A lawsuit filed by the Rincon Band of Mission Indians against the state could be decided by the U.S. Supreme Court next year.
The lawsuit was filed in 2004 by the North County tribe after negotiations for a new gambling agreement with Gov. Arnold Schwarzenegger fell apart. The tribe said the governor was violating federal law by insisting that tribes pay money into the state's general fund in exchange for more slot machines.
"We embarked on this course because Arnold Schwarzenegger's illegal extortion of tribal governmental revenue violates our sovereignty and federal law," Rincon Chairman Bo Mazzetti said.
The tribe stood to lose tens of millions of dollars under a deal offered by the Schwarzenegger administration while generating little for the tribe itself, according to court documents.
Schwarzenegger's office did not return calls for comment. The governor has maintained that the state negotiated in good faith, and he was confident he would prevail in the lawsuit.
The Rincon tribe owns a Harrah's brand casino and hotel in Valley Center. Tribal leaders have said they are willing to pay to offset problems related to their casino as long as the money goes back to local communities and does not stay in state coffers.
Schwarzenegger was elected in 2003 in part on a pledge that he would get gambling tribes to pay more money to the state as a way to offset California's growing budget deficits.
A divided three-judge panel of the 9th U.S. District Court of Appeals in April upheld a lower court ruling that sided with the Rincon band. In the 2-1 ruling, written by Judge Milan Smith Jr., the court said the governor's revenue-sharing demands amounted to an illegal tax.
Schwarzenegger asked the Supreme Court to review the ruling. On Monday, the Supreme Court asked the Obama administration to weigh in on the Rincon case. The Justice Department's opinion could determine whether the justices take up the case in their 2011-12 term or let the appeals court ruling stand.