Gambling in the Golden State
1998 Forward
By Charlene Wear Simmons, Ph.D.
Assistant Director
ISBN 1-58703-210-4
California State Library, California Research Bureau i
Table of Contents
EXECUTIVE SUMMARY ..............................................................................................
1
A F
AST GROWING AND PROFITABLE INDUSTRY........................................................... 1
STATE REGULATION....................................................................................................... 2
ECONOMIC BENEFITS AND SOCIAL COSTS.................................................................... 2
Problem and Pathological Gambling........................................................................ 3
Crime .......................................................................................................................... 5
Public Revenues......................................................................................................... 6
AN EVOLVING INDUSTRY............................................................................................... 6
BACKGROUND................................................................................................................. 7
P
ARTICIPATION IN GAMBLING ACTIVITIES .................................................................. 9
W
HO GAMBLES? .......................................................................................................... 11
REGULATION ................................................................................................................ 13
Electronic Technology is Morphing Gambling ...................................................... 14
CALIFORNIA’S GAMBLING INDUSTRY ......................................................................... 16
INDIAN CASINOS IN CALIFORNIA......................................................................... 17
THE BASIC LEGAL FRAMEWORK ................................................................................ 17
Tribal Gaming.......................................................................................................... 17
CLASS III INDIAN GAMING IN CALIFORNIA................................................................ 18
California State-Tribal Compacts for Class III Gaming........................................ 18
Where Indian Gaming Can be Located–the “Indian Lands” Requirement..........
24
THE GAMES .................................................................................................................. 32
Class I Games...........................................................................................................
33
Class II Games .........................................................................................................
33
Class III Games........................................................................................................ 35
T
HE REGULATORY FRAMEWORK................................................................................ 37
Tribal Regulation..................................................................................................... 37
State Regulation....................................................................................................... 38
Federal Regulation ..................................................................................................
42
California Lobbying and Campaign Contributions................................................
43
GAMING TRIBES AND REVENUES................................................................................. 44
ii California State Library, California Research Bureau
Restrictions on Expenditures................................................................................... 48
Non-Gambling Revenues......................................................................................... 49
TAXES AND REVENUE SHARING WITH STATE AND LOCAL GOVERNMENTS .............. 49
Commercial Casinos ................................................................................................
49
Indian Casinos .........................................................................................................
50
California ................................................................................................................. 51
State and Local Taxes.............................................................................................. 53
CALIFORNIA INDIAN TRIBES WITH CASINOS .............................................................. 55
SOCIAL AND ECONOMIC IMPACTS OF INDIAN CASINOS.............................................. 67
On Tribes.................................................................................................................. 67
On Communities and Consumers............................................................................ 72
Environmental Impact............................................................................................. 78
Public Health Impact...............................................................................................
79
C
RIME........................................................................................................................... 81
Problem and Pathological Gambling...................................................................... 83
CALIFORNIA STATE LOTTERY.............................................................................. 87
BACKGROUND............................................................................................................... 87
COMPETITION, INNOVATION AND EXPANSION............................................................ 88
Video Lottery Terminals .......................................................................................... 89
Multistate Games...................................................................................................... 89
Internet Lottery Games............................................................................................ 90
REVENUES..................................................................................................................... 90
Displacement Effect.................................................................................................
92
P
UBLIC EDUCATION—CALIFORNIA’S STATE LOTTERY BENEFICIARY ..................... 93
CONSUMER IMPACT—PROBLEM GAMBLING.............................................................. 94
CALIFORNIA HORSE RACING.................................................................................
99
BACKGROUND............................................................................................................... 99
C
ALIFORNIA RACE TRACKS....................................................................................... 100
ACCOUNT WAGERING................................................................................................ 101
REGULATION .............................................................................................................. 102
R
ACINOS ..................................................................................................................... 103
R
EVENUES................................................................................................................... 104
County Fairs........................................................................................................... 105
California State Library, California Research Bureau iii
SOCIAL IMPACT.......................................................................................................... 105
CALIFORNIA’S CARD CLUBS ................................................................................ 107
BACKGROUND............................................................................................................. 107
P
OKER......................................................................................................................... 108
S
HARED STATE AND LOCAL CONTROL ..................................................................... 108
REVENUES AND TAXES ............................................................................................... 110
CRIME......................................................................................................................... 112
OWNERSHIP ................................................................................................................ 113
LOCATIONS................................................................................................................. 113
INTERNET GAMBLING............................................................................................ 121
BACKGROUND............................................................................................................. 121
PLAYERS ..................................................................................................................... 122
T
HE LEGALITY OF INTERNET GAMBLING IN THE UNITED STATES.......................... 123
An International Business.....................................................................................
124
SOCIAL AND ECONOMIC COSTS OF INTERNET GAMBLING....................................... 125
SOCIAL IMPACTS OF GAMBLING........................................................................ 127
PROBLEM AND PATHOLOGICAL GAMBLING ............................................................. 127
Background............................................................................................................ 127
Clinical Definition.................................................................................................. 127
Prevalence .............................................................................................................. 128
Vulnerable Groups................................................................................................. 130
Electronic Technologies and Problem Gambling................................................. 133
Public Health Impacts ...........................................................................................
134
Social Costs ............................................................................................................
135
Prevention and Treatment ..................................................................................... 136
C
RIME......................................................................................................................... 139
Public Corruption .................................................................................................. 139
Financial Crimes....................................................................................................
140
Victim Crimes......................................................................................................... 140
Illegal Games.......................................................................................................... 142
H
EALTH ISSUES .......................................................................................................... 143
Smoking..................................................................................................................
143
Alcohol.................................................................................................................... 144
iv California State Library, California Research Bureau
ECONOMIC IMPACTS OF GAMBLING................................................................ 145
BACKGROUND............................................................................................................. 145
DIRECT EMPLOYMENT............................................................................................... 145
A Point of Comparison—Commercial Casinos....................................................
146
S
TATE AND LOCAL REVENUES................................................................................... 147
BANKRUPTCIES........................................................................................................... 148
APPENDIX A................................................................................................................ 151
ENDNOTES................................................................................................................... 157
California State Library, California Research Bureau 1
EXECUTIVE SUMMARY
This report was requested by California Attorney General Bill Lockyer and provides an
overview of gambling in California since 1998,
*
including its social and economic
impacts. The report considers each segment of the gambling industry in a separate
chapter: Indian casinos, the state lottery, horse racing, card rooms and Internet gambling.
The final two chapters broadly examine the literature on the social and economic impact
of the gambling industry.
A FAST GROWING AND PROFITABLE INDUSTRY
Gambling is a major and fast-growing industry. Industry revenues in the United States
grew from $30.4 billion in 1992 to $68.7 billion in 2002, and increased from 0.48 to 0.66
percent of gross domestic product.
1
Gambling is a large industry in California, with about $13 billion in gross gaming
revenues in 2004. Indian casino gross gaming revenues were an estimated $5.78 billion,
card clubs took in about $655 million, the state lottery’s sales were nearly $3 billion, and
over $4 billion was wagered on horse races. Net revenues after prizes and operational
expenses are deducted were considerably less. Racetracks and horsemen kept about eight
percent ($302 million) and the state lottery’s net revenues were $1.09 billion; card club
and Indian casino net revenue figures are generally proprietary.
What is the potential of the gambling market in California? We know of no way to
produce a credible estimate. We simply have no experience with the phenomenon of
readily available and skillfully packaged gambling opportunities located relatively near to
California’s large population centers. We do know that gambling is growing very rapidly
in the state and that knowledgeable observers of the industry expect it to continue to
expand.
Indian casino gaming in particular has the potential to expand considerably in California.
Sixty-six of California’s 108 federally recognized tribes have tribal-state compacts to
operate gambling facilities, and 61 have gambling facilities. Another 67 California tribal
groups are petitioning the Bureau of Indian Affairs for recognition. As tribes gain federal
recognition, they have the right to establish reservation lands with federal approval, and
the potential to operate gaming facilities on those and other non-ancestral trust lands.
California tribal casinos earn the most revenue of tribal casinos in any state—an
estimated $5.78 billion in 2004, up from $3.67 billion in 2002. In 2004, the state’s 56
Indian gaming facilities had an estimated 58,100 gaming machines, 1,820 non-house
banked table games, and large bingo operations. Non-gaming revenues at California
Indian gaming facilities (hotels, restaurants, retail shops, etc.) in 2004, earned an
estimated $544.6 million, a seven percent increase from the previous year.
2
*
See Roger Dunstan, “Gambling in California,” California Research Bureau, 1997, and Roger Dunstan,
“Indian Casinos in California,” California Research Bureau, 1998, for our earlier analyses.
2 California State Library, California Research Bureau
Federally recognized California tribes which had tribal-state gaming compacts as of
October 2005, had 31,623 enrolled members in 2001 (the most recent data available from
the Bureau of Indian Affairs), about nine percent of all American Indians residing in
California. Indian gross gaming revenues averaged about $188,000 per gaming tribal
member in 2004.
STATE REGULATION
Gambling is government-regulated. Governments determine which kinds of gambling
are permitted, where gambling establishments may locate, their size, who may own them,
who may work for them, who may sell them supplies and what games they can offer. In
effect, governments grant monopolies to themselves (state lotteries) and limit other
gambling operations through regulation (Indian casinos, race tracks, card clubs),
providing a valuable asset to a relatively few enterprises.
Governments regulate gambling in part to reduce its negative impacts on society. In
order for a regulatory scheme to be effective, it must have the resources and structure to
effectively monitor and investigate potential problems. California’s regulatory structure
mixes responsibilities among a number of entities—the Lottery Commission, the
California Horse Racing Board, the California Gambling Control Commission, the
Division of Gambling Control in the Department of Justice, the Office of Problem
Gambling in the Department of Alcohol and Drug Programs, and the Governor. This
divided structure makes it hard for the state to develop and implement a unified
regulatory policy. Equally important, the state’s regulatory agencies do not have
sufficient resources to fully staff their responsibilities.
Technology is producing new and different forms of gambling, confounding old divisions
between industry sectors and challenging regulatory schemes based on those divisions.
In California, Indian casinos have bingo machines that look and operate like slot
machines. Racetracks take wagers from bettors around the world over the Internet. Card
clubs host poker tournaments and advocate for slot machines. The state lottery joins a
multi-state lottery that offers larger jackpots. Internet gambling, which only the federal
government can regulate, offers gambling at home without any intermediate provider.
This reality suggests that the state should regularly review its entire approach to gambling
regulation to ensure that it is as effective as it could be.
ECONOMIC BENEFITS AND SOCIAL COSTS
California’s gambling industry provides economic and employment benefits to many
Californians. Rural areas benefit economically when casinos attract gamblers from other
places and some of their money is spent outside the casino. In California, Indian casinos
also provide a new source of employment for residents in rural areas, since up to 90
percent of casino employees are non-Indians.
3
Casinos may purchase a variety of goods
and services from local firms.
California State Library, California Research Bureau 3
A 2003 study by San Diego County estimated the following economic impacts from
tribal gaming in the county.
4
• Creation of about 12,000 jobs, primarily for non-Indians, with an annual payroll
of $270 million.
• Purchases of $263 million in goods and services in 2001, including contracts with
over 2,000 vendors, most in the county.
• Contributions of over $7 million to community organizations.
A 2004 study of the impact of California Indian casinos by researchers at California State
University, Sacramento (CSUS), based on county-level data, found “…a modest
correlation between Indian casinos and [higher] county employment
rates…[and]…somewhat higher crime and higher rates of personal bankruptcy.”
Aggravated assault and violent crimes were correlated with a greater casino presence, as
were increased public expenditures (as additional $15.33 per capita) for law enforcement.
The study also found somewhat higher tax revenues, primarily generated by room
occupancy taxes and tobacco taxes. Since local jurisdictions cannot impose a room
occupancy tax on hotels located on an Indian reservation, the increased tax revenues were
most likely generated by hotels in surrounding communities.
5
These findings run parallel to a 2002 National Bureau of Economic Research study using
county-level data, which found that after the opening of a Native American casino
employment increased by about five percent in nearby communities, while crime and
bankruptcy rates increased by about ten percent.
6
Problem and Pathological Gambling
Most people gamble responsibly for recreation, but a certain number gamble excessively
and become problem and pathological gamblers, harming themselves, their families, and
their communities. As access to gambling--either state-promoted or authorized--
increases, the prevalence of problem and pathological gambling is also increasing. This
addiction creates social costs analogous to the impact of excessive alcohol or drug
consumption.
7
Problem gambling refers to gambling that significantly interferes with a person’s basic
occupational, interpersonal, and financial functioning. Pathological gambling is the most
severe form and is classified as a mental disorder with similarities to drug abuse
including “…features of tolerance, withdrawal, diminished control, and relinquishing of
important activities.”
8
Casino gambling generates 82.5 percent of all problem gambling helpline calls to the
California Council on Problem Gambling. Over three quarters of the callers give
California Indian casinos as their primary gambling preference, and five percent cite
Nevada casinos. Casino gambling is thus the predominant venue for problem gambling
in California.
9
4 California State Library, California Research Bureau
We use national prevalence figures to estimate that there are 589,000 adult problem
gamblers and an additional 333,000 adult pathological gamblers in California--nearly a
million people with a serious gambling problem.
Adolescents who gamble are more likely to develop problem and pathological gambling
behaviors, with lotteries and Internet poker as gateway games. Adolescent excessive
gambling can result in a number of long-term negative consequences including truancy,
dropping out of school, severed relationships with family and friends, and mental health
and behavioral problems including illegal behavior to finance gambling. If we apply
Oregon’s adolescent gambling problem/disorder prevalence percentages to California, we
find that 436,800 youth are problem gamblers and 159,900 youth have gambling-related
disorders with impairment--nearly 600,000 California youth have a serious gambling
problem.
High-risk groups, in addition to adolescents, include adults in mental health and
substance abuse treatment, who have rates of problem and pathological gambling four to
ten times higher than the general population.
10
Men have a prevalence rate two to three
times higher than women. Some ethnic groups are especially vulnerable to problem
gambling. For example, in California the Commission on Asian & Pacific Islander
American Affairs has identified problem gambling as a serious community concern.
• Prevalence increases considerably among adult casino gambling patrons—4.6
percent are problem gamblers and 5.4 percent are pathological gamblers. A study
by the National Opinion Research Center found that adults living within 50 miles
of a casino had double the probability of pathological or problem gambling.
11
• A study in the Journal of the American Medical Association found that 3.6
percent of lottery patrons were problem gamblers and 5.2 percent were
pathological gamblers.
12
Lotteries are a key entry point into this disorder, given
their widespread and ready availability and state-sponsored legitimacy. Underage
youth have little difficulty in purchasing lottery tickets.
• Studies find that adults who bet on horse racing (both on and off-track) have the
highest incidence of problem and pathological gambling of any gambling patrons.
Fourteen percent are estimated to be problem gamblers and 25 percent are
pathological gamblers.
13
The California Horse Racing Board offers direct access
to companies that facilitate betting on horse races through its state website.
• Internet poker gambling among young males is extremely popular, and becoming
a problem. As an example, the president of the sophomore class at Lehigh
University robbed a bank in an attempt to pay off $5,000 in Internet gambling
debts.
14
Prohibitions against gambling by minors in California card clubs appear
to not be not well enforced.
• A study by the State of Oregon of gambling treatment and prevention programs
found that the primary gambling activity of gamblers enrolled in treatment was
video poker (74.5 percent), followed by slot machines (10 percent), cards (5.2
California State Library, California Research Bureau 5
percent), betting on animals (1.6 percent), Keno (1.5 percent), and bingo (1.4
percent).
15
Based on national estimates, the annual cost of adult pathological gamblers in California
is an estimated $489 million, and the annual cost of adult problem gamblers is an
estimated $509 million--nearly one billion dollars in total. These costs derive from a
number of social and personal problems that correlate with problem gambling including
crime, unpaid debts and bankruptcy, mental illness, substance abuse, unemployment and
public assistance.
California state prevention programs for problem and pathological gambling are just
getting underway, and there are no state-funded treatment programs. The state’s Office
of Problem Gambling in the Department of Alcohol and Drug Programs has a budget of
about $3 million. Based on an estimate provided by the California Council on Problem
Gambling, it would cost around $2.8 billion to offer all of the state’s adult problem and
pathological gamblers a six-week intensive treatment course, with follow-up at
Gamblers’ Anonymous. There currently are a very limited number of certified therapists,
so there would need to be investment in capacity-building first.
Crime
Research suggests that crime rises as casinos attract visitors who either commit or are the
victims of crime. This phenomenon may also occur in other attractions with cash-bearing
participants.
16
In addition, problem and pathological gambling increases among local
residents and is associated with crimes that generate money to gamble and/or pay off
gambling debts.
A study using data from every U.S. county between 1977 and 1996, found that casinos
(including Indian casinos and riverboat casinos) are associated with increased crime
(defined as FBI Index 1 Offenses: aggravated assault, rape, murder, robbery, larceny,
burglary, and auto theft) after a lag of three or four years. Prior to the opening of a
casino, casino, and noncasino counties had similar crime rates, but six years after casino
openings, property crimes were eight percent higher and violent crimes were ten percent
higher in casino counties.
Should casinos help pay for the public costs of these crimes? The authors of one study
estimate that taxes compensating for the casino-induced increase in FBI Index 1 crimes
would represent about 25-30 percent of casino revenues.
17
Casinos could plausibly also
be asked to address problem and pathological gambling. The authors of a Wisconsin
study made the following recommendations to the state as it renegotiated its tribal-state
gaming compacts:
18
• The tribes should fund enhanced law-enforcement activities in casino and
adjacent counties, including road patrols, especially in areas around bars.
• The tribes should fund community assistance, such as creating and activating
neighborhood-watch programs.
6 California State Library, California Research Bureau
• Tribes should not sell alcoholic beverages in their casinos.
• Drug-detection units of state police should be enhanced and made available to
sheriffs and police.
• Police officers and prosecutors in all counties should include gambling screening
questions in all arrest reports and crime reports.
Public Revenues
The gambling industry provides relatively modest revenues to state and local
governments.
• Under the 1999 tribal-state compacts, California gaming tribes make payments to
a Revenue Sharing Trust Fund for non-gaming tribes. Twenty eight tribes with
1999 compacts also contribute to a Special Distribution Fund that backfills
shortages in payments to non-gaming tribes, with the remainder appropriated by
the legislature. Under 2004 amended compacts, six tribes make payments to the
General Fund. Five years of all these payments (2000-2005) are the equivalent of
about nine percent of the Indian gaming revenues earned in four years (estimated
gaming revenues for 2000 are not available).
• Net lottery revenue contributed about one percent of total California state
revenues in FY 2004-05, and about three percent of the amount that the state
spent on public education.
• In 2004, the state received $39.5 million in licensing fees and breakage
*
(1.03
percent) from California horse races and local governments retained more than $7
million (0.19 percent).
• Fees paid by card clubs to the state have held steady over the last eight years and
have declined when inflation is taken into account; in contrast, revenues have
increased by 75 percent.
AN EVOLVING INDUSTRY
Although we have made every effort to review recent data on gambling in California and
the nation, the industry is constantly evolving. Thus the reader is advised to check recent
news articles and state reports for updated information.
*
“Breakage” is the odd cents not paid to winning ticket holders.
California State Library, California Research Bureau 7
THE GAMING INDUSTRY
B
ACKGROUND
Gambling has a long history in human affairs--at times associated with sin and corruption
and at other times considered a form of entertainment. Societal responses have ranged
from strict prohibition to legal acceptance.
19
Various groups and individuals hold the full
range of those views today, so controversy will certainly continue. Nonetheless,
gambling revenues are a major source of funds for governments, charities and businesses
throughout the world, gambling is a major industry that employs thousands of people,
and it is an enjoyable entertainment for many people.
Studies in the United States suggest that religious differences and the availability of
gambling in neighboring jurisdictions affect the permissiveness of state gambling laws.
20
All states except Hawaii and Utah have authorized at least one form of gambling, as
summarized in Table 1.
Table 1
Number of State Permitting 21 Different Forms of Gambling (2003)
# States
Permitting
# States
Permitting
Charitable Bingo
46
Indian Casinos 22*
Thoroughbred Wagering 43 Greyhound Racing 19
Inter-Track Wagering 42 Telephone Wagering 17
Charitable Games 41 Keno Style Games 15
Instant Pulltabs 40 Casinos and Gaming 14
Lotto Games 40
Card Rooms
13
Quarter Horse Wagering 37 Non-Casino Devices 6
Numbers Games 36 Video Lottery 6
Harness Racing 34 Jai Alai 4
Indian Bingo 30 Sports Betting 4
Off-Track Wagering 25
* 30 as of 2005.
Sources: Taggart and Wilks, Gaming Law Review, November 2005, drawn from McQueen,
International Gaming & Wagering Business, 2003, and Alan Meister, Indian Gaming Industry Report,
2005-06 edition.
Gambling revenues in the United States grew from $30.4 billion in 1992 to $68.7 billion
in 2002, and as a percentage of gross domestic product (GDP) increased from 0.48 to
0.66 percent over that period.
21
State governments have benefited from gambling
revenues, which in 2000 transferred $26.8 billion to state coffers (although the net effect
8 California State Library, California Research Bureau
is likely less due to displaced spending from other taxable sales, as discussed).
22
Even
charities increasingly rely on poker tournaments and casino gaming as fundraisers, which
pending legislation in California would legalize.
23
Over a ten-year period, from 1994 to 2004, the gross gambling revenue earned by the
legal gambling industry doubled in the United States.
*
In 2004, consumer spending
increased by seven percent from the previous year to $78.6 billion. This was more than
consumers spent on movie tickets, recorded music, theme parks, spectator sports, and
video games combined.
Figure 1
Total Legal* Gross Gambling Revenue in the U.S.
1994-2004 (in $billions)
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Revenue in $billions
Source: American Gaming Association
*Includes horse racin
g
, lotteries, commercial & Indian casinos, bin
g
o, card rooms, le
g
al bookmakin
g
, charitable
Indian gaming is the most important growth sector of the U.S. gambling economy, with
gross revenues doubling from $9.6 billion in 1999 to $19.4 billion in 2004. California’s
Indian casinos accounted for about half of that increase, generating more revenue than
gaming tribes in any other state. Experts predict that there is room for substantial growth
in the future. Indian gambling enterprises are rapidly expanding into related businesses,
such as hotels and restaurants that attract gamblers and keep them playing.
Table 2 shows that the gambling industry in the United States grew considerably from
1999 to 2003. Indian casino gaming revenues increased by 75 percent. Estimated global
Internet gambling revenues increased by an amazing 487 percent from 1999 to 2003
†
.
Decreased horse racing and card room revenues were due in part to competition from
casinos and Internet gambling, although card room revenues increased again in 2004,
according to the American Gaming Association, driven by the popularity of poker. Card
room revenues in California were an exception to the national trend, increasing by nearly
60 percent from 1999 through 2004 (see Figure 17, page 111).
*
Gross gambling revenue is the amount wagered minus the winnings returned to players.
†
The most recent estimate (2006) estimate by the American Gaming Association is that Internet gambling
is a $7 billion to $9 billion market in the United States, and growing.
California State Library, California Research Bureau 9
Table 2
1999, 2002 and 2003 Gross Revenues by Gambling Industry (U.S.) (in $ millions)
1999 Gross
Revenues
2002 Gross
Revenues
2003 Gross
Revenues
% Change
1999-2003
Horse Racing
$3,382.9 $3,445.5 $3,362.4 -1%
Lotteries (except
Video)
$14,952.8 $16,237.7 $17,351.2 16%
Casinos (Land &
Water)+
$24,888.4 $27,858.6 $28,689.4 15%
Indian Casinos*
Class II $1,149.8
Class III $8,454.9
Total $9,614.7
Class II $1,753.9
Class III $12,718.4
Total $14,472.3
Class II $2,018.5
Class III $14,802.6
Total $16,821.2
75%
Card Rooms
$909.3 $973.3 $851.3 -6%
Charitable Games
$1,417.7 $1,508.4 $1,559.7 10%
Internet Gambling
(Global)
$1,167 $4,007 $5,691.4 487%
+Except for commercial casinos, the industries presented are legal in California.
