California's Big Gamble
Los Angeles Times Magazine
January 09, 2000
The real Southern California, the one nature intended, is near Banning, just east of Riverside. The ground beyond the telephone poles is flat and pitted. The sagebrush is spiky and dirty brown. Beer cans and rusty bumpers provide wan color. Even people who say they love the desert don't live out here.
The Indians do, because that's where we put them. Here, hard by the Fields Road exit from Interstate 10, is the Morongo Band of Mission Indians. On their land also live a few members of the Los Coyotes Band, whose own reservation lies a couple of hours away. Both have roots in the Cahuilla people; they are first cousins, anthropologically speaking. The big difference is that the Morongos have a huge casino and the Los Coyotes don't, because their reservation is too remote. The Morongos are rich. The Los Coyotes are poor. Together, they are a living history exhibit of Indian gaming.
The contrast is stark. Yet it is nothing like what's on the horizon. Soon, it appears, Indian gaming as we've known it for the last decade will seem a quaint way station in a new California gold rush. On March 7, voters will be asked to approve an amendment to the state Constitution to allow not only far more gambling on Indian lands from Mexico to Oregon, but also the kind of high-stakes gambling now offered in Las Vegas. It appears that Californians are ready, with scarcely a trace of hesitation, to say yes. If they do, the fortunes of a small percentage of Indians in California will soar, and the character of California society will change as a state turns to embrace a form of gambling it has outlawed since its early days.
Prop. 1A would grant California's Indians a statewide monopoly over Vegas-style gambling. The number of casinos would be allowed to grow from the 41 currently offering scaled-down gambling to well more than 200 providing an array of games--everything, for the most part, except roulette and craps. The casinos could spread closer to cities, as already is being attempted in the Bay Area and Sacramento, through land swaps or as disbanded tribes without property reform and buy new "homelands."
In short, if Prop. 1A passes, California seems destined to become a bigger gambling state than Nevada. Yet unlike Nevada, California will not guarantee gamblers any protection under a state gaming commission that could resolve disputes over winnings, enforcement of contracts or personal-injury claims. The Indians would police their own casinos. Also unlike Nevada, the lucrative California gaming houses would be exempt from local, state and federal taxes.
Katherine Saubel is almost 80 and chairwoman of the Los Coyotes Band. She has one of those keen minds that sees both past and present and combines them into the quality we call insight. Time has made her reflective but not mellow. She looks at a stranger with deep-set, dark eyes reflecting a wariness that says her tidings have not all been good. Her voice tightens as she talks about her youth, when Indian children were the targets of both Anglos and Mexican Americans.
Saubel has labored many years to save the Cahuilla language and convert it to writing; she has lectured on her language and culture in Europe and Japan. Yet to this day, this gifted linguist has a mental block against learning Spanish because of the mistreatment she suffered as a child.
For centuries, most Americans simply closed an eye to the abuses heaped on the nation's aboriginal peoples. Welcoming high-stakes gambling to California, and giving Indians exclusive rights to offer it, can be seen as a way to make amends. "Before Indian gaming was legalized, there were only a few tribes in this country that didn't live in poverty," says Whittier Law School professor I. Nelson Rose, an authority on gambling law. "Conditions were as bad as anything you would find in the Third World."
Some of the economic energy generated by California gaming tribes has been impressive. Large retail outlets and facilities for concerts adjoin some casinos. Many tribes have established modern clinics, provided education funds that guarantee tribal members free education through the PhD level, and have given steady employment to others long without jobs.
Prop. 1A is the successor to Prop. 5, a ballot measure approved by 63% of voters last year. Prop. 5 would have given Indians a monopoly on high-stakes gaming but it was thrown out by the state Supreme Court last summer as unconstitutional. The court had history on its side. Until 16 years ago, the constitution forbade nearly all forms of gambling. In 1984, when voters approved an amendment to allow the state lottery, they reinforced their distaste for other kinds of gambling by adopting a provision specifically banning Vegas-style gaming.
Today, judging by the big electoral majority that favored Prop. 5 and early favorable estimates for Prop. 1A, the public is solidly on the side of the Indians, or of big-time gambling, or maybe both. Mervin Field of San Francisco heads the bellwether Field Poll that monitors California politics. He says that public interest in Prop. 1A and the subject of Indian gaming is so low that he has not even bothered to measure it. "The presumption is that this will pass like a greased pig."
Just 16 years have passed since voters explicitly banned the high-stakes gaming they now apparently will approve. What changed?
What the Indians have accomplished in California is truly amazing. As recently as a decade ago, nobody expected them to emerge from their patches of poor reservation land to have political leaders jostling for their attention.
