gavin Newsom said in an email. The agreement with the NIGC was signed Jan. 3, said a spokesperson with the federal agency.
Elizabeth L. Homer, a tribal gaming attorney in Washington D.C. and former NIGC vice chair, said that moving away from a state gaming compact can increase sovereignty and self-governance. In California, she said, tribal gaming compacts often include stipulations related to child support enforcement or environmental policies.
“Compacts are really only supposed to govern the conduct of Class III gaming and are not intended as a mechanism for the state to start pressing its policies onto tribal governments,” Homer said.

Although the tribe will no longer be under the state’s gaming regulation, that doesn’t mean there won’t be an abundance of regulatory oversight.
All gaming on Indigenous land in the United States operates under a tribal gaming commission, which Homer said is on the casino floor daily making sure that cash handling, staff licensing, surveillance and other processes comply with the tribe’s regulations.
“Does this mean that there is less oversight, or is this going to be a more poorly regulated facility because the state isn’t performing that function? I would say, not really. I think there’s going to be robust regulation regardless,” she said.

Instead of the state performing its annual inspections, it will be the duty of the NIGC to conduct site visits, monitor operations and enforce compliance, according to the agreement between Rincon and the federal agency provided to The San Diego Union-Tribune.
The shift of power for Rincon’s gaming operations follows a report from the state auditor’s office last summer that found California had not effectively managed the Indian Gaming Special Distribution Fund.
The fund’s balance was found to have an excessive reserve last June with a balance of $127 million — enough to pay for four years of expenditures related to regulating tribal gaming. California collected $34 million more in distribution fund fees than the cost of regulation in 2021.

The report also states the Public Health’s Office of Problem Gambling hasn’t effectively monitored its treatment and prevention programs, which the fund also covers.
Although the tribe will no longer be paying the state for regulation — it will instead pay the NIGC — Rincon will continue to pay $1.3 million each year into the state’s revenue sharing trust fund. Money from that fund is distributed to tribes that lack gaming operations, often because they’re located in remote areas that make the success of a casino less feasible.

The tribe’s casino is also covered by its own oversight through the Rincon Tribal Gaming Commission, which monitors all casino activities to make sure staff receive proper background checks, and that all transactions adhere to federal, state and tribal gaming laws.
“We had all three of them before — our tribal gaming commission, the state of California and the National Gaming Commission,” Mazzetti said. “Basically, now we’ve just moved the state out, and the national gaming commission is going to provide the oversight that the state used to provide.”
It may be too early to tell whether many other tribes will follow suit, said George Forman, a tribal gaming lawyer in Northern California.

To make a similar move, a tribe would need to be in the position to renegotiate its compact upon approaching its expiration date. After being unable to come to an agreement, a tribe would need to then sue the state for failing to negotiate the compact in good faith and win its case.
“Tribes cannot simply opt out. These compacts — the more recent ones — are 25-year agreements,” Forman said.
But Forman said about 28 tribes — those among the first to enter into state compacts in 1999 — have agreements that will expire at the end of the year.

Some other tribes — Forman said there’s 16 throughout the state — have already won cases against California over bad faith gaming negotiations.
Last summer, five tribes — Hopland Band of Pomo Indians, Chicken Ranch Rancheria, Robinson Rancheria, the Chemehuevi Indian Tribe, and Blue Lake Rancheria — won a suit in the 9th U.S. Circuit Court of Appeals, according to Casetext. The ruling states that California has problematically “demanded that the Tribes agree to compact provisions relating to family law, environmental regulation, and tort law” unrelated to gaming operations, which isn’t allowed under the Indian Gaming Regulatory Act.
Forman said tribes that have already won their lawsuits, including four he represents, will enter into post-judgment negotiations that will determine the future of their gaming operations.

“It’s going to depend on whether tribes entering into new compacts are able to reach agreement with the state on new compacts, in which case, the state will continue to exercise the regulatory authority conferred on them by the compacts,” he said.
The La Jolla Tribal Council — which operates the La Jolla Trading Post-Casino about 10 miles away from Harrah’s — said in a statement they were pleased Rincon and the state had agreed the tribe could regulate their gaming operations without the state’s oversight. The tribe did not say whether it too would consider working directly with the federal agency for gaming regulation.
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