*Indian gaming revenues in 2004 were $19.4 billion, according to the National Commission on Indian
Gaming.
Source: International Gaming & Wagering Business, August 2001 and September 2004.
Table 2 shows gross revenues, which is the total amount wagered minus money returned
to players. In competitive gaming markets, more revenues must go into prizes, limiting
the industry’s revenues. The amount of money actually earned by a gambling enterprise
(the “take-out rate”) is gross revenues minus operational expenses.
In some states, gambling businesses operate in a variety of markets. For example, casino
companies and Native American tribes own and operate racetracks, casinos, and lotteries
and offer keno and table games, including poker, as well as slot and video gaming
machines. There are casinos on cruise ships and soon will be on airplanes.
24
PARTICIPATION IN GAMBLING ACTIVITIES
A December 2003 Gallup Lifestyle Poll found that two-thirds of Americans had gambled
in the previous 12 months. State lotteries were the most common form of gambling:
25
• 49 percent had purchased a lottery ticket
• 30 percent had visited a casino
• 15 percent had participated in an office pool
• 14 percent had played a video poker machine
• Five percent had played bingo for money
10 California State Library, California Research Bureau
• Four percent had bet on the horse races
• One percent had gambled for money on the Internet (a number that has
undoubtedly increased since 2003).
Figure 2
Participation in Gamblin
g
Activities Over Previous 12
Months, in 1989, 1996 and 2003
0%
10%
20%
30%
40%
50%
60%
Bing
o
Ca
s
ino
Ho
r
s
e
Race
Sta
t
e
Lott
e
ry
Profession
a
l s
p
ort
s
Offic
e
p
o
ol
I
n
t
e
rne
t
Vide
o
p
o
ker
1989
1996
2003
Source: Gallup Poll, 2003.
As Figure 2 shows, national participation in casino gambling increased from 20 percent
in 1989 to 30 percent in 2003, while participation in other types of gambling decreased.
A study by Harrah’s Entertainment found that more than a quarter of Americans over age
21 gambled at a casino in 2002, on average once every two months. The same survey
found that California’s 2002 casino participation rate was 38.3 percent, with 5.4 average
trips per year. Indian casinos in Southern California were the top destination (33 percent
of trips), followed by Las Vegas (21 percent of trips).
26
Half the people who gamble do so to win money, and as many gamble for entertainment
and excitement.
27
Nevertheless, the gambling industry as a whole suffers from a negative
public image, according to a 2004 survey, which found that “trustworthiness” and a
negative public image were the biggest challenges facing the industry. In comparison,
gambling companies identified their biggest challenge as offering a broad range of secure
payment methods.
28
A poll by Harrah’s Entertainment in 2002 found that casinos are “…perceived as a sin
industry with deep pockets—much like tobacco, alcohol and pharmaceutical
corporations---and therefore an attractive source of increased taxes.” Only 23 percent of
those polled had a positive perception of the casino industry and 99 percent said they
would target casinos as a source for additional tax revenue.
29
California State Library, California Research Bureau 11
WHO GAMBLES?
According to a recent article in The Atlantic Monthly, a record 73 million Americans
visited one of 1,200 gambling businesses in the last year, a 40 percent increase from five
years ago, and a quarter of American adults list gambling as their first entertainment
choice.
30
A 2004 Los Angeles Times poll found that 40 percent of Californians said that
they or a family member had visited an Indian casino in the past year.
31
The data presented in the following figures is drawn from a March 24, 2004, Gallup Poll
and from a survey conducted by Harrah’s Entertainment.
32
Gallup found that nearly
seven out of ten American adults and 26 percent of teenagers took part in some form of
gambling in 2003 (in most states it is not legal for teenagers to gamble).
Figure 3
Gender of Americans Gambling in the Previous Year (2003)
0%
10%
20%
30%
40%
50%
60%
70%
80%
Men Women
Source: Gallup Poll, 2004.
More men than women gamble. Older Americans are more likely to gamble than young
adults. The median age of all U.S. adult gamblers is 45 years old. A 1995 Las Vegas
Visitor Profile Study found that nearly half of casino patrons were 50 years or older; 30
percent were over 60.
33
12 California State Library, California Research Bureau
Figure 4
Age of Americans Gambling in the Previous Year (2003)
56%
58%
60%
62%
64%
66%
68%
70%
18-29 30-49 50-64 65+
Percent
Source: Gallup Poll, 2004.
College-educated adults are more likely to gamble than adults who completed high
school or have less than a high school education. The Harrah’s survey found that the
typical casino customer is slightly more likely to have attended college than the average
American (55 percent versus 53 percent). However the relative amount gambled by these
groups varies. For example, a 1999 study found that while high school dropouts and
college graduates participated equally in lotteries, the dropouts spent $334 per capita
while the average college graduate had bought just $86 of lottery tickets.
34
Figure 5
Education of Americans Gamblin
g
in the Previous Year b
y
Subgroup (2003)
63%
64%
65%
66%
67%
68%
69%
70%
71%
72%
High school or less College
Percent
Source: Gallup Poll, 2004.
People who earn more money are more likely to gamble. According to the Harrah’s
survey, the median 2004 household income of U.S. casino customers was $55,322.
However most economic studies have found that gambling expenditures are regressive
California State Library, California Research Bureau 13
because the poor spend a higher proportion of their income on gambling than do the rich.
In general the poor, racial minorities and less educated Americans spend considerably
more per capita on gambling. In the 1999 study cited above, households with incomes in
the $50,000 to $99,000 range participated in lotteries at a higher rate (61.2 percent) than
poor households with less than $10,000 in income (48.5 percent). However the poorer
households spent $520 on lotteries in a year compared to $301 for the richer households.
Figure 6
Income of Americans Gambling in the Previous Year (2003)
0%
10%
20%
30%
40%
50%
60%
70%
80%
Earned less than $30,000 Earned more than $70,000
Percent
Source: Gallup Poll, 2004.
Americans have mixed opinions about gambling. According to a 1999 Gallup Poll, 56
percent agreed that casinos have a negative impact on family and community life in the
cities in which they operate, even though two-thirds agreed that gambling had helped the
local economy. Only 22 percent of Americans said that gambling should be expanded,
nearly half (47 percent) wanted it to stay at current levels and 29 percent believed it
should be reduced or banned.
35
Although the national gambling polls cited above do not present information about the
ethnicity of gamblers, in California Asian-Americans are highly represented among
recreational gamblers: “Asian Americans make up some 50 percent of the clientele at
Pechanga Resort & Casino and a large part of the clientele at other casinos. These
casinos are seeking to attract …coveted Asian–American customers…and are doing
everything from advertising in ethnic publications and hiring multilingual hosts, to
offering Asian-American entertainment and in one case redesigning parts of the casino
with Asian themes.”
36
REGULATION
Whether to allow gambling, what types of games, and in what locations--these are
contentious issues in many states. The gaming industry is highly regulated as to where
and how it can operate and what games it can offer. Gaming enterprises aggressively
seek to increase their market share by lobbying political jurisdictions to expand into new
locations, discourage competition, and extend regulatory boundaries to offer newer and
14 California State Library, California Research Bureau
more profitable games. For example, horse racing tracks and cardrooms have been
urging states to allow them to install slot machines in their facilities, with some success
(although not in California)
.
According to the National Gambling Impact Study Commission, state and federal
gambling laws and regulations support the following common goals:
37
• Ensure the integrity of the games
• Prevent links with criminal activity
• Limit the size and scope of gambling
The extent to which gambling can expand in a relatively unregulated market may be seen
in Russia, which after years of prohibition now has few regulatory restrictions, cheap
licensing and low tax rates ($150 to $250 a month per slot machine). Moscow has one
slot machine for every 290 inhabitants housed in more than 53 gambling halls and 2,000
arcades.
38
Electronic Technology is Morphing Gambling
Electronic gaming and new communication technologies are rapidly erasing the divisions
between games and locations on which many state and federal gambling laws and
regulations are based. The challenges to regulators to define gaming limits are
continuous given the pace of technological innovation. Large potential profits encourage
gaming enterprises to push at the laws’ limits. For example:
• Rapid Roulette uses a physical wheel and live dealer but touch screen technology
that allows players to place bets via a video screen from remote locations.
• In video poker games based on blackjack, the most popular American table game,
each player has a video screen and there is often a live dealer, using real chips,
running the game.
• Electronic bingo is virtually indistinguishable from a slot machine from a player’s
perspective, the difference being that multiple players are linked electronically.
Examples of recent advisory opinions issued by the California Department of Justice’s
Division of Gambling Control include:
“Ultimate Bingo Game System Considered to be a Slot Machine”
39
“Volcanic Bingo Advisory”
40
“California Roulette and California Craps as House-Banked Card Games”
41
Electronic gaming technologies have led to controversies involving multiplayer
electronic units modeled on table games. Several California Indian tribes counted
multiplayer units tied to a single server as one “slot machine,” placing more terminals in
their casinos than allowed under their tribal-state compact. A survey by the Division of
California State Library, California Research Bureau 15
Gambling Control and the California Gambling Control Commission found nearly 300
terminals attached to multiplayer games in casinos around the state. The Attorney
General defined each terminal as a gaming device and the tribes had to remove the extra
machines after the federal district court agreed.
42
Internet and wireless communications technologies challenge existing gambling markets
and state and federal regulatory schemes. For example, bettors can play poker and wager
on horses online, bypassing traditional card rooms and the pari mutuel wagering that
supports horse racing. These communication technologies support multistate lotteries
and allow bingo games to be hosted at multiple sites, creating larger prizes and more
competitive games. International gambling companies headquartered in other countries
compete in the American gambling market via the Internet, even though it is illegal.
Some analysts contend that the gambling industry is facing a shake-up similar to the
challenge that Napster and other file-sharing programs have posed for the music and
movie industries.
Charitable Games
Even nonprofit organizations are pushing at the edges of legal gambling in California.
43
Some organizations recently received notice from the California Division of Gambling
Control that poker tournaments and casino gambling nights are illegal fundraisers.
Organizers could face up to a year in jail or a fine of $5,000. This is because only
licensed card rooms or tribal casinos with state-tribal compacts are permitted to host
games such as poker or Monte Carlo-style gambling in California. Pending legislation
may legalize a limited number of casino-themed fundraisers for nonprofit organizations.
*
Currently, non-profit organizations in California may host bingo games and raffles.
Charities must register with the Attorney General’s Registry of Charitable Trusts prior to
conducting a raffle, and report afterwards. Charities operating bingo games must comply
with local ordinances regulating days, locations, and hours of operation. Local
governments may charge a licensing fee for bingo games.
Charitable bingo can be a big business, as in the case of the Hawaiian Gardens Bingo
Club, which is the largest non-tribal bingo parlor in the state, operating seven days a
week. Between 1997 and 2003, the club brought in more than $200 million in revenue
and paid out almost $37 million in charitable giving. Some of the proceeds have gone to
local charities, but considerable controversy has accompanied many of the grants to
groups in Israel. Under California law, bingo halls must be staffed by volunteer workers,
so the bingo hall’s workers rely on tips from players. Next door to the bingo hall, and
under the same management, is Hawaiian Gardens Casino, the state’s largest card room,
*
AB 839 (Torrico) would allow registered charitable organizations to hold one casino-night fundraiser a
year, including poker and pai gow games, with at least 90 percent of the gross revenues going to the
charity. Players must be over 21, and cash prizes are prohibited. Any single prize could not exceed $500
in value, or total prizes exceed $5,000. In addition, no more than four events could be held in any one
location a year. The nonprofit organization would need to register with the Division of Gambling Control
in the Department of Justice and pay a fee, and vendors would need to be licensed by the California
Gambling Control Commission. (2/2/06 version).
16 California State Library, California Research Bureau
with 1,675 employees, 180 tables, and expected revenues of $85 million this year.
According to press accounts, the club plans to expand to 300 tables by the end of the
year. The club provides nearly 80 percent of the city’s general fund budget (almost $10
million a year).
44
The flow of revenue to some nonprofit organizations from bingo games has shrunk since
casino gambling on Indian lands became widespread in California. For example,
Sacramento County charity bingo hall revenues have dropped by nearly one third in the
last 12 years. Ride to Walk, a Placer county charity that at one time earned $150,000 a
year from its weekly bingo night, lost $6,600 last year, reportedly due to competition
from nearby Thunder Valley Casino.
45
CALIFORNIA’S GAMBLING INDUSTRY
Gambling was limited to card rooms, racetracks and charitable bingo for most of the
state’s history. Now the state has a lottery and allows slot machines and Nevada-style
house-banked card games in Indian casinos. The state’s voters approved a casino
gambling monopoly for California’s federally recognized Indian tribes in March 2000,
and validated that decision again in 2004, when they defeated an effort to expand slot
machines and other casino games to card rooms and race tracks. Californians also
participate in charitable gambling, including raffles and bingo. Cruise ships with casinos
sail from Los Angeles and San Diego on short trips to Baja California and back. There is
considerable illegal gambling, including cockfighting, and betting on sports games. In
short, gambling is a major industry and activity in California.
California’s gambling industry earned over $13 billion in gross gaming revenues in 2004.
Indian casino gross gaming revenues were an estimated $5.78 billion, card clubs took in
about $655 million, the state lottery’s sales were nearly $3 billion, and over $4 billion
was wagered on horse races. Net revenues after prizes and operational expenses are
deducted were considerably less. Racetracks and horsemen kept about eight percent
($302 million) and the state lottery’s net revenues were $1.09 billion.
What is the potential of the gambling market in California? We know of no way to
produce a credible estimate. We simply have no experience with the phenomenon of
readily available and skillfully packaged gambling opportunities located relatively near to
California’s large population. We do know that gambling is growing very rapidly in this
state, and that knowledgeable observers expect it to continue to expand.
This report is divided into sections, each of which focuses on a different segment of
California’s gambling industry, principally since 1999.
*
Whenever possible we provide
state-level data along with comparative national information. The report also examines
research findings about the economic and social impact of gambling in California and
other political jurisdictions.
*
See California Research Bureau reports by Roger Dunstan and the National Gambling Impact Study
Commission for more detailed earlier data.
California State Library, California Research Bureau 17
INDIAN CASINOS IN CALIFORNIA
T
HE BASIC LEGAL FRAMEWORK
Several key principles underlie the special legal status that American Indian tribes enjoy
in the United States. Most importantly, tribes are sovereign political entities with
“inherent” rights that preceded European colonization, were recognized in treaties with
the colonies and then the federal government, and continue today. The tribes are
“…distinct political entities both protected by and subject to the laws and policies of the
national government.”
46
Article I, Section 8 (3) of the U.S. Constitution reserves the power to regulate commerce
with Indian tribes to the Congress. Thus tribal status can be modified by Congress but
state laws do not apply to the tribes unless Congress consents.
Tribal Gaming
Tribal gaming as an economic development tool began with high-stakes bingo games
offered by the Seminole and Miccosukee tribes in Florida in the 1970s. In California, the
Cabazon and Morongo Bands of Mission Indians launched card games and bingo in their
casinos approximately 25 years ago, leading to a dispute with county and state authorities
and threatened criminal action. The legal basis of the dispute was anchored in Article IV,
Section 19 (e) of California’s Constitution, which prohibits casino operations:
The Legislature has no power to authorize, and shall prohibit casinos of the type
currently operating in Nevada and New Jersey (adopted by initiative, 1984).
In 1987, the United States Supreme Court found in California v. Cabazon Band of
Mission Indians (480 U.S. 202, 1987) that federal law authorized gaming on federally
recognized tribal lands and that the state did not have civil regulatory authority to
proscribe gaming on those lands. The court further reasoned that since the state already
allowed local communities to authorize card rooms and charity bingo games, these games
did not violate the general public policy of the state and were therefore allowed on tribal
lands. Indian gaming is conducted by tribal governments as an exercise of their
sovereign rights.
In response to the Supreme Court’s decision in Cabazon, Congress enacted the Indian
Gaming Regulatory Act (IGRA) to provide a statutory basis for the operation of gaming
by Indian tribes on Indian lands, “…as a means of promoting tribal economic
development, self-sufficiency, and strong tribal governments…”
47
IGRA created a
comprehensive regulatory framework, dividing Native American gaming into three
categories or classes, each of which differs as to the extent of federal, tribal and state
oversight. IGRA also established the National Indian Gaming Commission (NIGC) to
exercise general regulatory oversight.
While class I traditional and social games are subject only to tribal government
regulation, and class II games such as bingo are subject to tribal and federal oversight,
18 California State Library, California Research Bureau
class III casino-type gaming is regulated by the tribes, states and the federal government.
In order for tribes to operate casino-type class III games, IGRA requires that a tribal-state
compact be adopted. A tribe that wants to conduct class III gaming must formally
request that the state enter into compact negotiations. Once approved by the state, the
compact must be submitted to the Department of the Interior, which has 45 days to
approve (sign or take no action) or disapprove it. NIGC approval is also required for
tribal gaming ordinances and casino management contracts.
CLASS III INDIAN GAMING IN CALIFORNIA
Between 1990 and 1992, the State of California, through the California Horse Racing
Board, entered into four compacts with federally recognized tribes to allow off-site
betting on horse races on their lands. (The Board no longer has statutory authority to
negotiate with tribes on behalf of the State.)
Then-Governor Wilson was resistant to expanding casino gambling to tribal lands.
Nonetheless, some tribes installed a variety of video pull-tab games (under the legal
theory, since disproved by the courts, that they were class II games) and nonbanked
versions of Nevada casino games, leading to numerous legal actions.
In 1996, some California tribes had an estimated 496 table games and 14,407 video slot
machines in their casinos, taking in more than $652 million.
48
Thus there was large-scale
class III gaming but no tribal-state compact as required by federal law, a violation of
IGRA and the federal Johnson Act.
Also in 1996, in Seminole vs. Florida, the U.S. Supreme Court struck down as
unconstitutional a provision in IGRA that permitted tribes to sue a state for failure to
negotiate a compact in good faith. This decision increased states’ negotiating leverage
with tribes desiring to establish and/or expand gambling operations on their lands, and
“…set the stage for highly politicized compact negotiations.”
49
It is not clear, outside
California, that a tribe has an effective legal remedy should a state refuse to negotiate a
compact.
*
California State-Tribal Compacts for Class III Gaming
In 1998, Governor Wilson entered into a compact with the Pala Band of Mission Indians,
a non-gaming tribe, after 17 months of negotiations, permitting specific types of class III
gaming on tribal lands. Ten other tribes subsequently signed similar agreements, which
were approved by the legislature in August 1998. However other tribes found the
compacts’ provisions to be intrusive into traditional Indian sovereignty and circulated an
initiative to essentially overturn the Pala compact. Concurrently the U.S. Department of
*
Department of Interior regulations establish a mediation process, but whether a compact could be
imposed on a state is open to constitutional challenge under the Tenth Amendment. However California
has waived its immunity to suit under IGRA (Gov. Code §98005; H.E.R.E. v. Davis (1999) 21 Cal.4
th
585,
615-616.)
California State Library, California Research Bureau 19
Justice had forfeiture and injunction actions underway to seize tribal slot machines from
gaming tribes operating without tribal-state compacts.
In November 1998, California voters approved Proposition 5, the “Tribal Government
Gaming, and Economic Self-Sufficiency Act of 1998,” by 63 percent. The initiative
sponsored by the tribes authorized the full range of gambling on Indian lands in the state.
At that time, this was the most expensive initiative campaign in U.S. history, with the
tribes investing nearly $70 million in support and Nevada casinos $26 million in
opposition. However since Proposition 5 was a statutory initiative, and the prohibition
against casino gambling was in the state’s Constitution, the state Supreme Court found
the initiative to be unconstitutional in a 1999 decision.
Nonetheless, a number of tribes continued to operate an estimated 20,000 slot machines
in about 40 casinos. Christiansen Capital Advisors estimated that California tribal
casinos generated between $800 million and $1 billion in gross gambling revenues in
1999, while operating in a questionable legal environment that impeded ready access to
capital for facilities.
50
Many of the slot machines were supplied by companies under
revenue-sharing agreements.
In March 2000, two-thirds of the state’s voters voted in favor of Proposition 1A, which
was placed on the ballot by the governor and the legislature and supported by more than
80 of the state’s 108 federally recognized tribes.
51
Proposition 1A authorized the
governor, with the approval of the legislature, to negotiate and conclude compacts for the
operation of slot machines, lottery games and banking and percentage card games by
federally recognized Indian tribes on Indian lands. Proposition 17, passed in the same
election, enabled the legislature to authorize private, nonprofit organizations to conduct
raffles [California Constitution, Article IV, Section 19(f)]. The adoption of Proposition
1A provided a legal basis for tribal gaming in California.
In anticipation of the passage of Proposition 1A, in September 1999, Governor Davis and
58 of the state’s 108 federally recognized tribes signed 20 year compacts giving the tribes
a monopoly on slot machines and house-banked card games in the state. Sixty-one tribes
ultimately signed the compacts, which were ratified by the legislature. In 2003, the Ninth
U.S. Circuit Court of Appeals found Proposition 1A to be constitutional.
In 2004, an initiative sponsored by card rooms and horse tracks (Proposition 68) to allow
card rooms and five tracks to have slot machines was defeated, receiving only 16.3
percent of the vote after the sponsors spent $27 million. Proposition 70, sponsored by the
Agua Caliente Band of Cahuilla Indians and several other Southern California tribes to
expand Indian gaming, was also defeated in that election. Sponsors spent $30.6 million.
The Proposition 1A Compact
The 37 page tribal-state gaming compact negotiated by Governor Davis and tribal leaders
in September 1999, was hastily drafted over a 16 day period, with no public hearings or
review. The compacts authorized the tribes to use up to 350 slot machines each, or more
if they had more in operation as of September 1, 1999. Tribes could also purchase
20 California State Library, California Research Bureau
licenses to use as many as 2,000 machines. They could establish and operate up to two
gaming facilities, offering slot machines and house banked card games. In addition, the
tribes could offer class II games (bingo etc.), which the state does not regulate. The
compacts were among the first in the nation to contain payments for non-gaming tribes,
and to allow collective bargaining among casino employees.
The compact, signed by 61 tribes, has been subject to varying interpretations, sometimes
resulting in litigation. Key terms are vague, leading to disputes such as over the number
of slot machines allowed, which ranged from Governor Davis’ figure of 45,000 to the
Legislative Analyst Office’s estimate of 113,000. The California Gambling Control
Commission eventually placed the number of authorized slot machines at 61,957. As
shown in Figure 7, the state’s Indian casinos currently have around 58,100 slot machines
in operation (although 66,507 have been authorized by the Commission), as well as 1,820
table games.
Figure 7
Gaming Machines in California
Indian Gaming Facilities
58,100
55,603
47,186
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2002 2003 2004
Machines
Source: Alan Meister, Casino City’s Indian Gaming Industry Report, 2005-2006 Updated Edition.
The compacts established a Revenue Sharing Trust Fund (RSTF), which is funded by
fees paid by gaming tribes with licensed slot machines for distribution to non-compact
tribes (defined as tribes with less than 350 slot machines). The compacts provide that
non-gaming tribes are to receive $1.1 million annually. As of September 2005, $148
million had been distributed to eligible tribes. Including interest, payments to the fund
totaled $154.6 million.
Tribal contributions do not generate sufficient revenue to allow the RSTF to provide $1.1
million annually to all non-gaming tribes, resulting in an aggregate shortfall to all eligible
recipient Indian tribes in fiscal year (FY) 2004-05, of $48,483,757, or $692,625 per
tribe.