Common Cause says California's Indian tribes, using money generated by the comparatively modest gaming they've been allowed to offer in recent years, spent $75.2 million on state elections in 1998. That included $67.7 million supporting Prop. 5 and at least $708,000 for the election campaign of Gov. Davis. For the Prop. 5 campaign, the most generous givers were the San Manuel Indians, whose contribution of $27.8 million amounted to $1.1 million for each of the tribe's 25 members, many of whom now live in palatial homes on their San Bernardino County reservation.
Dan Walters is a tough-minded columnist for the Sacramento Bee. After a quarter-century of watching the Capitol circus, he doesn't say gee whiz to too many acts. But Prop. 1A astonishes him. After the Supreme Court voted 6-1 on Aug. 23 to reject Prop. 5, the atmosphere in Sacramento turned electric, he says. State legislators and the governor raced to put together a proposed constitutional amendment to appear on the March ballot. They also hurriedly crafted the Tribal-State Gaming Compact, known to insiders simply as "the Compact," laying out rules for the new gambling.
"The Legislature and the governor were falling all over themselves to try to make the Indians happy," Walters recalls. "The frantic goal was, 'We gotta do something for the Indians.' It was almost like nothing else mattered in the state.
"What makes it more dramatic is that before the Indians had money and started spending it on politics, they got nowhere. Before, they would come to the capital and seek very modest things like a little something on heritage or health care and never get to first base. They were basically ignored. That's the dramatic turnaround. All of the politicians who this year were saying 'Oh, we've got to help the poor Indians who have suffered so much through the years' are the same ones who before wouldn't give them the time of day."
Peter Schrag is another writer who has followed state government for almost 20 years as editorial page editor of the Sacramento Bee. What happened in Sacramento last year, he says, "is an example of how an enormously powerful interest group gets its way. What the governor said about 'righting historic injustices' is the most horribly cynical type of posturing." Schrag says the downtrodden image of Indians is a source of their power. "Political correctness became a fig leaf to cover what was simply a power play by a rich interest group. They spent $68 million on Prop. 5 to prove they were poor Indians."
Insomniacs know that the Compact passed the Senate without a single dissenting vote at 1:30 a.m. on the final day. Here's the scene as described by a senior Assembly staff member who observed the proceedings:
"It was a stacked deck. It just sailed through both houses in three days without a single genuine public hearing, with hurry-up legislative hearings often held in out-of-the-way conference rooms, and after hours of closed-door negotiations between the governor, legislators and Indian representatives.
"The original bill in the Assembly was called a 'spot' bill, which is technically against the rules. A spot bill is one for which legislators vote before it has been fully written, or even when it is blank. It's a matter of trust between pals."
Law professor Rose and others who have studied the Compact say they are mystified by its contents. "I think if there had been real legislative hearings on this, some of this stuff never would have gotten by," Rose says. "This is the most important matter that's come out of the California legislative system in this century, and they didn't even do the most basic work! The language is indecipherable. There really was no rush. They could have had a special session."
At the Indians' request, lawmakers also gave Prop. 1A a spot at the top of the ballot so voters would act on it before moving down to Prop. 29, another gambling provision but one that many tribes oppose. Prop. 29, under an agreement approved by former Gov. Pete Wilson, would expand Indian gaming only marginally.
Among the provisions of the Compact is a formula for establishing the number of slot machines to be allowed. The office of the legislative analyst in Sacramento recently estimated that if Prop. 1A passes, Californians could see the current 21,000 slot machines quickly grow to 113,000.
As the appetite for gambling dollars grows, the action will inexorably edge closer to population centers. Many casinos already are on the edges of metropolitan areas, especially Los Angeles and San Diego. Although Prop. 1A supporters try to dismiss the likelihood of further "creeping urbanization," it's already happening. The Auburn Tribe is completing plans for a large casino outside Roseville in the Sacramento suburbs and the Lytton Band of Pomo Indians is getting close to taking over a large card room in San Pablo in the Bay Area that could be expanded into a full casino.
Shortly after signing the Compact last fall, Davis vetoed a bill that attempted to modestly expand mule racing in California. He slapped down the mule-racing folks with a stern admonition: "I made clear last year that I do not personally favor gambling, and I certainly do not encourage others to gamble." Davis, who declined to be interviewed for this story, explained last year that although he opposed large-scale expansion of gambling, he felt obliged to negotiate the Compact because Prop. 5 showed clearly that a majority of Californians favor high-stakes gambling on Indian lands.
