Tuesday, August 4, 2015

CA's TRIBAL GAMING: HOW The Compact Negotiations SHOULD Have Gone

Free Range Indian has a take on how the Compact Negotiations for Tribal Gaming, by Gray Davis, Arnold Schwarzeneggerr, should have gone.

How many gambling machine licenses are there in California available to Indians? At one time that number was touted as 56,000 licenses. No matter which formula you use the number becomes totally senseless and with no formula base at all. At the time of the compacts there were 107 federally recognized tribes or entities. 56,000 divided by 107 equals approximately 523 licenses available to each tribe. Yet the number of licenses argued, offered, discussed and bantered during the compact negotiations always centered around 300 to 350 machines licenses per tribe. The math never worked.

There was discussion that the number of machine licenses available was worked out by the larger gaming tribes with their future needs in mind and without consideration for any other tribe’s needs. It was a known fact that not every tribe would be able to operate gaming facilities just simply due to their location. That left a void in the Compact negotiations. For most of the small tribes located in isolated regions of California they simply could not afford to attend the negotiations. Location really is the driving force in determining where and when a casino facility will be built. There are large tribes that do not have the market or populations to support gaming facilities. Many large tribes were also noticeably absent during these negotiations as well.

This absence did not go unnoticed by the State of California and opponents of Indian gaming. How can you negotiate machine licenses without all of the tribes present since supposedly the number of licenses was going to be based on the number of tribes?
The polls were showing that the gaming tribes were losing the battle with the general public because not all tribes would be benefitting from Indian gaming. The gaming tribes, with their multi-million dollar political firms began a campaign to demonstrate to the State of California that they had a heart and that they truly cared about their lesser Indian brethren.
The ads ran night and day on TV and radio. It was in local and statewide papers. It was announced to the point of annoyance. The gaming tribes would not forget their brethren. They in fact would institute a revenue sharing plan so that non-gaming tribes would receive income from the machine licenses too. At first it was promised that each gaming tribe would contribute 4% of their revenue to a special fund for distribution and equal sharing by the non-gaming tribes. That was the point when we all became one and sharing an interest in the outcome of the Compact negotiations.

The non-gaming tribes were offered free membership in California Nations/Nevada Indian Gaming Association. (Whichever suits your fancy). The problem was they began to show up at the meetings and membership meant they could vote. Soon they had the power to out vote the gaming tribes. It was at that point that true negotiations moved away from the public and into secret back door sessions. The gaming tribes had access. With their money they could access the governor’s office and legislators. The non-gaming tribes were worrying about whether or not they were going to sleep in their cars or try to find a relative they could stay with during the CNIGA meetings.

It really became a matter of the poorest of the poor versus the richest of the rich. If you were in those meetings you quickly realized there were no brethren. Discussions and negotiations broke down into pocket groups usually resulting from which attorney represented which group of gaming tribes. The non-gaming tribes did not have attorneys.

The State was determined to limit the number of machine licenses in the state. The gaming tribes wanted unlimited machine licenses making valid arguments that the number of licenses should be market driven. In the middle of it all was the long set aside formula that the number of licenses would be based on the number of tribes in California. With the polls swinging in favor of the Indians and a Compact on the horizon there was a definite shift in the proposal for revenue sharing. It was the centerpiece for the non-gaming tribes and a nuisance for the gaming tribes. Whatever financial assistance was offered to the non-gaming tribes to offset travel expenses was withdrawn. The non-gaming tribes were mocked at the meetings. The revenue sharing plan slipped from 4% to 1% of gaming revenues. Then the number simply became a number. $1.1 million dollars per non-gaming tribe per year. Still the ad campaigns could tout that the gaming tribes would be providing for their less blessed brethren.

Then there was a move to withdraw the revenue sharing plan altogether from the Compact. Yes there was that much indifference openly apparent between the gaming and non-gaming tribes. Yet, for those the poorest of the poor, any offering was better than nothing. When you only have a cup of water the chance to make a cup of soup was irresistible.

So where are we today?

Yes there is a revenue sharing plan but even this is still being challenged. Some tribes want the revenue sharing clause removed from their re-negotiated Compacts or the newer gaming tribes don’t want the clause at all. It is truly shameful.

So what really should have been done at those negotiations? 

The number of machine licenses should have been determined by the number of tribes within the state. Each tribe should have been offered a Compact in which they had the option to use their machine licenses or lease them to another tribe. This would have been equitable and would have developed revenue for every tribe in the state. This would have been genius in casino operations.

The larger operations would have unlimited access to the number of machine licenses they could have as long as they found tribes willing to lease them their licenses and there was a market. The lease agreements would be market driven. The terms and life of the leases would be negotiable. More importantly, it would have forced openness in casino accounting. Each Lessor would have the right to inspect the financial books and statements of the Lessees to determine whether or not they were receiving their fair share of revenues. In other words there would have been true oversight in casino operations.

What size of shrimp did your tribal representative sell you out? Really, if you had ever attended the machine vendor luncheons/dinners, they had shrimp as large as lobster. They wooed every tribal representative in every which way they could. They were easy pickings. It would have been a lot different if every tribe was involved in machine selection. Again, there would be genius in casino operations. Instead casinos are driven by greed, corruption and self-interest.

Maybe if there was equitable sharing in licenses and there was true genius in casino operations there would not be a need to dis-enroll fellow Indians in order to drive your per-capita up. Dis-enrollment is less than genius in casino operations.

The Compacts will be maturing very soon now and there will be another chance to do this right. Will we??


Anonymous said...

Larger gaming tribes with prime locations could have also leased out floor space to isolated tribes and earned a management fee on said machine licenses.

Wendy Owen said...
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