52
Government Code §12012.90 provides that the shortfall is to be paid from the
Special Distribution Fund (SDF) through the state budget process.
California State Library, California Research Bureau 21
The 1999 compacts provide that up to 13 percent of net win
*
from slot machines in
operation on September 1, 1999, is contributed to the SDF. Tribes that did not have these
gaming devices in operation prior to September 1, 1999, are not obligated to pay into the
SDF. The funds can be appropriated by the legislature through the budget process for
any purpose including, but not limited to, gambling addiction programs, reimbursement
of regulatory costs, grants to state and local governments impacted by gaming, and to
cover shortfalls in the RSTF. Payments to the SDF began in 2003, and totaled $368.7
million (including interest) through September 2005. The fund has a balance of about
$92.9 million for FY 2005-06.
The 1999 compacts will expire at the beginning of 2021. However they provide for
renegotiation at the request of either tribal leaders or the governor under specific
circumstances. These include unresolved environmental issues in the development of a
gaming facility, and/or a tribe’s desire to operate more than the 2,000 gaming devices
allowed by the compact. The compacts were opened for renegotiation over
environmental issues in 2003, but Governor Davis sent a letter to tribes rescinding his
formal request to renegotiate before he left office later that year.
In 2003, three tribes, the La Posta Band of Mission Indians, the Santa Ysabel Band of
Mission Indians and the Torres-Martinez Desert Cahuilla Indians negotiated tribal–state
gaming compacts with the Davis Administration that introduced revenue-sharing with the
state (payments to the General Fund) for the first time. These compacts also contain
stronger environmental language, requiring tribes to reach agreements with local
governments on off-reservation impacts.
The La Posta and Santa Ysabel compacts provide that five percent of the net win from up
to 350 gaming devices will go to the state, and that the tribes will enter into memoranda
of understanding with local governments to mitigate the impact of their casinos. The
Torres-Martinez compact creates a sliding scale beginning with three percent of net win
the first year and topping at five percent the third year. These tribes do not currently have
operating casinos.
The Schwarzenegger Compacts
Thirteen new or amended compacts have been negotiated between tribes and Governor
Schwarzenegger, of which eight have been ratified by the legislature. These compacts
build on the Davis Administration compacts and contain provisions providing for greater
revenue sharing with the state, enhanced patron protections, stronger environmental,
labor and building safety provisions, and most recently a problem gambling program.
They also require agreements with local governments. These compacts are likely to be
seen as models in future compact negotiations, a possibility opposed by some tribes.
(Table 8 provides information about all tribes with tribal-state gaming compacts.)
*
According to the California Gambling Control Commission, net win is “…the difference between gaming
wins and loses before deducting costs and expenses.” (CGCC Publication 1, Feb. 16, 2005, p. 5).
22 California State Library, California Research Bureau
• In January 2004, the governor successfully entered into negotiations with nine
tribes; six were parties to the 1999 tribal-state compact and sought to offer more
gaming devices, and three sought to enter into compacts for the first time. One of
the new compacts, with the Lytton Rancheria of California, was not ratified by the
legislature due to controversy over its proposed location and size. The other new
and amended compacts were ratified, resulting in a total of 66 tribes with tribal-
state gaming compacts in California (four of those tribes do not have casinos).
• In 2005, the governor negotiated four compacts (one amended, three new) that
have not yet been ratified by the legislature. Compacts with the Yurok, Quechan,
Big Lagoon Rancheria and Los Coyotes Band tribes were opposed by “smaller,
powerful tribes with big casinos” who do not support some of the new provisions
in the compacts, according to press accounts.
53
Table 3
California Indian Tribes With Unratified Compacts, October 2005
Tribe, Location, #
Members reported
to BIA (2001)
Business
Partners
State Compact
Proposed
casino
location
Number and
Types of
Games
Payments to state
and local
jurisdictions
Big Lagoon
Rancheria,
Humboldt Co., 18
members
BarWest
Gaming LLC
(Detroit)
Negotiated in
2005, land not in
trust
Barstow
Up to 2,250 slot
machines, card
games
Would pay state
16-25% annual net
win
Los Coyotes Band
of Cahuilla and
Cupeño Indians,
San Diego, 286
members
BarWest
Gaming LLC
(Detroit)
Negotiated in
2005, land not in
trust
Barstow
Up to 2,250 slot
machines, card
games
Would pay state
16-25% annual net
win
Lytton Rancheria of
California,* 246
members
Rumsey and
Pala tribes, G.
Maloof
Negotiated in
2004
San Pablo
Compact would
allow 2,500
gaming devices;
tribe has 800
class II games
and card room;
Compact provides
25% net win to
state minus local
payments; city
earned $9 million
in FY 05-06 (7.5%
revenues) from
class II games
Quechan Indian
Nation, Imperial
County, 2,668
members in Ca.
Amended 1999
compact
negotiated in 2005
Imperial
County
One casino, up
to 1,100 slots,
card games
10% net win up to
25% based on
tribal enrollment
and revenues
Yurok Tribe of the
Yurok Reservation,
Klamath, 4,466
members
Negotiated in
2005
Klamath
Up to 350
gaming devices,
card games
Sliding scale
beginning with
10% net win, up to
25%
* The Lytton Rancheria makes per capita payments to its members that total 49% of revenues. Payments to the city
of San Pablo amount to over half the city’s annual budget.
Source: California Research Bureau, California State Library, 2006.
California State Library, California Research Bureau 23
The casinos proposed in the Los Coyotes and Big Lagoon tribal-state compacts would be
located in Barstow, where neither tribe has federal trust land. The tribes would have to
secure federal and state approval and demonstrate local community support in order to
gain federal trust land for gambling purposes, a long and uncertain process.
The Quechan tribe has sued the state in federal court alleging bad-faith by virtue of the
Legislature’s failure to ratify the negotiated compact amendment, requesting that a
mediator be empowered to choose the “last best offer” as a compact binding between the
tribe and the state. If successful, this suit could obviate legislative ratification of the
amended compact.
54
The tribe wants to build a larger facility with up to 1,100 slot
machines in a better location than its existing casino. According to court filings
submitted by the tribe, 67 percent of its members are unemployed.
55
The new and amended 2004-05 tribal state compacts strengthen Indian gaming
exclusivity and in some cases allow more than 2,000 gaming devices per casino. Gaming
devices are defined to include instant lottery game devices and video poker as well as slot
machines, expanding the range of games that can be offered.
Tribal parties to the 2004 amended compacts agreed to fund a $1 billion state
transportation bond and share revenues with the state. These tribes make payments into
three accounts: the Revenue Sharing Trust Fund, the state General Fund (based on the
number of slot machines added since the amended compacts took effect), and a
transportation bond fund.
56
All the recent compacts contain increased revenue sharing provisions with the state from
ten to 25 percent of annual net win. However, the definition of annual net win is
different from that typically used by the gaming industry and in the 1999 compacts. It
allows deduction of limited operational expenses, including leasing fees for gaming
devices, thereby decreasing the revenue base on which payments to the state are
calculated. As of September 2005, $20 million had been contributed to the state’s
General Fund.
Unlike the 1999 compacts, the Schwarzenegger compacts require tribes to reach
Memoranda of Understanding (MOUs) with local governments. The MOUs are to
address local land use, environmental and public safety issues, as well as mitigate local
impacts, such as increased traffic, that require infrastructure investments and increased
police and fire services. These MOUs are enforceable in state superior court under a
limited waiver of sovereign immunity.
The Viejas Band of Kumeyaay Indians recently agreed to pay San Diego County more
than $1.2 million for road improvements to address impacts of a planned $18 million
casino expansion, the first agreement reached in the county under the compacts
negotiated by Governor Schwarzenegger. The tribe’s expanded casino will have 2,500
slot machines, 68 table games, a 900-seat bingo hall and off-track betting. In addition,
the neighboring Ewiiaapaayp Band plans to develop a second casino on Viejas land,
24 California State Library, California Research Bureau
pending federal approval, a plan endorsed by county supervisors as a means of
concentrating the casinos’ impact.
57
According to news accounts, the California Nations Indian Gaming Association, an
association of 63 tribes, is developing guidelines for future compacts, “…driven by
gaming tribes who fear that the Schwarzenegger administration is piecing together a
tough template for the compacts.”
58
The tribes reportedly want to limit the amount of
revenue the state can seek and to avoid other concessions such as collective bargaining
and local impact agreements.
Where Indian Gaming Can be Located–the “Indian Lands” Requirement
Under IGRA, Indian gaming must take place on “Indian lands” or the gaming is subject
to state laws. For historical reasons, the location of Indian lands is not always clear. This
is because at various times in the nation’s history the federal government has taken away
Indian land by treaty or by force. At other times it has tried to force assimilation, for
example by allowing reservation land to be sold, resulting in a checkerboard pattern of
land ownership on some reservations.
*
Approximately 473,000 acres of California are under tribal control, compared to the nine
million acres (about seven percent of the state) that would have been retained under 18
federal treaties negotiated in 1851, but never ratified by the U.S. Senate.
59
During the
early 20
th
century, the federal government purchased land in rural areas for homeless
California Indians, leading to the eventual creation or purchase of 82 rancherias.
Tribal Restoration
For the purposes of this report, the 1950’s and 1960’s “termination era” is particularly
important. Congress passed the California Rancheria Act of 1958, leading to the
termination of the federal trust relationship with 38 California rancherias and of the tribes
that lived on them.
†
Of the Indian groups that lost their federally recognized tribal status
at that time, 17 were reinstated in the Tillie Hardwick decision in 1983, and ten other
tribes have since been restored by the federal courts.
Three California tribes have been recognized by acts of Congress. The Federated Indians
of Graton Rancheria was restored by Congressional action in 2000. The legislation
placed a mandatory duty on the Secretary of the Interior to acquire land for the benefit of
the tribe. The tribe has purchased land in Rohnert Park on which it hopes to build a 2,000
slot machine casino. The Paskenta Band of Nomlaki Indians and the United Auburn
Indian Community were restored by Congressional actions in 1994, and authorized to
establish reservations in Tehama and Placer Counties, respectively. Both tribes operate
*
One important question is whether states have jurisdiction over non-Indian member fee land located
within a reservation. In March 2005, the NIGC opined that they do not.
†
A more complete discussion of federal law would include the General Allotment Act of 1887 that led to a
significant reduction in tribal lands, the Indian Reorganization Act of 1934, which provides for, among
other things, the acquisition of additional trust land for tribes, and other developments beyond the scope of
this report.
California State Library, California Research Bureau 25
casinos. Legislation to facilitate recognition of other tribes is pending, such as HR 3475
(D-Honda), which would require the Bureau of Indian Affairs (BIA) to expedite
recognition of the Amah Mutsun, a tribe of 500 members located south of Gilroy.
*
Gaining federal recognition through administrative action is a lengthy process. The
Bureau of Indian Affairs (BIA) must find that a tribe was functioning before the arrival of
Europeans, has maintained political influence over its members to the present, and is not
an offshoot of an already recognized tribe.
60
Of the 302 tribes seeking federal recognition
nationally, 67 are from California (Appendix A lists California tribal groups petitioning
for recognition as of February, 2005).
Restoration and Acquisition of Indian Lands
As tribes are restored to federal recognition, they have the right to acquire land for a
reservation with federal approval. The Secretary of the Interior is empowered under the
Indian Reorganization Act of 1934, at his/her discretion, to acquire lands in trust
†
for a
tribe “within or without existing reservations.” This is a lengthy process, overseen by the
Bureau of Indian Affairs, which has been called “cumbersome” and lacking “sufficient
clarity over the standards applied.”
61
Decisions are subject to judicial appeal in federal
courts.
The Secretary must consider the following criteria in evaluating requests for the
acquisition of trust land, under regulations adopted by the Department:
62
• The existence of statutory authority for the acquisition.
• The need of the individual Indian or tribe for additional land and the amount of
land already owned.
• The purposes for which the land will be used.
• The extent to which the tribe has complied with the National Environmental
Protection Act.
• Whether the tribe owns an interest in the land and whether adverse legal claims
exist on the property, including potential environmental liability.
• The impact on state and local governments resulting from the removal of the land
from the tax rolls.
• Whether the acquisition of the land is necessary to facilitate tribal self-
determination, economic development, or Indian housing.
In evaluating off-reservation land acquisitions, the Secretary of the Interior must also
consider the distance of the land from the boundaries of the tribe’s reservation. The
*
Two rival groups claim leadership of the tribe, a complicated but not unique situation.
†
Placing tribal lands “into trust” is a process whereby the Secretary of the Interior acquires title to a
property and holds it in trust for the benefit of a Native American tribe or tribal members. The use of trust
lands is governed by the tribes with some federal restrictions, and is not generally subject to state laws.
26 California State Library, California Research Bureau
greater the distance, the more scrutiny is to be given to the tribe’s justification and the
greater weight given to state and local concerns. If the land is being acquired for
business purposes, the tribe must provide a plan specifying the anticipated economic
benefits.
Land Acquisition for Indian Gaming
The IGRA provides that an Indian tribe has the right to locate gaming facilities on land
that was within or contiguous to a reservation in 1988, at the time of the Act’s passage.
The ability of tribes to offer gaming on off-reservation lands that were not part of a
reservation or held in trust at that time is limited and the process is of obtaining approval
is complex. After a review process conducted by the Bureau of Indian Affairs, the
Secretary of the Interior must find, after consultation with state and local officials, that
(1) the gaming is in the best interest of the tribe and (2) is not detrimental to the local
community (defined as all units of local government within ten miles of the site and all
Indian tribes within 50 miles). Although there is no requirement that the land be located
with the tribe’s ancestral area, the further the land is from the tribe’s original lands, the
greater the weight given to local concerns. Finally, the state’s governor must concur (a
“Section 20 concurrence”).
However tribes may conduct gaming on after-acquired lands (post IGRA, 1988) without
the governor’s concurrence if the lands:
• Are taken into trust due to a court decision or settlement.
• Are acknowledged to have been part of an initial reservation by the Secretary of
the Interior.
• Or have been restored to a landless tribe that was restored to federal recognition.
To qualify under the “restoration of lands” exception, a tribe must have been previously
recognized, terminated, and subsequently restored by Congressional, judicial, or
administrative action. The land must be identified in the restoration legislation or the
tribe must establish a strong historical and geographical relation to the land within a
reasonable period of time after restoration.
63
In 2005, former Secretary Norton declared in a letter to the Governor of Oregon that the
Department of Interior would no longer consider gambling agreements for sites that are
not already Indian lands held in trust for a tribe by the federal government. The new
policy requires an extensive environmental review and support from surrounding
communities.
Governor Schwarzenegger negotiated state-tribal compacts in 2005 with the Los Coyotes
and Big Lagoon tribes to build casinos in Barstow. Neither tribe is from the area or has
land in trust there. Former Secretary Norton’s policy of not considering compacts when
the land is not already Indian land held in trust and eligible for gaming purposes appears
to be in conflict with these compacts.
California State Library, California Research Bureau 27
Previously two California gaming tribes gained state approval for a gaming compact
before they had land in federal trust, although the United Auburn Indian Community and
the Paskenta Band of Nomelaki Indians had received federal permission through
Congressional action to re-establish a land base in their home counties.
So far no California tribes have been authorized to conduct gaming on after-acquired
lands by the Secretary of the Interior, although a number are in the process of seeking
local and state support for their efforts to do so (see Table 4).
Table 4
Pending Land-Into-Trust Applications for Gaming in California (May 2006)
Tribe Location Section 20 Exception*
Big Lagoon Rancheria
677 miles from reservation
23.10 Acres – Barstow, San
Bernardino County
Off-Reservation §2719(b)(1)(A)**
Application dated 3/27/06
Chemehuevi Indian Tribe
160 miles from reservation
40 Acres – Barstow, San
Bernardino County
Off-Reservation §2719(b)(1)(A)
Application dated 2/14/06
Colorado River Indian Tribes of
Arizona
10 miles from reservation
75 Acres – Blythe, Riverside
County
Off-Reservation §2719(b)(1)(A)
Application dated 2/14/06
Fort Mohave Tribe of Arizona
2.5 miles from reservation
300 Acres - Needles, San
Bernardino County
Off-Reservation §2719(b)(1)(A)
Application dated 10/2/03
Land is in trust
Karuk Tribe 34 Acres - Yreka, Siskiyou
County
Off-Reservation §2719(b)(1)(A)
Application dated 4/11/06
Los Coyotes Band of Cahuilla
& Cupeño Indians
115 miles from reservation
20 Acres – Barstow, San
Bernardino County
Off-Reservation §2719(b)(1)(A)
Application dated 3/27/06
Manzanita Band of the
Kumeyaay Nation
60 miles from reservation
60 Acres – Calexico, Imperial
County
Off-Reservation §2719(b)(1)(A0
Application dated 4/14/06
Ramona Band of Cahuilla
Indians
Off-Reservation §2719(b)(1)(A)
Application dated 4/14/06
Tule River Indian Tribe 39.9 Acres, Tulare County Off-Reservation §2719(b)(1)(A)
Land is in trust, 1994
Elk Valley Rancheria 203 Acres, Del Norte County Restored Tribe exception+
Off-Reservation §2719(b)(1)(A)
Application dated 4/13/01
Enterprise Rancheria of Maidu
Indians
40 Acres, Olivehurst, Yuba
County
Restored Tribe exception
Off-Reservation §2719(b)(1)(A)
Application dated 8/13/02
Greenville Rancheria of Maidu
Indians
333.66 Acres - Red Bluff,
Tehema County
Restored Tribe exception
Off-Reservation §2719(b)(1)(A)
NOA for EIS published 8/22/05++
Greenville Rancheria of Maidu
Indians
18.40 Acres – Chester, Plumas
County
Restored Tribe exception
Off-Reservation §2719(b)(1)(A)
Application dated 4/14/06
North Fork Rancheria of Mono
Indians
305 Acres, Madera County Restored Tribe exception
Off-Reservation §2719(b)(1)(A)
NOA for EIS published 10/27/05
Quartz Valley Indian
Community
74 Acres – Siskiyou County Restored Tribe exception
Off-Reservation §2719(b)(1)(A)
28 California State Library, California Research Bureau
Table 4
Pending Land-Into-Trust Applications for Gaming in California (May 2006)
Tribe Location Section 20 Exception*
Application dated 4/13/06
Cloverdale Rancheria of Pomo
Indians
13.04 Acres – Cloverdale,
Sonoma County
Restored Tribe exception
Application dated 4/7/06
Graton Rancheria 360 Acres, Rohnert Park,
Sonoma County
Restored Tribe exception
Application dated 4/14/06
Guidiville Band of Pomo
Indians
375 Acres, Richmond, Contra
Costa County
Restored Tribe exception
Application dated 4/13/06
Ione Band of Miwok Indians 224 Acres, Plymouth, Amador
County
Restored Tribe exception
NOA for EIS published 11/7/03
Mechoopda Indian Tribe of
Chico Rancheria
650 Acres, Chico, Butte County
(Tillie Hardwick)
Restored Tribe exception
Application dated 1/10/03
Scotts Valley Band of Pomo
Indians
29.87 Acres, City of Richmond,
Contra Costa County
Restored Tribe 2719(b)(1)(B)(iii)
NOA for EIS published 7/20/04
Upper Lake Pomo Tribe 27 Acres – Upper Lake, Lake
County
Restored Tribe 2719(b)(1)(B)(iii)
Application dated April 10, 06
Timbisha Shoshone
100 miles from reservation
58 Acres, City of Hesperia, San
Bernardino County
Settlement of a Land Claim IGRA
exception §2719(b)(1)(B)(i)
NOA for EIS published 4/7/04
Source: California Tribal Business Alliance, May 2006.
*Section 20 of the Indian Gaming Regulatory Act (“IGRA”), 25 U.S.C. § 2701 et seq
**Section 2719 (b)(1)(A) of the IGRA provides that the Secretary of the Interior may determine that a gaming
establishment on newly acquired lands may be in the best interest of a tribe, and would not be detrimental to the
surrounding community, but only if the governor of the state concurs.
+Section 2719(b)(1)(B)(iii) of the IGRA provides that lands restored to a tribe that is restored to federal recognition
are excepted from the October 17, 1988 deadline for gaming on trust lands.
++Notice of Availability (NOA) for Environmental Impact Statement
Separately, the National Indian Gaming Commission (NIGC) must determine whether the
proposed gaming will occur on Indian lands, or whether lands taken into trust for non-
gaming purposes can be redefined as “Indian lands” for gaming purposes. A number of
Indian tribes are seeking this determination. NIGC regulations provide that “Indian
lands” are those located within the limits of an Indian reservation, or held in trust by the
United States for the benefit of an Indian tribe or individual, over which an Indian tribe
exercises governmental power.
In at least one instance, Congress has enacted legislation backdating a post-1988 land
acquisition so that it falls within the provisions of IGRA. The Lytton Band of Pomo
Indian’s acquisition of a card room in San Pablo, California, about 40 miles south of its
ancestral homeland, is the notable and controversial example. The tribe does not have a
ratified state-tribal gaming compact (see Table 3).
As noted above, Indian land may also be restored as the result of a lawsuit settlement.
For example, the Torres-Martinez tribe entered into a settlement with the United States
government in response to the inundation of reservation lands by the Salton Sea.
Congress enacted the settlement agreement, providing for additional land near the
California State Library, California Research Bureau 29
reservation and in a secondary acquisition area, not to exceed 640 acres, in Riverside
County. The tribe is planning to build gaming facilities in both locations.
A recent review by the Inspector General of the Department of the Interior found ten
instances in which tribes had converted trust land from non-gaming to gaming purposes
without the approval of the Bureau of Indian Affairs (BIA) or of the NIGC, and that
neither agency had a process for identifying those converted lands.
64
As a result, the
National Indian Gaming Commission is reviewing Indian casino sites around the country
to ensure that they are located on federally approved lands. Title searches underway in
California involve the Smith River Casino and the Mooretown Casino near Oroville.
65
Reservation Shopping
Most tribal lands are located in rural areas, but the most successful casinos are located
near urban areas. This reality provides important motivation for some tribes and their
financial backers to seek land closer to the state’s urban areas. In some cases landless
restored tribes are seeking a favorable land base on which to reestablish their
communities. In other cases cities and counties are seeking the revenue a casino might
produce. For example, the city of Garden Grove has authorized city staff to negotiate
with Indian tribes and developers to build a casino near Disneyland on city-owned
redevelopment land.
66
The Scotts Valley Band of Pomo Indians and the Guidiville Band
of Pomo Indians have proposed building casinos in the city of Richmond.
The more marketable locations for casinos may be outside areas over which tribes
historically exercised their sovereignty. As U.S. Attorney Thomas Heffelfinger
cautioned:
This is an industry where location, location, location are the three rules and all the
good locations are taken…I think the future holds a whole bunch of cooperation
agreements between Indian and non-Indian entities in an attempt to develop land
which can be taken into trust for purposes of gaming.
67
“Reservation shopping,” as this process is sometimes characterized, is creating
considerable controversy in California. This is because placing land under Indian
sovereignty can allow large scale gambling-related development that may be exempt
from city and county zoning laws and state laws designed to protect workers, consumers
and the environment. Local opposition can be intense. For example, the proposal by the
landless Ione Band of Miwok Indians and its partner, a Mississippi casino developer, to
acquire property near Plymouth in Amador County to build a $250 million casino and
hotel complex
*
led to the recall of the city council after it signed a municipal services
agreement with the tribe. The county subsequently sued the city.
68
More recently, 85
percent of the voters in Amador County voted “no” to more casinos on an advisory
measure.
*
The tribe lacks federal approval to take the land into trust and does not have a tribal-state compact.
30 California State Library, California Research Bureau
Tribes that have invested in farther-out, less urban casinos sometimes oppose other tribal
efforts to locate gaming facilities closer to urban areas. Opponents also include card
rooms, racetracks, and community groups.