The Cinderella slipper for the tribes' transformation is a legal doctrine called "sovereignty," bestowed on them through the years by U.S. law. In effect, reservations are independent nations subject only to the laws of Congress. Unless Congress says otherwise (and thus far, Congress has not), gamblers or business people dealing with an Indian tribe might as well be dealing with the government of Mexico or Canada.
The Indian gaming movement began with a lawsuit decided in 1987 by the U.S. Supreme Court, which held that the Cabazon Band of Mission Indians of Riverside County should be allowed to offer public bingo. That led to Congress passing the Indian Gaming Regulatory Act of 1988, which said that Indian tribes, because of their sovereign status, could offer any type of gambling that the state allowed anyone else. That rather mild bill was enough for the tribes to elbow their way through the courts, Congress and various legislatures, constantly widening the corridor they had been given. At last estimate, Indian gambling throughout the U.S. has generated $8 billion in casino gross winnings, mostly from slot machines.
In California, slot machines on Indian lands have been and remain illegal but are allowed anyway because the federal government. . . . well, because the federal government allows them. The only way to legalize the Indians' machines is for the state to approve a compact with the tribes--as Prop. 1A would do. The federal government, aware of its failure to shut down the illegal machines, is only too eager to have the issue settled at last.
As negotiations over the Compact began, the state--indeed all states, by virtue of a U.S. Supreme Court ruling--had more leverage with Indian gaming interests than ever before. The court said in 1996 that states no longer can be compelled to agree to gaming compacts. As a result, "we have noticed that states are negotiating for more in the last two or three years," says George Skibine, director of the Office of Indian Gaming Management of the Bureau of Indian Affairs.
Even so, California's Compact demands a smaller share of gambling revenues than other states have required. In Connecticut, for example, where there are just two Indian casinos, the state treasury was fattened by $300 million from Indian gambling in the last fiscal year. The money came exclusively from slot machines, which typically account for some 80% of gambling revenues. The Connecticut tribes turn over 25% of their take from slots.
The California Compact requires Indians to contribute just 7% to 13% of their income from slots. And even that amount won't go directly to the state. Instead, the money will go to a fund to pay as much as $1.1 million apiece to all non-gaming Indian tribes. Any remaining money then would go to the state treasury.
States generally require Indian gaming operations to pay fees because, as sovereign nations, reservations are not subject to federal, state or local taxes. In California, those fees may be of relatively little comfort to the small cities of Hawaiian Gardens and City of Commerce, whose budgets would be gutted as casinos lure customers away from local card rooms--which do pay taxes.
A top Democrat in California, who refused to be identified for this article out of concern that he would jeopardize his relationship with Davis, said that when the governor negotiated the Compact, he made sure two groups were protected: the tribes and labor unions, which are promised the right to try to organize the casinos. "I guess there wasn't room on the page to add a third group to protect--the public."
Gamblers themselves are not immune from the pinch, for a byproduct of the Indian gambling monopoly is the competition, or lack of it, among Indian casinos. In Las Vegas and Atlantic City, casinos cluster on the same street or district and compete by the amount of payouts they offer. Indian casinos would be much farther apart, so the notion of competition from casinos across the street would not exist. The odds disparity gives gamblers a "substantially better chance of winning in Nevada than in a California Indian casino," says William Eadington, an economics professor at the University of Nevada, Reno, and a respected gambling economist.
Anthony J. Hope, former chairman of the National Indian Gaming Commission, says New Jersey slots "are set for a payout of from about 92% to as high as 99%. I believe California Indian casinos probably pay in the 70s. I'll play slot machines, but never on a California Indian reservation." Hope, a lawyer in Washington, D.C., and the son of comedian Bob Hope, says casinos in Nevada are "frightened to death" by the lack of regulation of Indian casinos because of the potential of being tarred by the broad brush of casino corruption.
One of the biggest objections of the meager band of 1A opponents is that the Compact allows tribes to be self-regulating. Although it could have been negotiated in the Compact, the tribes are not required to relinquish any sovereignty to future customers, or even to submit to neutral outside regulators who could ensure that gamblers get a fair shake. There will be no guarantee of a state gaming commission with teeth to step in to make sure things are fair.
Brian Sandoval is chairman of the Nevada Gaming Commission, which oversees an industry that is at risk of losing untold millions in gambling revenue to competing Indian casinos in California. Sandoval says his state's procedures for regulating the industry have been tested for decades and have been a model for several states trying to fashion tight regulatory environments. No California tribe has contacted his office for help. "Self-regulation makes no sense," he says. "The danger of conflict of interest is too obvious. It's trouble waiting to happen."
And then there are environmental concerns, raised not by the activist environmental groups but by neighborhood associations, small ranchers and county governments trying to defend land that they say can't support high-traffic activities such as casinos.
