California | Compacts

California tribes no longer forced to pay 'fair share' of revenues

Monday, September 7, 2015

Former California Gov. Arnold Schwarzenegger (R) is seen here with Anthony Pico, former chairman of the Viejas Band of Kumeyaay Indians, at podium, at a Class III gaming compact ceremony in 2004. Photo from History.Com

A federal court decision is having a major impact on Class III gaming compact negotiations in California.

In August 2010, the 9th Circuit Court of Appeals ruled that former governor Arnold Schwarzenegger (R) negotiated in bad faith by demanding revenues from the Rincon Band of Luiseno Indians. The tribe refused to pay into the state's general fund because the arrangement was considered an impermissible tax on its gaming operation.

Some tribes, however, willingly accepted the condition under compacts with the former governor. Schwarzenegger boasted that they were finally paying their "fair share" of revenues to the state.

But Gov. Jerry Brown (D) has shifted course in the wake of the 2010 ruling. A new compact with the United Auburn Indian Community redirects most of the tribe's payments to the Indian Gaming Revenue Sharing Trust Fund, which benefits local communities and tribes without large casinos.

Indianz.Com SoundCloud: 9th Circuit Court of Appeals Oral Arguments in Rincon Band of Luiseno Mission Indians v. Arnold Schwarzenegger

“If you understand Rincon, then you know that the handwriting is on the wall for compacts that require excessive general fund payments,” Doug Elmets, a spokesperson for the tribe, told The Sacramento Bee.

The Morongo Band of Mission Indians was one of the tribes that signed a compact with Schwarzenegger. Chairman Robert Martin told the Bee that he's looking forward to negotiating a new deal with Brown because "the economy has changed dramatically since 2006.”

In a section titled Fighting for Our Economy, Schwarzenegger's official website includes the following about Indian gaming:

Governor Schwarzenegger and his administration worked diligently over the past seven years to strengthen tribal gaming compacts in California. As a result of these efforts, general fund revenues from compacts jumped $372 million since 2004—from $19 million in fiscal year 2004–2005 to $391 million in fiscal year 2009–2010. Total revenues from the compacts increased from $128 million in 2002–2003 to $462 million in 2008–2009. Every compact drives job growth and provides protections for communities in which gaming takes place, including provisions to safeguard the environment, patrons, workers, and employees.

Get the Story:
California’s share of Indian gambling money dwindles (The Sacramento Bee 9/6)

9th Circuit Decision:
Rincon Band v. Schwarzenegger (April 20, 2010)