There is concern that outside financial interests are funding some tribal recognition and
land purchase efforts. The Inspector General of the U.S. Department of the Interior
testified before Congress that the Department is “…troubled by the invariable presence of
wealthy individuals and companies invested heavily in the recognition outcome for
seemingly one reason only, that is to ultimately fund and then reap the financial benefits
of a new gaming operation.” Subsequent testimony by the Tribal Treasurer of the
Paskenta Band of Nomlaki Indians, before the U.S. House of Representatives, Committee
on Resources, expressed concern about “…the inappropriate tribe-stalking role taken on
by these wealthy investors…Rather than reservation shopping, tribe shopping is the more
appropriate term.”
69
An analysis by Time magazine found that “The National Indian Gaming Commission…
knows little about most of the investors.” These investors may pay the expenses of a
tribal group applying to the Bureau of Indian Affairs for recognition and to place land in
trust, including historical documentation, and fund environmental impact studies, casino
construction, tribal government staff, public affairs, legal expenses and lobbyists. They
also provide management services and gaming devices. Time reports that the potential
profits of this investment are enormous.
70
Congress has been considering this issue. The Senate Indian Affairs Committee reported
out a bill by Senator Feinstein (S 113) that would delete the portion of the law that
deemed the Casino San Pablo, purchased by the Lytton Band of Pomo Indians, to be
Indian lands acquired before 1988 (pre-IGRA), and thus eligible for gaming. HR 4893
by Representative Pombo, Chairman of the House Resources Committee, would limit the
circumstances under which tribes could acquire lands for gaming. S 2078 by Senator
McCain, Chairman of the Senate Indian Affairs Committee, would limit the lands that are
eligible for Indian gaming.
Senator McCain recently amended his legislation to tighten the ability of tribes to take
new land into trust for gaming purposes under the exceptions currently allowed in the
IGRA, Section 2719(b). He said he would "grandfather" tribal applications received by
the Department of the Interior before April 15. This doubled the number of pending
proposals in California to 24, as seen by the dates on the applications listed in Table 4
above.
71
The following sample of selected newspaper headlines from one week in August 2005,
suggests how common--and sometimes contentious--the issue of expanded Indian gaming
has become in many California communities. For example, proposals from three tribes to
build casinos in Barstow, near the interstate highway from Los Angeles to Las Vegas,
have generated considerable controversy. None of those tribes has federal trust land
approved for gambling in Barstow. One of the tribes is located 700 miles north in
California State Library, California Research Bureau 31
Humboldt County. In another example, a tribe is seeking local support for its efforts to
place land into trust for gambling purposes.
“Tribe, County Must Negotiate a Better Plan,” San Diego Union Tribune
The announcement of the Jamul Indian Village that it plans to build a 30-story
hotel and casino on the six acres it owns in semi-rural east county unleashed a
firestorm of criticism. Parking, hotel, restaurants, and support facilities would be
on 101 adjacent acres owned by the tribe’s partner, Lakes Gaming of Minnesota.
In 2004, the governor wrote a letter to the Bureau of Indian Affairs opposing the
tribe’s application to take the 101 acres into trust, citing traffic, water, and broader
environmental concerns.
72
“Governor, Two Tribes Reach Deal on Casinos,” San Diego Union Tribune
The Governor and two Indian tribes, the Los Coyotes band of San Diego County,
and the Big Lagoon tribe of Humboldt County, have finalized agreements to build
large, off-reservation casinos in Barstow, in Imperial County, along a heavily
traveled route to Las Vegas. The 20-year deal offers up to 2,400 slot machines to
each tribe.
73
“Bill Targets New Casino in Madera,” The Fresno Bee
Senator Dean Florez introduced emergency legislation to require local public
approval for off-reservation casinos, in response to the Madera County Board of
Supervisor’s vote last week in support of an off-reservation $250 million resort
casino west of Highway 99 at Avenue 17.
74
“California Tribe Accepts County, City Conditions,” Merced Sun Star
Stockton’s California Valley Miwok tribe will have to pay for an expansion to the
local hospital’s emergency room, road improvements, and services for gambling
addicts before it can get an approval from Los Banos and Merced County to build
a Westside casino. The landless tribe has accepted these conditions.
75
“Legislators and Others Say it’s Not What Voters Approved in a 2000 Ballot Measure,”
The Riverside Press Enterprise
“Reservation shopping,” whereby a tribe tries to win government approval to
build a casino in an urban area far from its ancestral lands, is drawing increasing
criticism.
76
A 2002 survey of California local officials in communities located near Indian gaming
facilities found that two-thirds of the respondents reported occasional or frequent local
controversy associated with the gaming operation.
77
32 California State Library, California Research Bureau
Governor Schwarzenegger has stated his policy to (1) oppose federal acquisition of trust
land in any urban area for a casino; (2) decline to negotiate a compact with a tribe that
does not have land eligible for class III gaming, and; (3) consider tribal requests to
conduct class III gaming in non-urban areas only if they have local community support.
The November 2005 ballot in two California counties contained advisory measures
seeking local approval of tribal gaming (as now required by the Secretary of the Interior
to bring land into trust for gaming and by the governor for a state-tribal compact for class
III gaming on that land). Both lost.
• Measure G in Yuba County would have endorsed a proposal by a Butte County
tribe and a Chicago developer (Forsythe Racing Inc.) to place 40 acres of land in
trust in order to build a $150 million casino, hotel, and convention center at a
prime location, with the promise of 2,000 jobs. The Yuba County Board of
Supervisors and Marysville City Council had signed agreements with the tribe in
exchange for the promise of annual fees of $5 million to the county and $250,000
to the city. The measure lost, 52 percent to 48 percent.
• Amador County Measure 1 asked the voters if they approved of more casinos in
Amador County (there is already one, the Jackson Rancheria). Two tribes (one
with a state-tribal compact) want to develop casinos in the county. The measure
lost by 85 percent of the vote.
California casino gaming has considerable growth potential. According to some analysts,
the state could accommodate more than 100,000 slot machines—many more than are
allowed under existing tribal-state compacts. It seems clear that Indian gaming will be a
contentious issue for some time to come. A 2003 analysis arrived at the following
conclusion:
Despite Congress’ best intentions in enacting the IGRA, the law of Indian gaming
remains unsettled in many important respects and the fundamental tension
between federal, state and tribal sovereignty persists. Currently, these tensions
are being resolved on a case-by-case basis often without uniform national rules.
The result will almost certainly be additional litigation and a shifting legal
landscape.
78
THE GAMES
Under federal law, Indian tribes may conduct class I games without outside regulation
and class II games on tribal lands subject only to broad federal regulation. Tribes can
conduct class III games only after concluding a compact with the state. So the definitions
of these categories have considerable relevance.
California State Library, California Research Bureau 33
Class I Games
Class I games include traditional Native American “…social games played in connection
with ‘tribal ceremonies or celebrations.’”
79
Tribes have exclusive jurisdiction to regulate
class I gaming.
Class II Games
Class II games as defined by IGRA include bingo (with or without “electronic, computer
or other technologic aids”), and related games, including pull-tabs, lotto, punch boards,
tip jars, instant bingo, and non-banked card games such as poker.
80
Tribes may offer
class II games if a state permits gambling for any purpose. There are no restrictions on
the number of class II machines a tribe may operate.
An Unclear Distinction
Class II games are regulated by the tribes and the National Indian Gaming Commission
(NIGC). Determining whether a device is class II or class III is difficult, given rapidly
evolving electronic technologies and the creativity of the manufacturers of gaming
equipment. The federal courts, the NIGC and the Justice Department have all been
involved in defining class II machines, but there is no clear “bright line test.” The result
is that each new class II gaming device is evaluated on a case-by-case basis, sometimes
leading to litigation if a tribal casino proceeds with a questionable machine.
In determining whether games are to be classified as class II, federal courts have relied
upon an analysis of the specific nature of the device and the underlying game. Players
must compete against each other and not against the house. For example, federal courts
found that Lucky Tab II (with a paper pull tab) is a class II game that does not require a
gaming compact with a state but that electronic pull-tab machines do.
*
In another set of
decisions, the Ninth and Tenth Circuit Courts of Appeals have held that the electronic
bingo game MegaMania is a class II game.
†
The courts relied in part upon definitions set
forth by the National Indian Gaming Commission, which allow jackpots and a house cut
of the profits.
Federal courts have upheld the right of tribes to offer bingo played on linked video
machines, in which players play against a pool composed of other players. Even some
house-banked games are allowed under certain conditions, such as a paper pull-table
vending machine that plays like a slot machine but prints out a win/loss statement.
The federal Johnson Act makes it a crime to possess, use, sell, or transport any “gambling
device, both outside and in “Indian Country.” The Act defines a “gambling device” as
“…any slot machine…and other machine or mechanical device (including but not limited
to roulette wheels and similar devices) designed and manufactured primarily for use in
*
See U.S. v. 103 Electronic Gambling Devices, 2000 and Cabazon Band of Mission Indians v. National
Indian Gaming Commission, 1994.
†
U.S. v. 103 Electronic Gambling Devices, 2000 and U.S. v. 162 MegaMania Gambling Devices, 2000.
34 California State Library, California Research Bureau
connection with gambling…”
81
The Indian Gaming Regulatory Act (IGRA) provides that
the Johnson Act does not apply to any gaming conducted under a tribal-state compact.
Putting a class III gaming machine onto a reservation without a compact is a felony. For
this reason, the unclear distinction between class II and class III games is “…subject to
considerable scrutiny from state officials, state and federal regulators, as well as
opponents of tribal gaming.”
82
Each regulatory agency applies its own standards for class II games and they do not
always agree.
• The NIGC issues game classification opinions that are advisory in nature and not
binding upon a court of law.
• At the state level, the Division of Gambling Control of the California Department
of Justice has issued Tribal Gaming Advisories that caution against the use of
certain games.
According to Tom Heffelginger, U.S. Attorney in Minnesota and chairman of the Native
American Issues Subcommittee of the Attorney General’s Advisory Committee, “It is the
[U.S.] Department of Justice’s position…that the Johnson Act prohibits gambling devices
absent a State-tribal compact…IGRA intended that there be a clear distinction between
class III games that require a compact and class II games that do not.”
83
At a recent hearing of the U.S. Senate Committee on Indian Affairs, the Chairman of the
NIGC conceded that “…technology has now reached the point where if you look at one
of these Class II devices or purportedly Class II devices, it looks a lot like a slot
machine.” He asserted that there are over 30,000 devices that go beyond the “pale” in
play in the United States. According to his testimony, the Commission is trying to
develop a standard for class II games based on player participation, but is receiving
criticism from the tribes for being overly restrictive and from the U.S. Department of
Justice for being overly broad.
84
In September 2005, the U.S. Department of Justice announced that it was developing a
legislative proposal to amend the Johnson Act in order to clarify the distinction between
class II and class III games. In its most recent form, the department’s proposal would
leave the definition of what constitutes class II games to the NIGC. In March, the
Chairman of the NIGC contended that “The need has never been greater to have a bright
line that divides Class II and Class III gaming.”
85
Bingosinos
The National Indian Gaming Commission (NIGC) has authorized tribes without
compacts with state governments to have an unlimited number of bingo slot machines.
Since these devices are “virtually indistinguishable from video slots” with current
technology, bingo halls increasingly look like casinos, hence “bingosinos.”
86
California State Library, California Research Bureau 35
Class II machines are the exact duplicates of slot machines in more than just
appearance. They play like slot machines. Players have to pay each time before
they pull the handle or press the button starting that round of play. If they win an
interim prize on that round the machine pays them instantly. The differences
between Class II and III machines are usually minor, at least from the point of
view of the patron.
87
Progressive jackpots and satellite technology have had a large impact on tribal bingo
halls, linking multiple bingo rooms and thereby creating the opportunity to win larger
amounts on the games. The technology and larger jackpots draw more and younger
customers, although most bingo players are older. As one commentator writes, “Class II
gaming is booming.”
88
The Lytton Band of Pomo Indians’ Casino San Pablo has 805 electronic bingo machines.
The tribe originally proposed a 5,000 slot machine casino, but its tribal-state gaming
compact allowing 2,500 slot machines was turned down by the state legislature. The
Lytton tribe’s bingo-casino in San Pablo is earning nearly $300,000 a day in gross
gaming revenues on average, or about $2 million a week, most of it from local
gamblers.
89
Twenty two other California gaming tribes offer bingo in their casinos in
addition to the slot machines and table games allowed by the state, with the largest bingo
halls seating over 1,000 people (see Table 8).
According to press accounts, some gaming tribes that have been unwilling to accede to
the governor’s terms for new compacts allowing more class III machines have instead
installed “hundreds of the [class II] machines that look and play like slots.”
90
The
Morongo casino reportedly has 627 bingo devices, the San Manuel casino has 200, and
the Pechanga casino has 1,034 bingo devices. All three tribes sought, but were unable to
reach, agreements on revisions to their tribal-state compacts allowing more than 2,000
slot machines.
91
The California Tribal Business Alliance, composed of five gaming tribes, has expressed
the following concerns regarding class II gaming machines to the governor:
We are aware of several thousand purported Class II machines being operated by
tribes with compacts, which may, in fact, not be Class II electronically aided
bingo games and which do not have the approval of the NIGC. We believe that
tribes with compacts purporting to operate electronic Class II gaming devices
should provide to the state a written determination by the NIGC that such games
are Class II. In the absence of such written NIGC determination, such games
should be considered Class III slot machines subject to the terms of the
compacts.
92
Class III Games
Class III games include all gaming activity other than class I and II gambling. Examples
given in Indian Gaming Regulatory Act (IGRA) include, by virtue of their exclusion from
class II games, banking card games such as blackjack or baccarat, electronic facsimiles of
36 California State Library, California Research Bureau
any game of chance, or slot machines of any kind. However California law, and
California tribal-state compacts, do not allow craps, roulette or dice games.
Tribes hoping to offer casino-style class III games must pass an ordinance authorizing the
gambling activities, execute a tribal-state compact, and secure approval of the compact by
the Department of the Interior. The compacts are intended to contain all significant terms
and conditions governing the proposed Indian gaming.
Slot Machines
Slot machines are “…electronic gambling boxes with coin/token/bill validation and
coin/token rewards for attaining certain combinations on the reels.”
93
They were invented
by a San Franciscan, Charles August Fey, in 1899, but have been transformed by
computer technology.
Nowadays every machine on every casino floor in America is a sophisticated,
powerful digital processor whose outcomes and paybacks are quite precisely
determined long before any player walks up to play.
94
Playing the common bet of five dollars a spin, with a 90 percent payback, results in an
average loss of $240 an hour.
95
Slot machines are by far the most profitable games offered by gambling establishments,
earning 70 to 80 percent of gaming revenues. On a relatively modest investment of about
$10,000 per machine, the most profitable Indian casinos in California can earn over $500
a day in revenues. The machines pay for themselves in under a month. Since slot
machines last about five years (although some games turn over more quickly), one of
these machines could earn $912,500 during its lifetime. Earnings per machine are less in
Las Vegas, where there is more competition.
There are currently approximately 60,000 slot machines in Indian casinos in California.
Their profitability provides significant motivation for tribes whose casinos already have
the 2,000 machines allowed by their 1999 compacts to push at the definition of a slot
machine. Nevada currently has about 200,000 slot machines and California is a much
bigger market. This suggests that the state will be asked to negotiate or renegotiate many
tribal-state compacts in the future.
As noted above, some tribes installed multi-player gaming devices hooked to one central
controller and counted them as one slot machine in order to expand the number of
gaming devices in their facilities. The Division of Gambling Control has stated in an
advisory that each terminal is an individual device; that interpretation was adopted by the
California Gambling Control Commission in February 2005.
Similarly some tribes installed video lottery terminals (VLTs) that mimic slot machines:
Morongo installed 2,025 VLTs and Pechanga installed nearly 1,700.
96
The governor’s
attorney declared the machines illegal and a “material breach” of the tribes’ compacts.
California State Library, California Research Bureau 37
The tribes subsequently agreed to remove the machines. As discussed in the Lottery
Chapter, VLTs are major moneymakers for some state lotteries.
Beginning in 2004, California’s tribal-state gaming compacts expand the definition of a
“gaming device” to include any slot machine, instant lottery game device or video poker
machine (see, for example, the tribal-state gaming compact with the Coyote Valley Band
of Pomo Indians at http://www.cgcc.ca.gov/compacts.html).
Roulette and Games With Dice
The California Department of Justice’s Division of Gambling Control has advised that
“any house-banked games played with dice” are not permitted in California as they are
prohibited by the state’s Constitution and are not authorized by tribal-state compacts.
97
Craps games in casinos operated by the Pala and Rumsey tribes, among others, use
colored cubes with multiple numbers that do not fit the common definition of dice. The
tribes reject the state’s position that these are legally prohibited games.
98
Some tribes
also have electronic roulette games; roulette is prohibited by the state Constitution. The
question is whether these electronic games are “roulette” or “slot machines.”
The tribes’ ability to operate these games is under negotiation with the governor’s office
under the dispute resolution process provided for in the compacts. At some point the
federal courts could become involved. In the meantime, the games continue in operation.
THE REGULATORY FRAMEWORK
Tribal Regulation
Tribal governments have the primary responsibility for the regulation of gaming activity
conducted on their lands. They share aspects of this responsibility with the National
Indian Gaming Commission (NIGC) for class II games and, in California, with the
Attorney General’s Division of Gambling Control and the California Gambling Control
Commission for class III games authorized by tribal-state compacts. The ability of the
NIGC to regulate class III gaming is currently being challenged in the courts.
99
Tribal gaming ordinances must be approved by the NIGC and address a number of issues
including use of gaming revenues, audits, vendor contracts, and background checks and
licensing. Most tribes have created tribal gaming commissions to oversee gaming
activities and ensure compliance with tribal, state and federal laws and regulations.
Tribal gaming commissioners are either elected or appointed and typically serve as chief
administrative and enforcement officers. According to the National Indian Gaming
Commission, in 2004, 200 tribal gaming agencies employed 2,800 commissioners and
regulatory staff at a cost of $150 million nationwide.
100
As an example, the Viejas Band of Kumeyaay Indians adopted the “Viejas Tribal Gaming
Ordinance and Tribal Gaming Regulations” in 1998. The tribe appropriates $3.9 million
to operate an independent Gaming Commissioner’s Office and a sophisticated
surveillance system operated by 52 regulatory personnel.
101
A Gaming Review Board
38 California State Library, California Research Bureau
reviews and approves regulations and hears appeals of licensing actions and patron
disputes. When regulatory personnel find improprieties such as theft and embezzlement,
they generally call the county sheriff or the Division of Gambling Control in the
Department of Justice.
*
As the Viejas Band points out, “No one has a greater interest in
protecting the integrity of tribal government gaming than Indian governments.”
102
Not all tribal gaming commissions are equally effective. They require independence
from casino management and tribal politics, unrestricted access to all areas and records of
the gaming operation, clear authority to undertake enforcement actions, and a stable
source of funding. A tribal gaming commissioner stresses the importance of avoiding
serious conflicts of interest: “Commission members should not be employed by
gambling operations or by the Management Company…” or participate as a player.
103
State Regulation
Under California’s tribal-state gaming compacts, state responsibility for regulating class
III gaming conducted by tribes is shared by the Division of Gambling Control in the
Department of Justice and the California Gambling Control Commission. However only
the governor can determine whether provisions of a tribal-state compact have been
breached and whether enforcement action is appropriate. Thus three entities share the
state’s regulatory enforcement responsibilities, an awkward arrangement.
Recently the Office of the Governor demanded that the Alturas Indian Rancheria
relinquish its unused gaming licenses to the state, and notified the tribe that should it
commence with class III gaming on land that has not been placed in trust for gaming
purposes, the state will immediately take steps to terminate the tribe’s gaming compact.
104
The Division of Gambling Control
The state’s 1999 tribal-state gaming compacts established a state certification process for
determining the suitability of all gaming resource suppliers and financial sources as well
as key tribal casino employees. The Gambling Control Act gives that responsibility to
the Division of Gambling Control, which is charged with investigating the qualifications
of individuals who apply for state gambling licenses and monitoring their conduct to
ensure compliance with state law. The Division also investigates and monitors cardroom
owners and key employees, and the manufacturers, sellers and distributors of gambling
equipment.
Gaming resource suppliers (such as slot machine vendors) and financial sources must
request a finding of suitability from the Division and then submit an application to be
certified as suitable by the California Gambling Control Commission (CGCC) in order to
do business with the tribes. Some applicants withdraw during the Division’s
investigation before any formal finding is reached. To date, the Commission has found
*
California is a Public Law 280 state, meaning that Congress has provided the state with enforcement
authority over criminal activity on tribal lands.
California State Library, California Research Bureau 39
44 vendors and/or financial sources to be suitable and four have been found to be
unsuitable. Eighteen final determinations are at the CSCC awaiting approval.
Key employees go through a similar process, with some exceptions as specified in the
compacts. To date, the Division has investigated 5,772 tribal key employee applications
and recommended 11 denials to the CGCC. All of the state’s gaming tribes have
submitted information, covering the majority of their employees.
Prior to 2004, the Division checked whether tribes had appropriate procedures in place
but did not independently verify that they were actually conducting thorough background
checks on their gaming commissioners. Under the terms of more recently negotiated
compacts, the CGCC issues determinations on tribal gaming agency members’ suitability
to serve as gambling regulators. In part this policy resulted from allegations that seven
members of the Chumash gaming commission had criminal records. The top casino
regulator subsequently resigned following disclosure of a felony conviction. The casino
is operated by the Santa Ynez Band of Chumash Indians in Santa Barbara County.
105
The Division recently began monitoring gaming devices used in tribal casinos to ensure
that they meet established technical standards. The Division also monitors tribal
compliance with other compact provisions such as building codes, health, fire and safety
codes and environmental standards. If an initial compliance inspection finds a problem,
the Division will notify the tribe and follow-up with a report recommending an action.
The next step is a formal letter sent by the special agent in charge to the tribe. If
compliance is still not achieved, the Division generally sends the tribe another letter
before turning the issue over to the governor’s office, which may or may not initiate a
formal dispute resolution process. If at the end of this process the governor feels the tribe
is still out of compliance, the matter can be taken to federal court. This is a lengthy and
cumbersome process.
The Division has 134 employees and a budget of $13.4 million (FY 2005-06), funded
from fees paid by cardrooms and from the Special Distribution Fund established by some
tribal-state compacts. The bulk of the Division’s resources are directed towards its
licensing responsibilities, leaving it short of investigative and enforcement staff. For
example, under federal Public Law 280, the Division is responsible for investigating and
prosecuting criminal violations such as theft and embezzlement in Indian gaming
operations.
The California Gambling Control Commission
The California Gambling Control Commission, which is also funded by cardroom fees
and gaming tribe payments to the Special Distribution Fund, is responsible for auditing
the fund, establishing minimum regulatory standards, and ensuring that state gambling
licenses are not held by unsuitable vendors or individuals and that games are fairly played
(including hardware and software approvals, annual inspections). The Commission’s
semi-monthly agendas are filled with lists of individuals and suppliers applying for
suitability determinations for the conduct of business with tribal casinos.
40 California State Library, California Research Bureau
Recommendations to the Commission are based on findings made by both Division and
Commission staff.
The Commission is handicapped by a relatively small staff and by unclear language in the
1999 compact regarding its authority to inspect and audit casinos. The commission has
46 employees and a budget of $8.3 million (FY 2005-06) to monitor the state’s $5.78
billion Indian gaming industry and 86 card rooms.
*
It has fallen behind on audits of
Indian casinos and has a backlog of casino employee and vendor license reviews.