Bob Coffin is a lawyer in San Diego whose avocation has been to proudly make five acres of desert canyon east of the city come to life with a variety of citrus and other fruits. Just down a winding, narrow county road from Coffin's place is the casino of the Barona Indians. It's next to a wild bird sanctuary, and spread along the road are widely spaced homesteads, small ranches and county parks. The Barona Indians recently announced with great fanfare the grand expansion of their casino into a world-class resort, to include an 18-hole golf course. They now want a multilane highway cut through the canyon.
Can you imagine the environmental outcry if, say, the Hilton Hotels Corp. wanted to put a casino in the middle of the desert, next to a wild bird sanctuary? Coffin and his neighbors objected to the drilling of the big wells necessary to support such an enterprise. He said that some of his neighbors' wells already are starting to go dry. They asked the Indians to delay construction until proper water-table studies could be done. The Indians refused. The Coffin group protested to county planners. A meeting was held. Result? Nothing. In view of tribal sovereignty, lawyer Coffin quickly recognized what could be done: Nothing.
California Indians have been forthright on their basic issue: Gambling is a revenue source that is due them. Of the 107 federally recognized tribes in California, 41 now have casinos, and with 42 previously disbanded tribes seeking restoration of status, more will undoubtedly be on the way. Eadington says that if 1A passes, the Golden State will really earn its nickname, at least for the tribes: In just five or six years, he says, California's annual gaming profit could surpass the gross gaming profit in Nevada this year, which was $8.5 billion. That would be a sixfold increase for the California tribes from last year's estimated $1.4 billion. Nevada interests are taking note and have signed contracts with the Indians to help run casinos here. The Indians clearly have found an opportunity and are seeking to widen it. Many would call this The American Way.
Yet as I listen to Katherine Saubel, I'm not sure the gambling interests are including her in their plan for the future. For even though we have had Indian gaming for a decade, Saubel is still a poor woman--feisty, but poor. She stretches her Social Security check to make ends meet. Although there has been modest help from gambling money, she and her tribe are still largely burdened by poverty because they lost a roll of the dice ages ago. Their reservation, southeast of Temecula, is too remote for a casino there to compete with those closer to population centers, on the lands of more fortunate tribes. It is perhaps the best-kept secret of Indian gambling: the number of Indians actually getting the bucks is surprisingly small.
According to the lawsuit that overturned Prop. 5, and which quoted the Bureau of Indian Affairs 1995 census, about 15,000 Indians would benefit directly. They are the ones who belong to tribes that run gambling operations, and they account for less than 5% of the state's Indian population. Each member of the gaming tribes would participate in tribal winnings and remain eligible for the same federal welfare grants that poor Indians receive. (The 25-member San Manuel tribe, which contributed so generously to the Prop. 5 campaign, received $156,118 in Tribal Priority Allocation funds in 1998.)
Indirect benefit would come to another 17,000 Indians who belong to tribes that don't offer gambling, largely because their reservations are remote. Those tribes will share in the profits of the gambling tribes, with each non-gaming tribe eligible for as much as $1.1 million a year.
The remaining 270,000 Indians living here do not have California tribal ties and are not allowed into the payout line. These so-called "urban" Indians are in every city in California and frequently live in poverty or on the lower edges of the middle class. They often belong to tribes in other states, or have no tribal affiliation at all. According to the California Department of Social Services, the number of Indians on welfare in California rose from 4,633 in 1985 (pre-gaming) to 5,692 in 1997.
Driving through the Morongo Reservation after leaving Saubel's home, I pass an adobe-type building only slightly larger than the Saubel house. It is the Malki Museum, dedicated to Cahuilla culture. In it are a few artifacts, a stuffed bird and newspaper clippings of a 1900s manhunt for an outlaw named "Willie Boy." A lone Indian woman waits patiently for guests, of which I am the only one at noon on a Saturday. We chat about the history of her people and I ask if the museum has profited from the gambling income. "Well, they gave us $10,000 for a festival," she says with a shrug.
Just a couple of miles across the reservation from Katherine Saubel is the Morongo Indian casino, a large stucco box fronting the freeway. Even with the obligatory fountains in front, it lacks Vegas opulence and imagination. Considering the small fortune they make every day from the customers who cash their payroll and Social Security checks here, the folks who run the place don't seem terribly celebratory. The atmosphere is not party-time: It's stale smoke, indifferent food and hundreds of people staring stonily at clever machines programmed to be smarter than they. It has all the camaraderie of a Laundromat. No one here exploits or extols Indian culture. They ignore it.