A federal court decision this week allowing a North County Indian tribe to rescind its gaming compact with the state will enable it to be reimbursed or save nearly $100 million.
U.S. District Judge Cathy Ann Bencivengo sided Monday with the Pauma Band of Mission Indians in a lawsuit filed nearly four years ago challenging the terms of an amended 2004 state compact to operate its casino off state Route 76 in Pauma Valley.
The judge ruled that the tribe should be allowed to operate under the conditions of a compact signed in 2000, rather than one it was forced to renegotiate four years later, because the state’s Gambling Control Commission erred when it incorrectly under-calculated the number of slot machines that could be applied for by all the tribes in the state.
Based on the bad calculations, Pauma was directed into renegotiations with Gov. Arnold Schwarzenegger that resulted in an amendment requiring revenue sharing that was 2,460 percent as expensive as its original compact.
By allowing the tribe to become the first ever to rescind a gaming compact, the court in essence enabled Pauma to save at least $7.4 million per year until 2022, for a total savings of more than $65 million, said Attorney Cheryl Williams who represents Pauma in the dispute.
The decision should also permit Pauma to recapture about $33 million in past payments made to the state under the amended compact through either the return of funds or the issuance of a credit toward future compact payment obligations, Williams said. The court will decide next month how the money should be returned.
The Pauma tribe was the last in the state to apply and receive a compact in 2000 to operate a casino. In 2004, it amended that compact to have the right to operate up to 2,000 slot machines, which it felt was needed to partner with a large gaming partner.
The amended contract required the tribe to pay millions more a year for the right to have the machines because the state incorrectly calculated that there were no more licenses available for each machine.
Williams said for the 1,050 machines the casino has now, the amended compact required revenue sharing payments to the state of $7.75 million annually, with that number rising drastically if more machines are added. Under the 2000 compact the 1,050 machines required only $315,000 in payments each year.
A call to the California Attorney General’s Office, which represented the state in the proceedings, was not immediately returned Wednesday.
Casino Pauma opened in 2001 and recently remodeled in December. The tribe has no plans now to expand the operation, Williams said