The state’s Gambling Control Act declares in §19802(c) that the legislature should
“…sufficiently fund a full-time commission and law enforcement capability with
responsibilities commensurate with the expanded scope of gambling.” Interviews with
officials in the state’s regulatory bodies suggest that neither the Division nor the
Commission have sufficient staff resources to fulfill their statutory obligations to
regulate, investigate and enforce state gambling laws. Table 5 below provides
comparative state regulatory information on staff and budgets that supports this view.
Comparative State Regulatory Data
California’s agencies that regulate gambling have fewer resources relative to their
responsibilities than those provided by other major gambling states. The following table
provides information on regulatory functions and resources in states with commercial
(non-Indian) casinos, compared to California.
*
The number of licensed card rooms in California varies. It was over 100 in October 2005, and was 86 as
of February 2006. See http://www.cgcc.ca.gov/cardrooms.html
for the most recent information.
California State Library, California Research Bureau 41
Table 5
California Compared to States with Commercial (non-Indian) Casinos—
Regulatory Statistics (2005-2006)
State #
Casinos
# Gaming
Devices
Regulatory Agency Regulatory
Functions
Regulatory
Agency Budget
# Regulatory
Personnel
California 58 Indian
casinos,
86 card
clubs
58,100 slots,
3,325 table
games (1,820
tribal, 1,505 in
cardrooms)
Ca. Gaming Control
Commission;
Division of Gaming
Control, AG
Licensing, audits,
game approval, fee
collection, law
enforcement, tribal
compact compliance
$12.42 million
(Division), $8.3
million
(Commission)
Division-
134 positions (32
sworn),
Commission-
46 positions
Colorado 46 17,069 (slots
and table)
Colorado Division of
Gaming
Licensing, audit,
game approval, law
enforcement
$9.4 million 72 positions (34
sworn)
Illinois 9 9,908 slot
machines, 227
table games
Illinois Gaming
Board
Licensing, audit,
game approval, tax
collection, law
enforcement, self
exclusion program
$14.2 million (not
including police)
75 agency
employees
65 state police
Indiana+ 10 17,906 slots
645 table games
Indiana Gaming
Commission
Licensing, law
enforcement
$3.3 million 149 positions;
113 vacant
Iowa* 13 17,307 slots,
438 table games
Iowa Racing and
Gaming Commission
Licensing, law
enforcement, self
exclusion program,
drug testing
$4.2 million 58 positions
Louisiana* 18 22,145 slots,
851 table games,
12,000 video
poker/lottery
State Police, AG’s
Gaming Unit,
Gaming Control
Board
Licensing, law
enforcement
$1.25 million
(Board); $5.5
million (AG), $23
million (Police)
5 positions
(Board), 58
positions (AG),
285 State Police
(140 sworn)
Michigan 3 7,721 slots; 235
table games
Michigan Gaming
Control Board,
Attorney General
Licensing, audits,
gaming tests, law
enforcement
$15.7 million
(Board, ’04)
110 positions
(Board),
35 positions (AG)
Mississippi 29 4,719 slots; 380
table games
Mississippi Gaming
Commission
Licensing, law
enforcement, audits,
game approval
$10.7 million 150 positions
authorized (39
sworn)
Missouri 11 17,875 slot
machines; 547
table games
Missouri Gaming
Commission,
Highway Patrol unit
Licensing, audits,
enforcement, self
exclusion program
$15.35 million
(Commission)
74 positions
(Commission),
124 police
Nevada** 258 200,000+ slot
machines; 5,260
table games
Nevada Gaming
Control Board and
Commission
Licensing, game
approval, audits, law
enforcement, tax
collection
$37.53 million 439 positions
New Jersey 12 40,820 slot
machine; 1,578
table games
N.J. Casino Control
Commission and
Division of Gaming
Enforcement
Licensing, audits, law
enforcement, game
approval, self
exclusion program
$29 million
(Commission),
$42 million
(Division)
350 positions
(Comm.), 360
positions (207
sworn, Division)
South
Dakota
36 2,996 licensed
devices (slots,
poker,
blackjack)
South Dakota
Commission on
Gaming
Licensing, audits,
game inspections,
investigations and
enforcement
$9.6 million 14 positions (4
sworn)
Source: state gambling regulator websites
+Regulates riverboat gambling only
*Locations include racetrack casinos
**Locations with gross casino revenue of at least $1 million
California Research Bureau, California State Library
42
Federal Regulation
The National Indian Gaming Commission (NIGC) was created by IGRA to regulate
Indian gaming. Tribal gaming ordinances must be approved by the NIGC,
*
which also
must approve management contracts (such as the Rincon contract with Harrah’s). The
NIGC has the power to conduct background investigations and object to the persons hired
and licensed by tribal governments to work in their casinos. However it lacks legal
authority to enforce minimum background standards for tribal gaming commissioners.
The U.S. Department of Justice also conducts background checks on key gaming
employees and enforces criminal violations of federal gaming laws through the FBI and
the U.S. Attorney. In addition, tribes work with the IRS to collect taxes and with the
Secret Service to prevent counterfeiting.
In reviewing tribal gaming management contracts, the NIGC staff conduct background
investigations and seek to make sure that the tribe is the primary beneficiary of its
gaming operations, with a maximum of 30 percent of revenues (how revenues are defined
is unclear) going to the contactor. Since many of the contracts involve construction and
development, the contract approval process requires compliance with the National
Environmental Protection Act. However, according to the Inspector General of the
Department of the Interior, “Some tribes have circumvented this [NIGC] review,
approval and background process by entering into consultant agreements which…do not
significantly differ from management contracts.”
106
The NIGC has only approved 45
management contracts nationwide, nine in California.
The NIGC’s primary role is to oversee tribal regulatory operations. Each tribe must
submit an annual audit conducted by an independent outside auditing firm, including of
all gaming-related contracts. The NIGC also directly audits tribal gaming operations,
although its field operations are constrained by a relatively small budget and staff.
The Commission is funded by fees paid by gaming tribes, about $11.2 million in 2005,
and has 80 staff, of which 39 are auditor-investigators. This is to oversee more than 200
tribes that operate more than 400 gaming operations nationwide. In contrast, the Nevada
Gaming Commission has a budget of $37.5 million (FY 2006-07) with 439 positions
allocated to oversee 365 gaming operations. The California Regional Office of the NIGC
has four field investigators and two auditors to monitor a $5.78 billion industry.
The NIGC has the primary responsibility, along with the tribes, for regulation of class II
gaming. As noted above, NIGC advisory opinions have been significant in establishing
that a wide array of electronic bingo games—that look like slot machines--can be
classified as class II games and thus placed in tribal casinos without a tribal-state
compact.
*
See for example the August 26, 2002, Federal Register (Vol. 67, No. 165, p. 54823) for a list of 241
tribes with approved Class III gaming ordinances.
California State Library, California Research Bureau 43
The NIGC may impose civil penalties and fines of up to $25,000 per day. For severe
violations, it may close an establishment.
The NIGC’s role in regulating class III gaming is under challenge in the federal courts.
NIGC regulations establishing minimum internal controls for class III gaming casinos
were overturned by a U.S. District Court in a lawsuit brought by the Colorado River
Indian Tribes. The case is under appeal.
California Lobbying and Campaign Contributions
Article 15 of the California Gambling Control Act recognizes that:
In California, in other states, and in other countries, there is ample historical
evidence of the potential for revenues derived from gambling to be used to
corrupt political officials in the regulation or prosecution of crimes related to
gambling activities, embezzlement, and money laundering.
The Article prohibits members of the CGCC from soliciting campaign contributions,
creates a three year “revolving door” period in which Commission and Division members
and employees may not lobby on behalf of gambling interests before either body, and
provides for the suspension or revocation of a gambling license if the licensee violates
“…any law or ordinance with respect to campaign finance disclosure or contribution
limits…” (Business & Professions Code §§19980-19983).
Historically, racetracks and card rooms were the dominant gaming political donors in
California. Given the importance of gambling to Indian tribes, and the impact of federal
and state laws on their ability to pursue gaming enterprises, it is not surprising that the
tribes have become the largest contributors to political campaigns. California Indian
tribes became major players in the state’s political process when they contributed $70
million toward the passage of Proposition 5 in 1998, and $30 million to the Proposition
1A campaign in 2000, legalizing gaming on tribal lands in the state. Nearly one fifth of
the money spent in the 2003 gubernatorial recall came from gaming tribes.
State law does not limit campaign contributions in initiative, referendum and recall
campaigns, but it does require disclosure of contributions. In 2000, California Common
Cause filed a complaint with the state’s Fair Political Practices Commission alleging
violations of the state’s campaign contribution reporting laws. In early 2003, in a lawsuit
brought by the state’s Fair Political Practices Commission, a Superior Court judge found
that the Agua Caliente Band of Cahuilla Indians was subject to the same laws that apply
to other political contributors with respect to disclosure requirements. The court rejected
the assertion that the doctrine of tribal immunity applied. The Third District Court of
Appeal subsequently denied the tribe’s appeal. However a different Superior Court judge
came to a different conclusion in a related case involving the Santa Rosa tribe. The case
is under appeal to the California Supreme Court. It is likely that the issue will ultimately
have to be decided by the U.S. Supreme Court.
44 California State Library, California Research Bureau
GAMING TRIBES AND REVENUES
California has 108 federally recognized tribes and by far the most gaming tribes of any
state, as shown in the following chart drawn from National Indian Gaming Commission
data (states with fewer than seven gaming tribes are not represented).
Figure 8
States with Seven or More Gaming Tribes (2005)
0
10
20
30
40
50
60
Californi
a
Okl
a
h
o
ma
Washi
n
g
t
on
Ariz
o
n
a
Minne
s
ot
a
New Mexico
Wis
c
onsi
n
Michigan
Oregon
S
o
u
t
h Dakota
Monta
n
a
Number of Gaming Tribes
Source: National Indian Gaming Commission, 2005.
In 2004, there were 228 tribes in the United States operating 405 gaming facilities in 30
states. According to the National Indian Gaming Commission, these gaming operations
earned $19.4 billion in gross gaming revenues, a 15.3 percent increase over 2003.
Region II (California and Northern Nevada) gross gaming revenues increased by 23.2
percent over 2003, to $5,788,332.
107
In comparison, commercial (non-Indian) casinos in 11 states earned $28.93 billion in
gross gaming revenue in 2004. Comparative state information on gross revenues, gaming
tax revenue and employees is shown in Table 6 below.
California State Library, California Research Bureau 45
Table 6
Commercial (non-Indian) Casinos—Gaming Statistics (2004)
State #
Casinos
Gross revenues Gaming tax revenue
(state and local)
Casino
employees
Casino employee
wages+
Colorado 46 $725.9 million $ 99.55 million 7,703 $ 210.4 million
Illinois 9 $1.718 billion $801.72 million 8,628 $ 360.1 million
Indiana 10 $2.369 billion $760.52 million 17,377 $ 589.5 million++
Iowa* 13 $1.064 billion $252.67 million 8,799 $ 272.3 million
Louisiana* 18 $2.163 billion $436.9 million 20,048 $ 486.03 million
Michigan 3 $1.189 billion $279.4 million 7,572 $ 366.2 million
Mississippi 29 $2,781 billion $333.01 million 28,932 $1.009 billion
Missouri 11 $1.473 billion $403.13 million 11,200 $ 284 million
Nevada** 258 $10.652 billion $886.99 million 191,620 $7,287 billion
New Jersey 12 $4.807 billion $470.67 million 45,501 $1.259 billion
South Dakota 36 $78.02 million $ 11.93 million 1,830++ $ 36.4 million
Total 445 $28.93 billion $4.74 billion 349,210 $12.16 billion
Source: American Gaming Association, 2004
+Includes benefits and tips
++2003 data
*Includes racetrack casinos
**Locations with gross casino revenue of at least $1 million
Indian gaming is two-thirds the size of commercial non-Indian gaming and growing
faster.
Revenues earned by Indian gaming in the United States grew by an astounding
average yearly growth rate of 33.2 percent from 1988 to 2004, adjusted for inflation.
Non-gaming revenues (hotels, restaurants, etc.) rose 16 percent, from $1.8 billion to $2.1
billion.
108
According to a 2002 article in Time magazine, Indian gaming as a whole was
among the top 20 most profitable U.S. corporations. However the profits were not evenly
distributed. Thirteen percent of the casinos accounted for two thirds of the revenues.
109
California and Connecticut gaming tribes earned about 40 percent of all Indian gaming
revenues in the country in 2004, of which California tribes accounted for 28 percent of
the total.
110
Two of the three highest revenue-producing casinos in the country are Indian
casinos: Foxwoods (in Connecticut) and United Auburn Indian Community’s Thunder
Valley Casino in Lincoln, California.
Indian gaming revenue figures are estimates derived from a variety of sources, as tribes
are not subject to public information disclosure requirements. The Indian Gaming
Regulatory Act provides tribal gaming operations with an exemption from the Freedom
of Information Act. Unless a tribe agrees, federal and state regulators cannot publicly
release or disclose financial information, making it difficult to find out individual casino
revenues.
Tribes with locations near major metropolitan areas have the most successful casinos, but
“...very few tribes have really hit the jackpot” because many are located in remote areas.
An analysis by the Federal Reserve Bank of Minneapolis found that of the 42
reservations for which 1998 casino revenues could be estimated in the Bank’s district, the
46 California State Library, California Research Bureau
top five accounted for 53 percent of all casino revenue but had just 5.5 percent of the
reservation population; in contrast, ten reservations had one percent of casino revenue
and 42 percent of the total reservation population.
111
The following chart, based on 2004 data from the NIGC, shows that 55 Indian gaming
operations earned over $100 million, compared to 151 operations that earned less than
$10 million. The top 55 operations grossed nearly 70 percent of all tribal gaming
revenues, but comprised only 16 percent of all gaming operations. The 151 tribal gaming
operations earning less than $10 million comprised 41 percent of all gaming operations
but earned only two percent of all revenues.
Figure 9
National Indian Gamin
g
Revenues b
y
Number of Gamin
g
Operations (2004)
0
20
40
60
80
100
$250+ $100-$250 $50-$100 $25-$50 $10-$25 $3-$10 Under $3
Revenues in Millions
Number of Operations
Source: National Indian Gamin
g
Commission
,
California tribal casinos earn the most revenue of any state—an estimated $5.78 billion in
2004, a 23 percent increase over the previous year. In 2004, the state’s 56 class III Indian
gaming facilities had 58,100 gaming machines (not including bingo) and 1,820 table
games.
112
As previously discussed, and as indicated in Table 8, a number of tribal
gaming casinos also have bingo halls and class II bingo machines.
California State Library, California Research Bureau 47
Figure 10
Net Win Gaming Revenues at California
Indian Gaming Facilities ($ Millions)
$5,788
$4,700
$3,678
0
2,000
4,000
6,000
8,000
2002 2003 2004
Dollars
Source: Alan Meister, Casino City’s Indian Gaming Industry Report, 2005-2006 Updated Ed
.
Year
Non-gaming revenues at California Indian gaming facilities (hotels, restaurants, retail
shops, etc.) in 2004, were an estimated $544.6 million, nearly a seven percent increase
from the previous year.
113
Figure 11
Non-Gaming Revenue at California
Indian Gaming Facilities
($ Millions)
$544.60
$510.60
$399.60
$0
$100
$200
$300
$400
$500
$600
2002 2003 2004
Dollars
Source: Alan Meister, Casino Cit
y
’s Indian Gamin
g
Industr
y
Re
p
ort,2005-2006 U
p
dated Ed.
There is some indication that the growth of Indian gaming in some areas in California is
slowing down and that the industry is getting more competitive, particularly in San
Diego, Riverside and San Bernardino counties. For example, the Cabazon Band of
Mission Indians, which opened a $200 million resort in December 2004, near Indio, is in
debt and has laid off workers, dissolved its police and fire departments and dismissed its
top three tribal executives.
114
San Diego County has the largest number of tribes and reservations of any county in the
nation, with 18 federally recognized tribes, 18 reservations, and 17 tribal governments
48 California State Library, California Research Bureau
serving about 5,900 enrolled tribal members. The county currently has nine Indian
casinos, with more under development.
*
Restrictions on Expenditures
IGRA restricts how Indian government can spend their gaming revenues. Tribes are
allowed to use profits for governmental purposes including:
115
1. Funding tribal government operations or programs.
2. Providing for the general welfare of the tribe and its members.
3. Promoting tribal economic development.
4. Donating to charitable organizations.
5. Helping fund operations of local government agencies.
With the consent of the Secretary of the Interior, a tribe may allocate gaming revenue
among all enrolled tribal members (“per capita payments”), conditioned on submitting a
plan. The plan must address economic development and general welfare goals, as well as
affirm the responsibility to report per capita payments and gaming winnings for income
tax purposes. Tribes making per capita payments must establish a tribal dispute
resolution process to challenge the distribution and allocation of gaming revenues. Forty-
two California gaming tribes make per capita payments to members, ranging from one
percent to 80 percent of revenues (see Table 8). For example, according to press
accounts, last year the Santa Ynez Band of Chumash Indians made per capita payments
of $30,000 a month to its 153 members.
The Internal Revenue Services (IRS) has an Office of Indian Tribal Governments, which
deals with tax issues resulting from tribal gaming as well as issues involving tribal
governments and enterprises.
Bonds
The Indian Tribal Government Tax Status Act specifies that tribal governments should be
treated as states for purposes of issuing tax-exempt bonds if their bond proceeds are used
for an “essential governmental function.” The IRS currently has 12 tribal bond audits
open, six of tribes and six of issuers who sold bonds on behalf of tribes. At issue for the
tribes and the IRS is whether casinos, golf courses, hotels, convention centers, and other
facilities qualify as “essential governmental functions.”
The IRS has ordered the Seminole tribe in Florida to retire its casino construction bonds.
In California, the Cabazon Band of Mission Indians issued $145 million in tax exempt
casino-construction bonds for its Fantasy Spring resort that are under investigation.
116
The bonds saved the tribe close to $25 million in state and local taxes.
*
See Update on Impacts of Tribal Economic Development Projects in San Diego County for more detailed
information. (San Diego County: April 2003).
California State Library, California Research Bureau 49
Recently the IRS began investigating $51 million in bonds issued by the Morongo Band
of Mission Indians to build a parking garage for its new casino as well as roads and a
sewer system. After an initial review, the IRS determined that the Morongo Band of
Mission Indians’ bonds did not appear to be issued for an essential governmental
function. The issue had originally been planned as a $145 million deal -- using the
neighboring city of Banning as a conduit bond issuer -- to expand the tribe’s casino and
to construct a 23-story hotel.
117
Non-Gambling Revenues
Most tribes with casinos are reinvesting their gaming profits into business enterprises, as
well as improving the social, educational, and health care infrastructures of their
communities. For example, the Viejas Band of Kumeyaay Indians in San Diego County
owns a shopping center, a bank and radio and television stations. The Rumsey Band of
Wintun Indians in Yolo County is investing in real estate and owns a Ford dealership,
while the Agua Caliente Band of Cahuilla Indians owns a downtown shopping area and a
community bank, among other investments.
118
The Paskenta Band of Nomlaki Indians
plans to diversify over a ten-year period by creating an engineering company and
investing in medical waste destruction and real estate.
The trend toward diversification is also evident in Las Vegas. Gambling as a percentage
of revenue for Las Vegas’ hotel-casinos decreased from 55 percent in 1997 to 40 percent
in 2000. The Las Vegas Strip has 2.1 million square feet of retail shops, over half of
which was created in the last decade.
119
TAXES AND REVENUE SHARING WITH STATE AND LOCAL GOVERNMENTS
Commercial Casinos
Casino gambling is a fast growing industry around the world. In the United States,
commercial casino (non-Indian) revenues more than doubled from 1994 ($13.8 billion) to
2004. The American Gaming Association reports that 445 commercial (non-Indian)
casinos
*
in 11 states earned nearly $29 billion in gross revenues in 2004, from which
state and local governments derived $4.74 billion in direct gaming taxes, about 16
percent of gross gaming revenue.
120
(California does not have commercial, non-Indian
casinos.)
Gambling tax rates vary considerably in states with commercial casinos, as the following
data developed by the Indiana Gaming Commission indicates (the chart does not include
Colorado, New Jersey or South Dakota, which also have commercial casino gambling).
*
Commercial casinos include land-based, riverboat, docked, and racetrack casinos operated for
commercial purposes (and are not Indian casinos).
50 California State Library, California Research Bureau
Table 7
Comparison of Selected State Commercial Gambling Taxes
Fiscal Year 2005
State Total Taxes Adjusted Gross
Revenues*
Effective Tax Rate
Nevada $904 million $10.61 billion 8.5%
Illinois $797 million $ 1.75 billion 45.5%
Indiana $774 million $ 2.40 billion 32.2%
New Jersey $398 million $ 4.80 billion 8.3%
Missouri $410 million $ 1.50 billion 27.2%
Louisiana $335 million $ 1.56 billion 21.4%
Mississippi $334.6 million $ 2.79 billion 12.0%
Iowa $161.8 million $ 745.9 million 21.7%
Total $4.224 billion $25.15 billion
Source: Indiana Gaming Commission, 2006
*AGR includes adjustments such as chip and token float not included in win figures.
Indian Casinos
In 2004, there were 403 Indian gaming facilities in 30 states, which according to the
National Indian Gaming Commission earned $19.4 billion in gross gaming revenues.
Indian gaming tribes do not pay taxes on their gaming revenues to the state or federal
government, but they are legally required to deduct and withhold state and federal income
tax from non-Indian and nonresident tribal member employees, pay federal employment
taxes, report payments to independent contractors, and report and withhold federal
incomes taxes from gaming winnings and per capita payments to tribal members.
121
The IGRA prohibits states from imposing taxes, fees, charges, or other assessments on
Indian tribes as a condition of offering class III games. For this reason, revenue-sharing
agreements have become a common part of the compact negotiation process. The 1996
U.S. Supreme Court decision, Seminole vs. Florida, which struck down a provision in
IGRA that permitted tribes to sue a state for failure to negotiate a compact in good faith,
increased states’ negotiating leverage. Since that decision, most state-tribal gaming
compacts have involved revenue sharing.
The Department of the Interior will approve revenue sharing payments only when a state
has agreed to provide the valuable economic benefit of “substantial exclusivity” from
non-Indian, and occasionally other Indian, gambling enterprises in exchange. The
Department has refused to approve of compacts with revenue sharing provisions in states
that did not offer this benefit.
The most well-known compact in the country, signed in January 1993, between the state
of Connecticut and the Mashantucket Pequot tribe, created the spectacularly successful
Foxwoods casino, and called for the tribe to contribute 25 percent of slot machine
revenues to the state in return for the exclusive right to operate slot machines. That
California State Library, California Research Bureau 51
compact set a precedent that some states have tried to follow. California’s former
Governor Davis, for example, unsuccessfully proposed at one time that the tribes share
25 percent of their revenues with the state.
Alan Meister, in a recent analysis of Indian gaming, writes that seven factors can
influence tribal revenue sharing:
1. Economic climate—of the tribe, the state and the economy
2. New versus existing gaming and the degree of expansion
3. Profitability and its relation to tribal needs
4. Degree of competition
5. Type of gaming
6. Revenue-sharing rate
7. Revenue-sharing base (i.e. net win, net win after expenses, etc.)
122
Revenue sharing arrangements provide from eight percent (New Mexico) to 25 percent
(Connecticut) of Indian gaming revenues to state and local governments in fifteen states.
The three states receiving the largest aggregate contributions from tribal casinos in 2004
were Connecticut ($411.4 million, two casinos), California ($153.2 million, 56 casinos)
and Wisconsin ($68 million, 17 casinos and seven “ancillary sites”).
123
According to one analyst:
The fiscal aspects of these compacts appear to be completely ad hoc with no
evidence of fundamental public finance principles being applied in their design by
states and tribes, much less consideration being given to the design of optimal
fiscal compacts in any sense.
124
California
Gaming revenue at California Indian gaming facilities over a four-year period, 2001-
2004, was an estimated $17 billion.
125
Payments made by gaming tribes to the Revenue
Sharing Trust Fund, the Special Distribution Fund and the state’s General Fund from
2000 to September 30, 2005, totaled $543.4 million.
126
The five years of payments made
by gaming tribes to these funds was the equivalent of about nine percent of the estimated
Indian gaming revenues earned in four years.
Under the 1999 compacts, the 28
*
California gaming tribes that had gaming devices as of
September 1, 1999, make payments to the Special Distribution Fund (SDF) ranging from
zero to 13 percent of gaming machine revenue, based on the number of machines that
*
However the Rumsey Band of Wintun Indians and the Viejas Band of Kumeyaay Indians no longer make
payments to the SDF under 2004 amended compacts; 26 tribes now make payments to the fund. See Table
8 below.
52 California State Library, California Research Bureau
they had in operation at that time. The legislature annually appropriates money from the
fund. Under a formula enacted in 2003, which sunsets in 2009, payments are directed to
local jurisdictions. The intent is to mitigate the impact of the casinos on local
communities.
Riverside County tribes had more slot machines in 1999 than tribes in other parts of the
state, and thus those tribes pay more into the SDF. With nine casinos, Riverside County
has received 41 percent of the SDF funds allocated to date. San Diego County, which has
eight casinos in operation, has received 18 percent. The number of slot machines in each
of these counties totals about 13,100. The rest of the SDF has been distributed among the
other 33 counties with casinos. Of the $105 million allocated to date, only $5.5 million
has gone to eight counties that collectively have ten casinos.
127
The governor vetoed $20 million of SDF funds from the FY 2005-06 budget, “…because
local government agencies have not provided required annual reports that detail the
specific projects funded.” The funding was subsequently restored by legislation.
In 2003, Governor Davis negotiated compacts with three tribes that required revenue
sharing with the state of up to five percent of net win. These were the first compacts to
provide revenue to the state’s General Fund. In amended compacts negotiated in 2004,
six tribes agreed to increase payments to the RSTF and to make payments to the state’s
General Fund based on gaming devices added after the compact amendments became
effective, in exchange for removing limits on the number of slot machines. In addition,
these tribes also agreed to make a fixed annual payment equivalent to at least ten percent
of net win minus expenses in 2003--about $100 million a year--to back a $1 billion state
transportation bond over 18 years.
The state greatly over-estimated the amount of General Fund revenue it would receive
from the new and amended compacts. Administration officials predicted a payment of
$300 million in FY 2004-05, based on revenues from new slot machines. Instead the
state is expected to receive about $35 million in General Fund payments from tribes in
2005-06. The tribes have not increased the number of slot machines in their casinos as
rapidly as expected.
Some tribes have signed agreements with local governments, making direct payments to
offset increased local costs attributed to gaming operations (roads, law enforcement, etc.)
and contributing to special community funds. For example, the Rumsey Band of Wintun
Indians has agreed to pay Yolo County $100 million over 18 years. The Viejas Band of
Kumeyaay Indians recently agreed to pay San Diego County $1.2 million for road
improvements associated with its casino expansion, as well as funding a full-time deputy
sheriff and the district attorney’s tribal liaison position.
Because a compact with the state is not required for class II gaming, revenues from class
II gaming are not contractually shared with the state or local governments, but they may
be shared voluntarily. For example, the city of San Pablo expects to collect $9 million
California State Library, California Research Bureau 53
from Casino San Pablo in FY 2005-06, over half of the city’s annual budget and 7.5
percent of the casino’s revenues.
State and Local Taxes
Generally, Indian tribes and their property are not subject to state taxation unless
expressly authorized by an act of Congress. Tribal members living on the reservation are
subject to federal income tax but not state income tax. If they live outside of Indian lands
and within California, they are taxed by California on all income, including income from
Indian-country sources such as per capita casino distributions. They are also taxed by the
state on all income earned outside of Indian lands regardless of where they live.
128
The National Conference of State Legislatures notes that “Complex rules regarding state
taxation and Native American lands and individuals have been the source of many
misunderstandings…The legal right of tribal governments to conduct business free of
state taxation, the right of tribal members to make tax-free purchases, and the obligation
of non-Indians to pay taxes on their purchases has led both to litigation and to
negotiation.”
129
Sales of goods to tribal members for use on the reservation are exempt from state sales
and use tax when title to the good passes, and delivery occurs, to a tribal member. This
includes slot machines, vehicles (and vehicle license fees), construction materials, and
prepared food. However states can require tribes to collect taxes on goods sold to non-
Indians on Indian lands.
130
In 1976, the United States Supreme Court affirmed “…the
State’s requirement that the Indian tribal seller collect a tax validly imposed on non-
Indians is a minimal burden…”
131
In 1985, the U.S. Supreme Court found that the state
of California could legally require collection of excise taxes
*
by the tribes.
132
Enforcement is an issue as state sales, use and excise taxes must be collected by the
tribes. In 2001, the California Board of Equalization, which administers the state’s sales
tax, estimated restaurant and bar sales on California tribal lands to be $200 million
annually, resulting in approximately $15 million in tax, of which the tribes remitted less
than $3 million to the state. In addressing the issue of unremitted tax liabilities, the
Assistant Chief Counsel of the Board had written to the attorney of an Indian casino in
1997, “…we have no means at this time of bringing an action for collection against your
client without your client’s acquiescence…We will not cancel the liability.”
133
In 2002, the Board of Equalization exempted tribes from collecting use tax on meals,
food, or beverages sold for consumption on an Indian reservation. However Indian
retailers are required to collect use tax from non-Indian purchasers (except for meals,
food and beverages), and non-Indian retailers making sales on reservations are
responsible for collecting sales tax on sales made to non-Indians. This could include, for
example, items sold in a hotel gift shop. The amount of taxes actually being collected is
unknown as the Board does not keep statistics on goods purchased on Indian lands.
*
Excise taxes are paid when purchases are made on a specific good such as gasoline, wine or cigarettes.
54 California State Library, California Research Bureau
California tribes earned revenues of $544.6 million on non-gaming operations in 2004, a
seven percent increase from the previous year. As Table 8 indicates, many California
tribes are heavily invested in retail operations on their lands including hotels, restaurants,
gas stations, convenience stores, and retail shops. The Viejas Band of Kumeyaay Indians
collects and remits state sales and use tax from its retail outlet mall operations, the only
such example found for this report; San Diego County’s share in FY 2000-01 was
$520,981.
134
The state of Washington publishes the Indian Guide to Washington State Excise Taxes
that clarifies which state taxes should be paid, including sales tax on items sold to non-
tribal members.
135
In Minnesota, the Department of Revenue collects millions of dollars
in sales taxes from restaurants, shops, and hotels on reservations. Connecticut has a tax
agreement with the Mashantucket Pequot and Mohegan tribes establishing which items
sold on their lands to non-Indians will be subject to state taxes, such as alcoholic
beverages, gasoline and gift items; the tribes collect and remit the taxes to the state.
136
States with non-Indian casinos impose a variety of taxes including: wagering taxes
(varies from four to 70 percent of adjusted gross receipts), an admissions tax (primarily
riverboat casinos), taxes on slot machines, a tax on complementary items such as
entertainment and food, taxes on gross revenues and licensing fees to cover municipal
services.
Property taxes and local taxes such as hotel occupancy taxes do not apply to reservations.
In 2004, the Rincon Band of Luiseño Indians successfully sued the county of San Diego
to stop it from trying to collect more than $1.6 million in hotel transient occupancy taxes
on Harrah’s Rincon Resort and Casino, which has a 651 room hotel. In granting the
plaintiffs’ motion for summary judgment, the U.S. District Court ruled that the county
could not tax a hotel on tribal land, even if the hotel is operated by a corporate entity.
137
The court declared that, “absent a withdrawal or waiver by Congress or the tribe, the
doctrine of tribal immunity bars the imposition of state taxes.” The Rincon Band levies
its own hotel transient occupancy tax, from which it received $130,000 in 2002-03, when
the hotel had 200 rooms.
138
The Displacement Effect
Gambling does not increase the total pool of money available in the economy but rather
redistributes it. This is because consumers finance their gambling activities from reduced
savings and reduced spending on other taxable goods and services. Due to this
“displacement effect,” economists find that the net revenue benefit of gambling to states
and local governments is smaller than it might appear. A recent article in State Tax Notes
examined several state-level studies using county-level data to estimate the effect of
casino gambling on state sales tax revenues.
139
• A 1998 study in Arizona found that the introduction of Indian casinos diverted
funds from taxable to non-taxable sectors of the state economy, including from
retail trade, restaurants and bars, hotels and motels, and particularly from
amusement and entertainment. The commencement of casino operations lowered
California State Library, California Research Bureau 55
sales tax revenues (called transaction privilege tax in Arizona) by an average of
2.7 percent.
• A 2002 study using 1990-97 data from all New Mexico counties found that
counties with two Indian casinos have a sales tax base that is 6.2 percent lower
than counties without tribal casinos, suggesting the substitution of gambling for
other taxable activity. The model controlled for the effect of county employment
and wages, seasonal variations and systematic differences between counties with
and without Indian reservations.
• A 1999 study of riverboat casinos in Missouri found that a ten percent increase in
casino annual gross revenues was associated with an average decline in sales tax
revenue in the amusement and recreation sector of three to 5.9 percent.
The author of a study examining the change in sales tax revenue per dollar of casino
annual gross revenues found considerable variation among 13 states that have
commercial (non-Indian) casinos. Four states (Louisiana, Michigan, Mississippi, South
Dakota) experienced a net gain in per capita sales tax (of one cent to 47 cents per dollar
of per capita annual gross casino revenues). These states drew more out-of-state
gamblers. Eight states experienced a net reduction of sales tax, ranging from -$1.24 in
Illinois to -$.01 in Rhode Island. The author concluded that casino wagering could
displace taxable consumer expenditures and, as a result, lower sales tax revenue.
140
CALIFORNIA INDIAN TRIBES WITH CASINOS
Table 8 lists the 66 California tribes with tribal-state gaming compacts as of October
2005, including
• the number of enrolled members in each tribe (in 2001, as provided by the Bureau
of Indian Affairs)
• management partners approved by the National Indian Gaming Commission
• the number of authorized gaming devices, per the California Gambling Control
Commission
• other games, non-gaming facilities and profits (as available from press and
websites)
• % of revenues paid to tribal members in per capita payments (provided by the
BIA)
• payments to the Revenue Sharing Trust Fund over a five year period, tribes that
make payments to the Special Distribution Fund and, when appropriate, state
revenue-sharing agreements.
This is a very dynamic industry and information can change quickly. The reader is
advised to check for more recent updates.
At the time of the 2000 Census there were 333,346 American Indians residing in
California, of which members of California’s federally recognized tribes are a subset.
Federally recognized California tribes which had tribal-state gaming compacts as of
56 California State Library, California Research Bureau
October 2005, had 31,623 members in 2001 (the most recent data available from the
BIA), about nine percent of all American Indians residing in California. California
Indian gaming net win revenues in 2004 were more than $5.7 billion, an average of about
$188,000 per gambling tribal member.
Information presented in Table 8 comes from a variety of government and press sources
and is uneven for revenues and investments in facilities, as this proprietary information
can only occasionally be gleaned from Securities and Exchange Commission filings of
casino management companies and other sources. California gaming tribes do not have
to publicly report earnings and they do not do so. Some other states (Connecticut,
Nevada, New Jersey) provide for the disclosure of considerably more information about
casino revenues, audits and disciplinary actions.
Information is presented about tribal payments made to three funds pursuant to the state’s
tribal-state compacts, from 2000 to September 30, 2005.
• Payments made to the Revenue Sharing Trust Fund by gaming tribes from the
inception of the fund totaled $154.6 million (including interest).
141
These
payments are distributed to nongaming tribes.
• 28 tribes have made payments of $368.7 million (including interest) to the Special
Distribution Fund; 26 tribes still make payments.
*
However we are unable to
provide the amount paid by each tribe, as that information is confidential.
• Six tribes with 2004 amended compacts paid $20 million into the state’s General
Fund.
In total, California gaming tribes made payments of $543,445,721 to these three funds
from 2000 through September 2005.
The National Indian Gaming Commission (NIGC) is required to approve all tribal casino
management contracts; only nine contracts have been approved for California gaming
tribes with firms such as Harrah’s and Station Casinos (one of those contracts has since
been terminated). NIGC limits the percentage of tribal casino revenues that can be paid
to management consultants/contractors to thirty percent, according to its staff.
*
The tribes that have made contribution to the Special Distribution Fund include: August Caliente Band of
Cahuilla Indians, Barona Band of Mission Indians, Berry Creek Rancheria, Big Sandy Rancheria, Big
Valley Rancheria, Bishop Pauite-Shoshone Indians, Cabazon Band of Cahuilla Indians, Chicken Ranch
Rancheria, Colusa Indian Community, Hopland Band of Pomo Indians, Jackson Rancheria, Mooretown
Rancheria, Morongo Band of Cahuilla Mission Indians, Redding Rancheria, Robinson Rancheria of Pomo
Indians, Rumsey Band of Wintun Indians, San Manuel Band of Serrano Mission Indians, Santa Rosa Indian
Community, Santa Ynez Band of Chumash Indians, Smith River Rancheria, Soboba Band of Luiseno
Indians, Sycuan Band of Diegueño Mission Indians, Table Mountain Rancheria, Tule River Indian Tribe,
Twenty-Nine Palms Mission Indians, Viejas Band of Kumeyaay Indians. (The Rumsey and Viejas Bands
no longer contribute to the SDF under their amended 2004 compacts, but rather have revenue-sharing
agreements with the state.)
Table 8
California Indian Tribes with State Gaming Compacts as of November 2005
Tribe, Location,
Enrollment (2001, BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino(s)
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Agua Caliente Band of
Cahuilla Indians, Palm
Springs, 379 members
1999
Two casinos, 2,000
slots total, 78 table
games, 700 seat
bingo hall
228 room hotel,
13 restaurants,
2 showrooms,
spa
$95 million Spa
Resort, $90
million Rancho
Mirage
50% per capita
Payments to RSTF
of $3,873,142; SDF
payments
Alturas Rancheria,
Alturas, 9 members
1999
650 slots, 2 table
games
1 restaurant,
planned 100
room hotel
60% per capita
Payments to RSTF,
$187,500
Augustine Band of
Mission Indians,
Coachella, 8 members
Paragon
Augustine LLC,
Nevada
1999
775 slots, 10
gaming tables
2 restaurants 325 employees
Payments to RSTF,
$437,500
Barona Band of Mission
Indians, Lakeside, 362
members
1999
2,000 slots, bingo,
off-track betting, 70
table games
397 room hotel,
spa, golf course,
10 restaurants
60% per capita
Payments to RSTF
of $3,774,550, SDF
payments
Bear River Band of
Rohnerville Rancheria,
Humboldt Co., 265
members
1999
350 slots, 10 table
games
2 restaurants 10% per capita $0**
Berry Creek Rancheria
of Maidu Indians,
Oroville, 464 members
1999
900 slots, 22 table
games, bingo (300
seats)
Hotel, 5
restaurants
50% per capita
Payments to RSTF
of $617,500, SDF
payments
Big Sandy Rancheria
Band of Western Mono
Indians, Auberry, 331
members
1999
350 slots, 8 table
games
1 restaurant
Proposed $200
million hotel-
casino
50% per capita $0,** SDF payments
Big Valley Band of
Pomo Indians,
Lakeport, 696 members
1999
753 slots, 8 table
games
80 room hotel,
RV park,
marina, 2
restaurants,
convention
facility
49% per capita
Payments to RSTF
of $500,000, SDF
payments
California Research Bureau, California State Library 57
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Bishop Paiute Tribe,
Bishop, 914 members
1999
350 slots, 3 table
games
1 restaurant, gas
station
40% per capita
$0,** SDF
payments
Blue Lake Rancheria,
Blue Lake, 48
members
1999
700 slots, 16 table
games, bingo
3 restaurants,
showroom
Payments to RSTF;
$437,500
Buena Vista
Rancheria of Me-
Wuk Indians, Ione,
12 members
1999,
amended
2004
Unlimited number
of slots under
amended compact
Proposed
casino, shops,
restaurants,
entertainment
$200 million
estimate
Amended compact:
15-25% annual net
win to state, bond
payments
Cabazon Band of
Mission Indians,
Indio, 30 members
1999
1,956 slots, 30 table
games, bingo, off-
track betting
250 room hotel,
convention
center, 7
restaurants,
golf, bowling
alley, theater
$200 million
resort, 1,200
employees
$75.2 million
revenue March
2003-March
2004
Payments to RSTF
of $4,225,442, SDF
payments
Cahto Indian Tribe of
the Laytonville
Rancheria,
Laytonville, 81
members
1999 350 slots 1 restaurant $0**
Cachil Dehe Indian
Band of Wintun
Indians, Colusa, 75
members
1999 846 slots, table
games, bingo
3 restaurants,
hotel,
showroom
20% per capita Payments to RSTF
of $403,750, SDF
payments
Cahuilla Band of
Mission Indians,
Anza, 297 members
1999
350 slots, 3 table
games
3 restaurants 116 employees 51% per capita
Payments to RSTF
of $125,000, SDF
payments
58 California Research Bureau, California State Library
Tribe, Location,
Enrollment (2001,
BIA))
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Campo Band of
Mission Indians,
Campo, 294 members
1999
750 slots, 13 table
games, 46 poker
video games
2 restaurants,
bar, truck stop
(gas,
convenience
store etc.)
50% per capita
Payments to RSTF,
$500,000
Chemehuevi Tribe,
Havasu Lake, 708
members
1999
350 slots, table
games
1 restaurant, air
strip, marina,
RV park,
campground,
market
60% per capita $0**
Cher-Ae Heights
Indian Community of
the Trinidad
Rancheria, Trinidad,
189 members
1999
350 slots, 15 table
games, bingo
4 restaurants,
78 room hotel,
rental home
49% per capita $0**
Chicken Ranch Band
of Miwok Indians,
Jamestown, 21
members
1999
350 slots, bingo
(900 seats),
Restaurant, gift
shop
$0,** SDF
payments
Coast Indian
Community,
Resighini Rancheria,
Hoopa, 90 members
1999 350 slots, no casino
Concow-Maidu Tribe
of the Mooretown
Rancheria, Oroville,
1,193 members
1999
1,000 slots, 12 poker
and 16 table games
Gas station,
convenience
store, KOA
campground, 3
restaurants,
theater/lounge
50% per capita
Payments to RSTF
of $692,013, SDF
payments
Coyote Valley Tribe
of Pomo Indians,
Redwood Valley, 358
members
2004
2,000 slots, bingo,
poker, other table
games
Café, gift shop 50% per capita
Per device fee up to
750; 12-25% net
annual win over
750; RSTF over $50
million net win
California Research Bureau, California State Library 59
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Dry Creek Rancheria
Band of Pomo
Indians, Geyserville,
583 members
1999
1,600 slots, 16 table
games
3 restaurants,
gift shop
$4.8 million 2
nd
qtr. 2005 ($1.9
million to
Nevada Gold &
Casinos,
$356,000 to
tribe); 30% per
capita
Payments to RSTF,
$7,176,996
Elk Valley
Rancheria, Crescent
City, 100 members
1999
400 slots, 5 table
games
Golf course,
RV resort,
bowling alley, 1
restaurant
30% per capita
Payments to RSTF,
$62,500
Elem Indian Colony
of Pomo Indians,
Clearlake, 104
members
1999 350 slots, no casino
Ewiiaapaayp Band
of Kumeyaay
Indians (also known
as Cuyapaipe),
Alpine, 8 members
1999,
amended
2004
350 slots; proposed
casino on Viejas
tribal lands, federal
approval not yet
received
Payments to RSTF,
$2,437,433;
amended compact:
bond payments,
15% net win up to
$200 million, 25%
over $200 million
Fort Mojave Indian
Tribe, Needles, 412
members in
California
2004
1,500 gaming
devices, no casino
10-25% annual net
win; RSTF over $25
million net win**
Hoopa Valley Tribe,
Hoopa, 2,500
members
1999 350 slots, 1 table
Hotel, gas
station
$0**
Hopland Band of
Pomo Indians,
Hopland, 692
members
1999
942 slots, 10 table
games, 1,000 seat
bingo hall
2 restaurants,
lounge
30% per capita
Payments to RSTF
of $2,119,408, SDF
payments
60 California Research Bureau, California State Library
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Jackson Rancheria
Band of Miwuk
Indians, Jackson, 24
members
1999
1,500 slots, 40 table
games, bingo
446 room hotel,
6 restaurants,
conference
center, store
25% per capita
Payments to RSTF
of $3,026,877, SDF
payments
Jamul Indian
Village, Jamul, 56
members
1999
350 slots, planned
2000 class II
machines, 40 card
tables
Planned 412
room hotel, 5
restaurants
Planned $300
million with
Lakes Gaming
$0**
La Jolla Band of
Luiseño Indians,
Pauma Valley, 698
members
1999
350 slots, 12 card
tables
800 site
campground;
planned 75
room hotel
$0**
La Posta Band of
Mission Indians,
Lakeside, 20
members
2003,
allows one
casino
350 gaming devices,
no casino
5% net win
Manchester Band of
Pomo Indians,
Manchester, 621
members
1999 350 slots, no casino
Manzanita Band of
Diegueño Mission
Indians, Calexico,
98 members
350 slots, no casino
Middletown
Rancheria Band of
Pomo Indians,
Middletown, 75
members
1999
608 slots, 8 table
games
1 restaurant 50% per capita
Payments to RSTF;
$187,500.
Morongo Band of
Mission Indians,
1,055 members
1999
2,000 slots, 100
table games, 22
poker tables
310 room hotel,
10 restaurants,
nightclub, spa
$250 million
resort, 3,000+
employees
70% per capita
Payments to RSTF
of $497,300, SDF
payments
California Research Bureau, California State Library 61
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Pala Band of
Mission Indians,
Pala, 891 members
Anchor Pala
Management
LLC
1999,
amended in
2004
Unlimited number of
slots, 85 table games
507 room hotel,
8 restaurants,
spa, theater, 2
lounges
$115 million
$188.6 million net
win 2003-04; 50%
per capita
Payments to RSTF,
$14,871,569;
amended compact:
10-25% annual net
win, RSTF, bond
payments
Paskenta Band of
Nomlaki Indians,
Corning, 262
members
1999
773 slots, 12 table
games
4 restaurants, 2
hotels with 120
rooms
10% per capita
Payments to RSTF,
$528,750
Pauma-Yuima Band
of Mission Indians,
Pauma Valley, 132
members
1999,
amended in
2004
Unlimited number of
slots authorized in
2004, table games
Café, lounge
$44.2 million net
win 2003-04;
48% per capita
Payments to RSTF,
$1,080,421;
amended compact:
25% annual net
win, bond
payments
Pechanga Band of
Luiseño Indians,
Temecula, 1,372
members
1999
2,000 slots, 174 table
games
522 room hotel,
11 restaurants,
store, RV resort
convention hall,
gas station
$252 million
$100+ million in
annual revenue;
80% per capita
Payments to RSTF
of $1,533,780, SDF
payments
Picayune Rancheria
of the Chukchansi
Indians, Coarsegold,
1,173 members
Cascade
Entertainment
Group, CA
(terminated)
1999
1,800 slots, 47 table
games
192 room hotel,
7 restaurants,
theater
$310 million
bond
Payments to RSTF,
$9,848,969
Pit River Tribe,
Burney, 1,657
members
1999
350 slots, 3 table
games, 70 bingo
seats
1 restaurant $0**
Quechan Indian
Nation, Fort Yuma,
Imperial County,
2,668 members in
California
1999,
amended
2005 but
not ratified
350 slots, 15 table
games; seeking
approval for 2
nd
CA
casino with 1,100
slots
3 restaurants,
casino in
Arizona
$0**
amended compact:
10-25% annual net
win
62 California Research Bureau, California State Library
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Redding Rancheria,
Redding, 281
members
1999
951 slots, 18 table
games, 300 bingo
seats
4 restaurants,
planned 100
room hotel
60% per capita
Payments to RSTF
of $687,500, SDF
payments
Rincon Band of San
Luiseño Indians,
Valley Center, 639
members
Harrah’s
Entertainment
Inc., Nevada
1999
1,600 slots, 51 table
games and 8 poker
tables
653 room hotel,
spa, 8
restaurants,
lounge,
showroom, gift
shop
$293 million,
1,500
employees
50% per capita
Payments to RSTF,
$7,288,246
Robinson Rancheria
Pomo Indians, Nice,
433 members
1999
600 slots, 10 table
games, 530 bingo
seats
48 room hotel,
2 restaurants,
RV park,
conference
center, gift
shop,
49% per capita
Payments to RSTF
of $275,000, SDF
payments
Rumsey Band of
Wintun Indians, 44
members
1999,
amended
2004
Unlimited slots under
2004 amendment,
111 table games,
bingo
200 room hotel,
mini mart, spa,
showroom, 8
restaurants, golf
course
$250 million in
2003 (net); 30%
per capita
Payments to RSTF,
$5,634,900;
amended compact:
25% annual net
win, bond
payments
San Manuel Band of
Mission Indians,
Highland, 151
members
1999
2,000 slots, 99 table
games, 2,500 seat
bingo hall
6 restaurants,
gift shop
$240 million
resort, 2,700
employees
Over $100
million/year
(2002 estimate);
45% per capita
Payments to RSTF
of $4,828,747,
SDF payments
San Pasquel Band of
Mission Indians,
Valley View, 529
members
Siren Gaming
LLC, Nevada
1999
1,572 slots, 10 table
games
3 restaurants 45% per capita
Payments to RSTF,
$6,261,281
Santa Ynez Band of
Chumash Indians,
Santa Ynez, 159
members
1999
2,000 slots, bingo
(1,000 seats), 40 table
games, 14 poker
tables
hotel, spa, 3
restaurants,
showroom
$200 million
annual net
revenue; 20% per
capita
Payments to RSTF
of $7,072,164, SDF
payments
California Research Bureau, California State Library 63
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Santa Ysabel Band
of Mission Indians,
Santa Ysabel, 936
members
2003,
allows one
casino
350 slots; no casino
Planned $30
million
5% annual net win
to state
Sherwood Valley
Band/Pomo tribe,
Willits, 367
members
1999 350 slots Cafe 65% per capita $0**
Shingle Springs
Rancheria of
Miwok Indians,
Shingle Springs,
310 members
Lakes-KAR
Shingle
Springs LLC
1999 350 slots; not open
Planned $250
million
Payments to RSTF,
$1,238,750
Smith River
Rancheria, Smith
River, 896 members
1999
350 slots, 2 blackjack
tables, bingo
Restaurant
$0,** SDF
payments
Soboba Band of
Luiseño Indians,
San Jacinto, 802
members
Century
Casinos
Management,
Inc., CO
1999
2,000 slot machines,
21 table games, 10
table poker room,
350 seat bingo hall
3 restaurants,
entertainment
pavilion,
proposed 400
room hotel
950 employees
Payments to RSTF
of $3,858,730,
SDF payments
Susanville Indian
Rancheria,
Susanville, 360
members
1999
350 slots, table
games
3 restaurants,
gift shop
$0**
Sycuan Band of
Kumeyaay Nation,
El Cajon, 67
members
1999
2,000 slots, 64 table
games, off-track
betting, 1,254 seat
bingo hall
102 room hotel,
5 restaurants,
entertainment
hall, golf
course, gift
shop, tennis
32% per capita
Payments to RSTF
of $12,579,097,
SDF payments
64 California Research Bureau, California State Library
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Table Mountain
Rancheria,
Chukchansi Mono
Tribe, Friant, 115
members
1999
2,000 slots, 32 table
games, 800 seat
bingo hall
2 restaurants,
gift shop
Cascade
Entertainment
Group
25% per capita
Payments to RSTF
of $6,285,920, SDF
payments
Tachi Yokut (Santa
Rosa Rancheria),
Lemoore, 682
members
1999
2,000 slots, 17 table
games, 950 seat
bingo hall
4 restaurants 30% per capita
Payments to RSTF
of $13,042,151,
SDF payments
Torres-Martinez
Band of Cahuilla
Indians, Salton
City, 532 members
2003
Planned 350 slots on
existing reservation;
possible 1,650
expansion
Truck stop
Revenue sharing of
3% 1
st
yr., 4% 2
nd
yr., 5% 3
rd
yr.
Tuolumne Band of
Me-Wuk Indians,
Tuolumne, 350
members
1999
1,013 slots, 24 table
games
7 bars and
restaurants,
bowling alley,
arcade
Expansion
underway
1% per capita
Payments to RSTF,
$828,750.
Tule River Indian
Tribe, Porterville,
1,425 members
1999
1,500 slots, table
games, bingo (450
seat)
2 restaurants,
showroom, gift
shop
35% per capita
Payments to RSTF
of $2,897,124, SDF
payments
Twenty Nine Palms
Band of Mission
Indians, Coachella,
13 members
THCR
Management
Services,
Delaware
1999
2,000 slots, 37 table
games
3 restaurants,
gift shop; 800
employees
21.5% per capita
Payments to RSTF,
$7,410,853, SDF
payments
United Auburn
Indian Community,
Lincoln, El Dorado
Co., 244 members
Station
Casinos, LLC
Nevada
1999;
amended
2004
Unlimited number
under 2004
amendment, 98 table
games
11 restaurants $100 million
$338 million in
2003 (net); 40%
per capita
Payments to RSTF,
$7,446,560
California Research Bureau, California State Library 65
Tribe, Location,
Enrollment (2001,
BIA)
NIGC-
Approved
Management
Contracts
State
Compact
Authorized Slot
Machines, Other
Games*
Facilities in
addition to
casino
Investment in
Facilities, #
employees+
Total revenues
and % revenues
in per capita
payments to
members+
Payments to RSTF
2000 to 09/30/05,
SDF Payments,
State Revenue
Sharing++
Viejas Band of
Kumeyaay Indians,
Alpine, 268
members
1999,
amended
2004
Unlimited number
under 2004
amendment, 62 table
games, 900 seat
bingo hall, off-track
betting
6 restaurants,
factory outlet
store mall,
outdoor theater
$135 million
+$25million
expansion,
$56.6 million
in outlet center
$174 million
annual net win
2003-04; 55% per
capita
Payments to RSTF,
$4,192,366;
amended compact:
25% annual net
win, payments to
secure bond
The information provided in this table is drawn from government and news sources. Given how quickly new developments occur, there may be more recent changes.
*Some tribes do not have all authorized slot machines in operation; information about other games is taken from tribal websites.
**Tribes with 350 or fewer gaming devices (slot machines) are defined as “non-gaming tribes” and are eligible to receive a full share from the Revenue Sharing Trust Fund,
which currently provides $1.1 million/year to eligible compact tribes.
+Revenue information is considered to be proprietary and so is incomplete. Per capita % is from the Office of Indian Gaming Management, U.S. Department of the Interior.
++Revenue Sharing Trust Fund (RSTF) payments began July 1, 2000. The RSTF receives license fees of $0-$4,350 per device per year, depending on the number of gaming
devices a tribe operates. Some of the 2003-2005 compact tribes pay only into the RSTF; others pay only a % of net win to the state, as described..
66 California Research Bureau, California State Library
California Research Bureau, California State Library
67
SOCIAL AND ECONOMIC IMPACTS OF INDIAN CASINOS
In the last two chapters of this report, we discuss the social and economic impacts of
gambling in more detail. In this section, we review research that focuses solely on the
impact of Indian casinos.
On Tribes
Many of the country’s 1.9 million American Indians have lived in poverty on rural
federal trust reservations for decades, receiving minimal government services and
suffering from inadequate housing, poor schools, and chronic diseases such as diabetes,
alcoholism, and drug abuse. In 1990, per capita income for Indians on reservations was
less than one-third the U.S. average; college attainment was less than half the U.S. level;
unemployment was three times the U.S. level; and Indian homes disproportionately
lacked access to running water and wastewater facilities.
142
California tribes have experienced unemployment as high as 90 percent, welfare
dependency, and poor education and health services. Inadequate investment in
infrastructure on the tribes’ isolated lands has increased their lack of business
opportunities. For example, the state’s largest tribe, the Yurok (about 4,000 members),
lives on a reservation in which 80 percent of the homes lack electricity, 75 percent of the
tribal members do not have jobs or phone lines, water and sewer systems are inadequate,
and there is only a one lane roadway.
143
A Brookings Institute report summarized the costs of concentrated poverty on individuals
and society:
These costs come in the form of: reduced private-sector investment and local job
opportunities; increased prices for the poor; higher levels of crime; negative impacts
on mental and physical health; low-quality neighborhood schools; and heavy burdens
on local governments that induce out-migration of middle-class households.
Together, these factors combine to limit the life chances and quality of life available
to residents of high-poverty neighborhoods.
144
Improved Socioeconomic Well-Being
The IGRA requires that revenues from tribal gaming be used to fund tribal governmental
gaming operations and programs, provide for the general welfare of tribal citizens,
promote economic development, support charitable organizations, and fund operations
for local, non-tribal government agencies. Some tribes have used gaming profits to build
houses, schools, day-care centers, clinics, and hospitals; to support social service
programs; to build infrastructure such as roads and sewer and water systems; to make
direct per capita payments to tribal members; and to fund retirement programs and
college scholarships. Welfare and unemployment have been eliminated for members of
some gaming tribes.
68 California Research Bureau, California State Library
Indian gaming has had a tremendous impact on the economic well being of many
California tribes, resulting in:
…well-paying jobs; a viable revenue stream with which to provide essential
government services; a means to leverage economic growth, development and
economic diversification; the chance to revitalize culture and tradition; and the
opportunity to strengthen the institutions of tribal governance…
145
A National Bureau of Economic Research 2002 study found that four years after tribes
opened casinos, tribal employment increased by 26 percent and tribal populations
increased by about 12 percent, while the fraction of poor working adults declined by 14
percent. The increased employment was not necessarily in gaming, as some tribes have
diversified their economic base.
146
An extensive study by the Harvard Project on American Indian Economic Development,
summarized in Table 9, found many positive changes nationally from 1990, when few
tribes had gaming enterprises, to 2000, when many tribal-state compacts were in
operation (although large scale Indian gaming did not begin in California until after
2000). As the authors suggest, the results are remarkable. They conclude that a national
policy of Indian self-government is driving socioeconomic change as well as gambling,
given the reported improvements for non-gaming as well as gaming tribes.
147
Table 9
Changes on Reservations Other than Navajo (1990-2000)
Non-Gaming Gaming U.S. overall
Real per capita income +21% +36% +11%
Median family income +14% +35% +4%
Family poverty -6.9% -11.8% -0.8%
Child poverty -8.1% -11.6% -1.7%
Deep poverty -1.4% -3.4% -0.4%
Public assistance +0.7% -1.6% +0.3%
Unemployment -1.8% -4.8% -0.5%
Labor force participation -1.6% +1.6% -1.3%
Overcrowded homes -1.3% -0.1% +1.1%
Homes lacking plumbing -4.6% -3.3% -0.1%
Homes lacking kitchen +1.3% -0.6% +0.2%
College graduates +1.7% +2.6% +4.2%
Only high school or equivalent -0.3% +1.8% -1.4%
Less than 8
th
grade -5.5% -6.3% -2.8%
Source: Jonathan B. Taylor, Joseph P. Kalt, American Indians on Reservations: A Databook of Socioeconomic Change
Between The 1990 and 2000 Census, p. xi.
California Research Bureau, California State Library 69
Despite these impressive socioeconomic gains, the gap between American Indians living
on reservations and the United States as a whole remains significant. Per capita income
in 2000 was less than half the U.S. level, unemployment was twice the U.S. rate, and
family poverty was three times the U.S. rate. The authors of the Harvard Project study
point out that, “If U.S. and on-reservation Indian per capita incomes were to continue to
grow at their 1990’s rate, it would take half a century for tribes to catch up.”
148
A recent study by University of California, Riverside researchers relies on data developed
by the Harvard Project on American Indian Economic Development from the 1990 and
2000 censuses to arrive at conclusions about the impact of Indian gaming on California
tribes and nearby communities. Since California’s tribal-state gaming compacts were not
approved by the voters until March 2000, the study was not able to measure the full
impact of Indian gaming in the state, although it provides a useful baseline.
The UC Riverside study found that the income of gaming tribes increased 55 percent
from 1990 to 2000, reducing the percentage of families living in poverty from 36 percent
to 26 percent. In comparison, the income of non-gaming tribes increased by 15 percent.
Gaming tribes also experienced a reduction in the number of members with less than a
ninth grade education, from 11 percent to six percent; in contrast, the percentage of non-
gaming tribe members with less than a ninth grade education increased from 12 percent
to 14 percent.
149
Improved Child Well-Being
A study published in the Journal of the American Medical Association (JAMA),
examined the impact of casino revenues on the mental health of youth living on the
Eastern Band of Cherokee Indian reservation in North Carolina. The study began in
1993, with the goal of studying the development of psychiatric disorders and the need for
mental health services in rural and urban youth. One quarter of the sample was
composed of children aged 9, 11 and 13 years old living on the reservation. A “natural
experiment” occurred halfway through the eight year study when a casino was built,
bringing jobs and per capita payments of $12,000 a year (in 2001) to tribal members,
lifting around 30 percent of the Indian families in the study sample out of poverty.
150
Children living in poverty are more likely to have psychiatric disorders. The study found
that “Children whose families moved out of poverty…showed a significant decrease in
the mean number of psychiatric symptoms after the casino opened.” Parental supervision
was the intervening variable, accounting for 77 percent of the improved behavioral
symptoms. The authors conclude that, “This finding raises the possibility that children’s
symptoms, particularly those of oppositional and deviant behavior, are affected by
economic constraints on parents’ ability to devote scarce time resources to supervision.”
Concentrated Impact
While Indian gaming has greatly improved the social and economic status of many tribes,
its impact has been concentrated. Two-thirds of the nation’s American Indian population
belongs to tribes that do not have casinos, some for cultural reasons and others because
70 California Research Bureau, California State Library
their reservations are too remote. In 2001, “…22 of the more than 300 casinos and bingo
halls generated 56 percent of the nation’s tribal gambling revenues.”
151
Gaming tribes represent nine percent of California’s American Indian residents. Sixty-
two of California’s 108 federally recognized tribes currently have tribal-state compacts to
operate casinos, but the size of their operations and revenues varies considerably (see
Table 8). The largest tribal gambling facilities are located near major population centers.
Non-gaming tribes are located primarily in sparsely populated areas in Northern
California and along the eastern border of the state.
Tribes that have “hit the jackpot” with large, successful gaming operations are able to
provide a very high standard of living for their members. According to Chairman
Richard Milanovich, a tribal survey conducted by the Agua Caliente Band of Cahuilla
Indians in 1993, before the opening of the tribe’s Spa Hotel and Casino in downtown
Palm Springs, found that 50 percent of the tribe’s members lived at or below federal
poverty levels, with about 40 percent living in substandard housing. Now the tribe offers
all members a health and dental and vision program, pays all college tuition and
expenses, and pays a direct per capita payment to all members. Much of the tribe’s
casino profits are put into its economic development programs, purchasing commercial
property around Palm Springs and a 45 percent share in a local bank, among other
investments.
152
Disharmony
Gaming can bring tribal members together, giving them a choice in the direction of their
economic development. However in some tribes gaming profits have contributed to
disputes over tribal membership. Tribal membership criteria are up to the discretion of
the tribe, generally as interpreted by the tribal council. Most tribes determine
membership by the applicant’s percent of tribal blood—one quarter, one eighth or less.
Some tribal councils exclude certain blood relatives if they have not participated in tribal
affairs. Pechanga, Table Mountain, and Cabazon are among the tribes mentioned in press
accounts as having expelled members, in some cases leading to unsuccessful litigation in
state courts (which have ruled that they have no jurisdiction).
The Pechanga lawsuit lays out in considerable detail the benefits from gaming revenues
that the expelled members have lost. The 11 plaintiffs sued on behalf of an extended
family of more than 130 adults and children who claim ancestry in the Pechanga tribe but
were ousted from the tribe. They claim losing about $120,000 a year apiece in casino
profits that came with tribal membership, as well as homes, jobs and health benefits.
According to a news account, at least ten of California’s gambling tribes have “…kicked
out members or denied them a share of casino profits that often exceed $50 million a
year. The expulsions and exclusions have torn apart families and rekindled old
hatreds.”
153
Disenrolled members lose their share of casino profits and their status as
federally recognized Indians entitled to federal housing assistance, health care and
tuition.
California Research Bureau, California State Library 71
Perhaps the most serious quarrel over gaming profits occurred in the mid-1990s in the
Elem Indian Colony, in which disputes over gaming funds led to five days of violence,
including drive-by shooting and homes set on fire. Nine people were injured, ten homes
were made uninhabitable, and almost 60 tribal members fled the reservation to take
refuge at a nearby Navy base.
154
More Effective Governance
Casino revenues have provided tribal governments the means to professionalize their
operations and to offer their members a wide variety of services. Gaming tribes have
fully staffed departments providing a range of services from health and finance to public
safety and public works. This increase in capacity has also assisted the tribes to
successfully compete for federal and state grant funds. The UC Riverside study found
that “…the opening of a tribal gaming facility…is associated with an additional $535,000
in federal American Indian grants for that county.”
155
A 2005 survey conducted as part of the UC Riverside study, with responses from a
limited sample of 11 gaming and ten non-gaming tribes, found that:
…the gaming tribes provide more public services to their members, they have
more fully developed tribal legal structures, employ more workers…develop lines
of communication with other local governments, are more likely to be engaged in
policy discussions of regional and community issues, and have more diversified
economic activities.
156
The survey also found that non-gaming tribes are adding services at the same rate as
gaming tribes, a beneficial result of the 1999 tribal-state compacts, under which non-
gaming tribes receive Revenue Sharing Trust Fund payments, currently $1.1 million a
year.
About a fourth of the local government officials in communities located near gaming
tribes responding to the UC Riverside study rated the tribes as “constantly engaged in
area issues,” compared to about five percent of respondents from communities located
near non-gaming tribes. These communications are likely to take place through the
tribe’s professional administrative staff, reflecting the stronger institutional capacity of
gaming tribes.
157
A number of statewide and regional intertribal organizations strengthen tribal influences
on public policy decisions. For example, the tribal leader heading the Southern
California Tribal Chairmen’s association also chairs a subcommittee of the San Diego
Association of Governments. Tribal chairs participate in chambers of commerce and in
regional planning groups.
158
72 California Research Bureau, California State Library
On Communities and Consumers
Background
Indian gaming is located in less than half (25 counties) of California’s 58 counties. These
are primarily rural counties, containing 26 percent of California’s population. An
analysis by UC Riverside researchers found that 11 percent of California’s population
lives near a tribal gaming facility when measured at the census tract level.
159
As Table 10 illustrates, Indian gaming confers both cost and benefits to the tribes and the
larger society.
Table 10
Benefits and Costs of Indian Gaming
Benefits Costs
1. Some tribal economies profit.
1. Reduced taxes and lottery sales, offset by
revenue sharing with the state and payments to
some local governments.
2. Can reduce unemployment both on and off
the reservation.
2. Can increase unemployment in other sectors
of the state economy.
3. Can reduce state social service costs. 3. Can increase state social service costs.
4. Increased tribal income can stimulate local
businesses.
4. Can negatively impact local businesses.
5. Decreased cost of providing public services
to reservations.
5. Increases the demand for public services.
Source: “Testimony before the National Gambling Impact Study Commission,” Gary C. Anders, Ph.D.
Economic Impact
California’s $6.3 billion (gaming and non-gaming) tribal industries (2004 data) provide
economic and employment benefits to many Californians, particularly in the rural areas
where most Indian casinos are located. Off reservation communities benefit
economically when rural casinos attract gamblers from other places and some of their
money is spent outside the casino. The casinos also provide a new source of employment
for local residents, since up to 90 percent of casino employees are non-Indians.
160
Higher
crime rates and more personal bankruptcies offset these benefits.
A 2004 study of the impact of California Indian casinos by researchers at California State
University, Sacramento (CSUS), based on county-level data, found “…a modest
correlation between Indian casinos and [higher] county employment
rates…[and]…somewhat higher crime and higher rates of personal bankruptcy.”
Aggravated assault and violent crimes were correlated with a greater casino presence, as
were increased public expenditures ($15.33 per capita) for law enforcement. The study
also found somewhat higher tax revenues, primarily generated by room occupancy taxes
and tobacco taxes. Since local jurisdictions cannot impose a room occupancy tax on
California Research Bureau, California State Library 73
hotels located on an Indian reservation, the increased tax revenues were most likely
generated by hotels located outside of the reservations.
161
These findings run parallel to a 2002 National Bureau of Economic Research study using
county-level data, which found that after the opening of a Native American casino,
employment increased by about five percent in nearby communities, while crime and
bankruptcy rates increased by about ten percent.
162
UC Riverside researchers examining 1990 and 2000 census data, found increased family
incomes in census tracts located near California Indian casinos. The study concluded that
“…the establishment of gaming had beneficial impacts on poverty, employment,
educational expansion and the receipt of public assistance…resulting from the fact that
most Indian reservations in California, even the better-off ones, are located in the poorest
counties and tracts in the state.”
163
However there are limitations to the UC Riverside study:
• The study’s conclusions are based primarily on 1990-2000 census data. However,
as the researchers note, class III Indian casino gaming was not legal in California
until March 2000. Between 2000 and 2005, 16 new Indian casinos opened in
California and the average casino doubled in size.
• The rural areas in Riverside, San Bernardino, and San Diego counties (where
many casinos are located) experienced considerable population and economic
growth during 1990-2000, for reasons not related to gaming, and the study did not
control for these factors.
• The study concludes that tribal gaming was associated with a decline in the
number of poor people on public assistance, without taking into account the
impact of the 1994 federal welfare reform that resulted in a dramatic decrease in
public assistance rolls.
• The study examines a limited range of variables and does not, for example, take
into account the public and private costs associated with Indian gaming such as
public safety, infrastructure, crime, environmental degradation and problem and
pathological gambling. These issues are considered below.
UC Riverside researchers also conducted a 2005 survey of local officials located in
communities near Indian gaming operations. About half of these officials viewed gaming
as a benefit to the local business community, as shown in Table 11.
74 California Research Bureau, California State Library
Table 11
Casinos” Effects on Local Businesses as Perceived by Local
Government Officials (2005)
Casino Effects on Business Local Officials’ Opinion
Help business 49.2%
Have no effect 29.2%
Hurt business 12.3%
Does not apply 9.2%
Source: UC Riverside, 2005.
A 2003 study by San Diego County estimated the following economic impacts from
tribal gaming in the county:
164
• Creation of about 12,000 jobs, primarily for non-Indians, with an annual payroll
of $270 million.
• Purchases of $263 million in goods and services in 2001, including contracts with
over 2,000 vendors, most in the county.
• Contributions of over $7 million to community organizations.
The following examples of the substantial economic impact of rural tribal casinos are
drawn primarily from tribal and news reports because information about tribal gaming
operations is proprietary and confidential.
• According to the 2002 Financial Statement of the Viejas Band of Kumeyaay
Indians, the tribe’s total payroll for its casino and retail operations in rural Alpine
was $72 million, creating 3,000 jobs in San Diego County. Its enterprises
generated $41 million in federal, state, and local taxes. The tribe purchased $83
million in goods and services, and made the following payments:
o $2 million to community and charitable contributions
o $.7 million to non-gaming tribes per tribal-state compact
o $3.8 million to the Special Distribution Fund per compact
165
• The Viejas Band has a diversified investment portfolio. It purchased a half-
interest in a San Diego company that operates three radio stations and is
participating in financing of Marriott Inns in Washington, D.C. and Sacramento.
• The Rincon Band of San Luiseño Indians’ Harrah’s Rincon casino in San Diego
County employs 1,500 people, with a payroll of $56 million. It spends about $32
million with 1,042 vendors in California and $17 million elsewhere, and generates
more than $5 million in payroll, sales and tribal hotel occupancy taxes.
166
• Indian gaming helps drive the Inland Empire economy, with ten casinos providing
more than 14,400 jobs in Riverside and San Bernardino counties. The most
California Research Bureau, California State Library 75
profitable Inland casino slot machines are believed to pull in $450 to $500 a
day.
167
• The Jackson Rancheria Casino Hotel & Conference Center is the largest employer
in Amador County, of 1,700 people.
• Barstow officials estimate that two tribes’ plans to build casinos and hotels would
create 3,700 jobs and yield up to $9 million yearly for the city, based on a 4.5
percent share of slot machine profits.
168
Urban casinos
The cost-benefit calculus for an urban casino is different from that of rural casinos.
Negative economic impacts can result when gaming operations alter established retail
spending or employment patterns, create more problem gambling, and increase costs for
traffic, law enforcement and infrastructure. In part this is because more of the gamblers
are local residents so the money they spend on gambling displaces other local
expenditures. Gambling in rural areas tends to draw residents from other regions,
bringing money into the local economy.
An analysis prepared for opponents of a proposed 5,000 slot machine Indian casino in the
city of San Pablo concluded that the casino would result in a regional economic loss of
$138 million a year, not taking into consideration social, public health, or safety costs.
Money lost to the local economy, which would otherwise have been spent on local goods
and services, was estimated to have a multiplier effect on the regional economy resulting
in 7,219 jobs lost (compared to an estimated 2,000 employed at the casino).
169
The
smaller casino (805 class II bingo machines) currently operated by the Lytton Rancheria
employs 540 unionized workers, and reportedly has had little effect on nearby businesses
because most players are from the local area and leave after they gamble.
170
Public Revenues
As noted above, some California gaming tribes with 1999 compacts make payments into
the Special Distribution Fund (SDF). Tribes with more recent compacts also make
payments to the state’s General Fund and, in the case of six tribes, payments to fund a
state transportation bond issue. Some of these revenues fund state programs for problem
and pathological gamblers, cover state regulatory and enforcement costs at a relatively
low level and mitigate some of the off-reservation impacts on local governments.
Local Infrastructure
Casinos in rural areas draw tens of thousands of people into relatively isolated areas that
may lack adequate roads, water supplies, and sewer infrastructure. The projected cost to
local and state governments of providing the needed investment is substantial. Tribes
have paid for some road improvements directly, and for others through the Special
Distribution Fund, but these payments do not fully mitigate the impact. For example, San
Diego County estimated in 2003 that the price of improving roads to casinos in rural
areas was $150 million.
171
The county estimated that the tribal “fair-share” to improve
76 California Research Bureau, California State Library
county roads near reservations was $23.9 million. Three tribes had comprehensive
cooperative agreements with the county to fund $10.9 million of that amount. In another
example, the Rumsey Band of Wintun Indians agreed to pay Yolo County $5 million a
year for 18 years to mitigate the traffic, environmental and other problems associated
with its casino expansion.
Large casinos can easily double the daily population in small communities, increasing
traffic congestion and air pollution. San Diego County notes that “Deterioration of air
quality in the vicinity of gaming and resort projects is still a significant issue for the
County that is largely unaddressed, and the major road improvements needed to prevent
development of “hot spots” take years to construct, under the best of circumstances.”
172
Sewer and wastewater treatment are another major concern. Some casinos are located in
dry rural areas that lack sufficient water and have inadequate wastewater infrastructure.
Local governments do not have jurisdiction, and the state’s role is limited, particularly
under the 1999 tribal-state compacts. For example, according to an August 2005 article,
the state wanted to inspect the wastewater treatment system at the Campo Band of
Mission Indian’s Golden Acorn Casino to ensure that it is not a threat to public health,
but under the tribal-state compact, the state can only investigate in the absence of regular
federal inspections. The U.S. Environmental Protection Agency had inspected earlier in
the year but did not test for harmful bacteria or require safety equipment for workers.
173
Labor Standards
The 1999 California tribal-state compacts require that the tribes provide “…an agreement
or other procedures acceptable to the State for addressing organization and representation
rights of class III Gaming Employees and other employees associated with the Tribe’s
class III gaming enterprise…” More recent tribal-state compacts contain more explicit
language providing employees the right to organize for collective bargaining purposes if
they choose to do so. For example, the tribal-state compact with the Coyote Valley Band
of Pomo Indians, ratified in 2003, contains the following provisions:
• The tribe is to adopt and comply with federal and state workplace and
occupational health and safety standards, and to allow for inspection of the
gaming facility by state inspectors to assess compliance. Violations are a
violation of the compact and may result in enjoining employees from entering into
the gaming facility.
• The tribe agrees to participate in the state’s workers’ compensation program for
employees of the gaming facility and independent contractors, and consents to the
jurisdiction of the Worker’s Compensation Appeals Board and state courts for
purposes of enforcement.
• The tribe is to enact an ordinance that affords employees the right to self-
organize, bargain collectively, and engage in other concerted activities including a
right to strike and to select a representative through secret ballot. The model
ordinance describes the certification process (after employment of 250 or more
persons), defines eligible employees and access to those employees, describes
California Research Bureau, California State Library 77
unfair labor practices and unfair union practices, provides for free speech and
posting of information, and ensures tribal preference in employment.
• All issues are to be resolved through a binding dispute resolution mechanism.
Employees in six Indian casinos in the state are unionized and have collective bargaining
agreements. UNITE HERE, which represents nearly half a million workers in the
hospitality, gaming, apparel, textile, retail, distribution and laundry industries in North
America, has contracts with four casinos: Casino San Pablo (Lytton), Cache Creek
(Rumsey), Thunder Valley (United Auburn) and the Chukchansi Gold Resort and Casino
(Picayune Rancheria); and is in negotiations with the Pala Casino (Pala). The
Communications Workers of America represents gaming workers in two Southern
California casinos owned by the Viejas Band of Kumeyaay Indians and the San Manuel
Band of Mission Indians. Other tribes have been involved in organizing battles with
unions and reportedly object to the collective bargaining provisions in the new gaming
compacts.
A Decision and Order of the National Labor Relations Board in 2004, found that tribal
operation of a casino is not an exercise of self-governance and that the Board has
jurisdiction over labor relations.
174
In its opinion, the Board noted that tribal enterprises
are playing “…an increasingly important role in the Nation’s economy...[as]…significant
employers of non-Indians and serious competitors of non-Indian owned businesses.”
Significantly, the Board found that, “When the Indian tribes act in this manner, the
special attributes of their sovereignty are not implicated. Running a commercial business
is not an expression of sovereignty in the same way that running a tribal court system is.”
Tribal casino employment manuals specify grievance procedures for casino employees.
In a recent civil suit against Thunder Valley Casino, alleging civil rights violations
ranging from sexual assault to age bias, a Placer Court commissioner found that neither
the casino nor its owner, United Auburn Indian Community, could be sued for violations
of state and federal civil rights laws because the tribe is a sovereign nation. The
employees have appealed. Related civil suits against a supervisor and Station Casinos,
Inc., the casino’s contract manager, are pending.
175
Many of the jobs created by Indian casinos are service jobs involving restaurant and hotel
work and are relatively low paying. A 2003 study of Wages and Healthcare Benefits of
Workers at Agua Caliente Casino (Rancho Mirage), found that the average hourly wage
of employees was $8.93, with an average workweek of 38 hours, resulting in an annual
income of $16,967. The authors concluded that this income was not enough for casino
employees with children to achieve a modest standard of living. Over a quarter of the
casino employees had second jobs, indirect evidence of the “inadequacy of their casino
earnings.”
176
The authors also found that “Agua Caliente Casino induces employees to
depend on government subsidized health-care for their children…[and] potentially
increases casino profits by as much as $1,000,000 a year...[but]…costs state taxpayers
who fund the Health Families and Medi-Cal programs.” The casino employed
approximately 1,000 workers, of whom 470 were covered by the Tribal Labor Relations
Ordinance.
78 California Research Bureau, California State Library
Environmental Impact
Language in the state’s 1999 compacts with gaming tribes intended to mitigate the
environmental impact of large casino construction projects has proven to be vague and
“largely unenforceable.” Tribes are required by the compact to adopt environmental
ordinances and conduct environmental impact studies, making a “…good faith effort to
incorporate the policies and purposes of the National Environmental Policy Act (NEPA)
and the California Environmental Quality Act (CEQA) consistent with the Tribe’s
governmental interest” (Sec. 10.8.1). Tribal signatories are also charged with making
“…good faith efforts to mitigate any and all such significant adverse off-Reservation
environmental impacts” [Sec. 10.8.2 (b) (2)].
The first wave of casino construction was driven by a compact deadline requiring that
slot machines authorized under licenses drawn from the compact-created license pool be
in operation within a year. This happened before any agreement was reached on what
environmental protections were required. The Attorney General notified at least three
tribes (Rincon, San Pasquel, Tuolumne Band of Me-Wuk) that they had failed to comply
with the basic guidelines of CEQA.
177
For example, the Attorney General’s letter to the
Tuolumne Band of Me-Wuk Indians declared that under either NEPA or CEQA, the
Draft Mitigated Negative Declaration for the Tuolumne Rancheria’s Grading and
Clearing Operation was inadequate, and “…must be withdrawn until such time as the
environmental impacts of the entire project have been considered.”
178
However that tribe
continued grading and clearing for construction. The Attorney General does not have the
authority to enforce provisions of the compact—that responsibility remains with the
governor.
Concerns have been raised around the state about the sufficiency of some tribal
environmental impact reports and mitigation efforts, particularly relating to wastewater,
groundwater depletion, endangered species, water contamination, grading of land, and
dangerous road conditions. In some areas, such as near the Barona casino and golf
course, local residents have experienced loss of water due to ground water depletion. The
Campo Indian tribe’s Golden Acorn Casino sewage system allowed wastewater to flow to
a hillside behind the casino for about two years.
179
The casinos’ large-scale developments have changed the character of some rural areas.
After an extensive review, San Diego County concluded that:
In general, the Environmental Assessments prepared for individual proposed
gaming facilities have not provided the level of detail the County requires of
projects under its jurisdiction, and have not included factual analysis to support
the conclusions that the tribal projects did not have significant impacts on the
community character of the surrounding areas.
180
Environmental standards are still unclear in the 2004 amended compacts. For example,
the county of San Diego has asked the governor to intervene in a dispute with the Pauma
Band of Mission Indians, which county officials say has illegally expanded its casino
operations. At issue is what “significant” environmental impact actually means in the
California Research Bureau, California State Library 79
tribe’s 2004 amended contract, and whether the 1999 compact provisions continue to
apply to the project.
181
Public Health Impact
Alcohol
Some California Indian casinos provide alcohol for their patrons. Federal law requires
that they first receive a state license to sell alcohol, which is issued and regulated by the
Department of Alcoholic Beverage Control (ABC) in California. The Department
regularly inspects the premises of businesses with liquor licenses, including tribal
casinos, to make sure they are enforcing state laws, such as against underage drinking.
Issuance of a liquor license is not automatic. In some areas there is strong local
opposition to granting a liquor license to a tribal casino. For example, The River Rock
Casino’s application for a liquor license, which has been approved by the ABC, is
opposed by the Sonoma County sheriff, the Sonoma County fire chief, town officials, and
local residents.
182
Many tribal casinos are located in rural areas and reached by narrow winding roads,
leading to special problems with drunken driving (see Crime section). In the opinion of a
Riverside County deputy district attorney, tribal casinos need to train their alcohol servers
better, as “ People do not get drunk unless someone serves them.”
183
The following 15 tribes, about one quarter of the state’s gaming tribes, had state liquor
licenses as of October 2005, according to the ABC:
• Viejas Band of Kumeyaay Indians (5 licenses)
• Pechanga Band of Luiseño Indians (2 licenses)
• Chemehuevi Tribe (3 licenses)
• Cabazon Band of Mission Indians (1 license)
• Agua Caliente Band of Cahuilla Indians (3 licenses)
• Quechan Tribe of Fort Yuma Indian Reservation (1 license)
• Morongo Band of Mission Indians (5 licenses)
• Twenty-Nine Palms Band of Mission Indians (1 license)
• La Jolla Band of Mission Indians (1 license)
• Pala Band of Mission Indians (2 licenses)
• Rincon Band of Luiseño Indians (1 license)
• Rumsey Indian Rancheria of Wintun Indians (1 license)
• Big Sandy Band of Western Mono Indians (1 license)
80 California Research Bureau, California State Library
• Concow Maidu Tribe of the Mooretown Rancheria (1 license)
• Colusa Indian Community Council (1 license)
Liquor license applications have also been approved by the ABC following
administrative judicial determinations for the River Rock Casino (Dry Creek Rancheria
Band of Pomo Indians) and the San Manuel Indian Bingo and Casino (San Manuel Band
of Mission Indians).
Smoking
Smoking presents a major public health issue for casino workers and patrons, as most
casinos allow smoking. Bingo halls in particular are well known for their heavy
smoking. The California Environmental Protection Agency (CalEPA) estimates that
casinos and bingo parlors that allow smoking may expose their patrons and staff to
twenty three times more nicotine than venues where smoking is prohibited.
184
California’s tribal-state gaming compacts exempt tribes from “any state laws, regulations,
or standards governing the use of tobacco.” However beginning in 2003, with La Posta
Band of Mission Indians’ tribal-state gaming compact, casinos are required to have non-
smoking areas and ventilation systems that exhaust tobacco smoke. The small Lucky
Bear Casino owned by the Hoopa Valley Tribe is advertised as a non-smoking casino.
According to CalEPA, environmental tobacco smoke (ETS) aggravates asthma and
contributes to chronic respiratory impairment, coronary heart disease and lung, nasal
sinus, breast and cervical cancers. It may be associated with decreased fertility. For
pregnant women, exposure to environmental tobacco smoke adversely affects fetal
growth, with elevated risks of low birth weight, perinatal mortality, and other health
problems.
185
In labeling ETS as toxic, the California Air Resources Board relied on
CalEPA’s study finding a clear link between secondhand smoke and breast cancer. The
findings, the first of their kind by a government agency in the United States, concluded
that premenopausal women exposed to significant amounts of secondhand smoke
suffered a 68 percent to 120 percent higher risk of breast cancer.
186
Any increase in exposure to environmental tobacco smoke translates into increased
healthcare costs for individuals and society.
Emergency Services and Public Safety
Under the 1999 tribal-state compact, all gaming facility construction is to conform to the
building and safety codes of the tribe, which are to meet the standards of the local county
or the Uniform Buildings Codes, and to comply with the Americans with Disabilities Act.
Subsequent tribal-state compacts contain more explicit standards. For example, the 2004
tribal state compact with the Coyote Valley Band of Pomo Indians provides that the tribal
ordinance governing new construction or building modifications must meet or exceed the
California Building Code and the Public Safety Code applicable to the city or county in
which the facility is located.
California Research Bureau, California State Library 81
There are concerns about the adequacy of fire protection for some casino properties.
Rural counties and cities may not have the capacity to provide fire protection for the large
hotels that have been built on tribal lands next to some casinos. For example, according
to the Indio Police Chief, the city does not have a ladder truck that can meet the fire
protection needs of the Cabazon tribal casino and hotel, and the tribe recently disbanded
its fire department for financial reasons.
187
The most recent tribal state compacts address
this issue. The 2004 tribal state compact with the Coyote Valley Band of Pomo Indians
provides for the tribe to ensure availability of fire suppression services and to satisfy all
requirements of Title 19 of the California Code of Regulations.
The adequacy of rural road infrastructure and traffic control is a major concern given the
thousands of patrons drawn daily to many tribal casinos. For example, the California
Highway Patrol has determined that the estimated 9,400 daily trips to a casino-hotel
proposed by the Jamul Indian Village could not be accommodated on Highway 94, and
that an additional twelve officers and two sergeants would be required to handle traffic
control.
188
About a fourth of the local officials in communities located near gaming tribes
responding to a 2005 UC Riverside survey, indicated that they contract with tribal
gaming operations to provide services.
189
Some tribes, such as United Auburn Indian
Community, have signed memoranda of understanding (MOUs) with local governments
to provide fire and police protection. United Auburn built a fire station on casino
property and pays the county nearly a million dollars annually for staffing and
maintenance costs. In another example, the Dry Creek Rancheria Band of Pomo Indians
is currently paying $336,000 a year for emergency fire services from the Geyserville Fire
Protection District.
190
In some cases there are jurisdictional overlaps and inefficiencies in policing casino
properties. For example, the Indio police patrol the parking lots while sheriff’s deputies
respond to problems inside the Cabazon casino. The tribe had its own police force,
which it disbanded earlier this year.
An analysis by the Abaris Group of the potential impact of a Las Vegas-style casino in
the city of San Pablo estimated three EMS responses to the casino and one additional
automobile crash daily, requiring a new ambulance at a cost of $490,000. The experience
of the first five months, with a smaller bingo-casino in San Pablo, is that the ambulance
has responded 19 times, compared to six times over the same time period in 2003 and
2004.
191
The number of visitors has increased from 54,000 to 155,000 visitors monthly.
Riverside County reports an average of three to four ambulance responses daily to each
of the major casinos in their county, with many of the responses for casino employees.
192
CRIME
Law enforcement on Indian lands is a complex issue beyond the scope of this report.
Both the state of California and county governments (through Public Law 280) and the
federal government have law enforcement responsibilities, as do the tribes. Most gaming
82 California Research Bureau, California State Library
tribes have large security operations in place to protect the integrity and safety of their
gaming operations.
The following figure, drawn from data developed by San Diego County, shows that
arrests, crime cases and calls for service to the county sheriff on reservations with casinos
have increased considerably since 1999.
193
0
500
1000
1500
2000
2500
Arrests Crime Cases Calls For
Service
Figure 12
Trends in Arrests, Crime Cases and Calls for Service on
Reservations with Casinos, San Diego County
1999 2000
2001 2002
Source: San Diego County, 2003.
Casinos attract large numbers of people and thus may become venues for crime. For
example, the Palace Casino in Lemoore, California, owned by the Tachi Yokut Tribe,
was the site of a major drug bust in January 2004. Some casinos in rural San Diego near
the border attract immigrant smugglers who look for down-and-out gamblers to transport
undocumented immigrants. According to an article in the San Diego Union-Tribune, the
parking lots of casinos such as the Golden Acorn and Viejas have been used as staging
areas for smuggling operations.
194
A 2002 analysis by the National Bureau of Economic Research found that: “Four years
after a casino opens, bankruptcy rates, violent crime, auto thefts and larceny are up 10
percent in counties with a casino.”
195
This association is supported by other studies and is
discussed more extensively in the chapter of this report on social impacts.
According to the Inspector General of the U.S. Department of the Interior, Indian casinos
are particularly attractive to money launderers, who can cash-in illegal proceeds for
chips, gamble for a while, and then redeem “clean” money. Tribal financial institutions
without federal or state charters and regulations are particularly vulnerable to
manipulation.
196
Nevada estimates that six percent of net gaming revenues are lost to
theft, fraud, and embezzlement every year.
197
If that were true in California, losses would
be around $320 million per year.
California Research Bureau, California State Library 83
Local Law Enforcement
The Riverside District Attorney’s office received $700,000 from the Special Distribution
Fund to form an Indian gaming prosecution unit for casino-related crime in 2005. The
county has eight gaming tribes and nine casinos. As of October 2005, the unit had
prosecuted 104 felonies and 264 misdemeanor crimes in the previous nine months.
Driving Under Intoxication (DUI) was the most common felony crime, followed by ID
thefts (credit cards and fake checks), and auto theft and violent crimes (ten percent).
Misdemeanors included petty theft, drunk in public, and trespassing (people who have
been barred from the casinos but keep going back).
198
Crime at the casinos may not be disproportionate given the large numbers of people who
visit, although DUI is a particular concern, according to the Riverside prosecutor.
Prosecution of crimes committed inside a casino is fairly straightforward, given that they
are captured on surveillance cameras.
199
Traffic safety is an issue for tribal members and casino patrons. A 2002 report found that
Native Americans are at the highest risk of motor vehicle-related death of all ethnic
groups. Moreover, the number of fatal crashes on Indian reservations increased by 52.2
percent between 1975 and 2002, compared to a two percent decrease for the nation as a
whole. Alcohol-related crime is a major contributor—the “great majority of calls to tribal
police involve alcohol-related offenses, including driving under the influence.”
200
Casino-related crime has a workload impact on local law enforcement. For example,
according to the Sonoma County sheriff, calls for deputies to respond to the River Rock
Casino in Geyserville increased by 51 percent from 2003 (85 calls) to 2004 (128 calls),
diverting law enforcement from the rest of the north county. The sheriff estimates a cost
of $700,000 to increase patrols to accommodate the increased workload. In 2004, Alpine
law enforcement responded to 443 calls from the Viejas reservation, mostly from the
casino and outlet center, which draw about 21,000 people a day.
201
Calls to San Pablo
police have increased from an average of 12 a month (at the smaller card room) to 71
monthly calls at the Lytton bingo-casino.
Some gaming tribes support local law enforcement services through MOUs or grants.
For example, the Paskenta Band of Nomlaki Indians (Rolling Hills Casino) earlier this
year gave $200,000 to the Tehama County general fund, $50,000 to fund a deputy district
attorney and $180,000 to the sheriff.
202
Problem and Pathological Gambling
“Compulsive or pathological gambling remains the most real and serious side-effect of
gambling legalization.”
203
Problem and pathological gambling affects approximately four
percent of adults in the United States (see Chapter on Social Impacts) and can lead to a
number of serious problems including personal bankruptcy, family abuse, and crimes
such as theft. Adolescents who gamble are more likely to develop into problem
gamblers, making underage gambling a major concern. California’s 1999 tribal state
84 California Research Bureau, California State Library
compact allows individuals 18 and older to gamble. More recent compacts draw the line
at age 21.
The National Gambling Impact Study Commission found that the number of compulsive
and problem gamblers doubles when a casino is placed within 50 miles of their home.
Greater access and closer proximity to casinos results in more problem gambling,
particularly among low-income gamblers.
204
Thus casinos in or close to urban areas
create significantly more social costs than do rural casinos. Personal bankruptcies
increase and the impact on family income can be substantial. Financial tensions in poorer
families can result in increased domestic violence and child abuse. These impacts are
discussed in more detail later in this report.
Over three quarters (77.5 percent) of the calls to the problem gambling helpline of the
California Council on Problem Gambling, Inc., a nonprofit organization, are generated by
gamblers whose primary preference is gambling in an Indian casino. The top ten Indian
casinos of choice for problem gamblers in 2004 were (in order, beginning with the most):
Thunder Valley (United Auburn), Pechanga, Casino Morongo, Cache Creek (Rumsey),
San Manuel, Barona, Viejas, Soboba, Harrah’s Rincon and Jackson. An additional five
percent of the problem gamblers calling the helpline prefer to gamble in Nevada casinos.
Thus casino gambling generates 82.5 percent of all problem gambling helpline calls,
making it the predominant venue for problem gambling in California.
205
An analysis of the impact of a casino proposed by the Lytton Band of Pomo Indians for
the city of San Pablo, with 2,500 slot machines and 100 gaming tables, estimated that it
would create 10,341 new compulsive gamblers and 12,065 new problem gamblers, with
associated costs to Contra Costa and Alameda counties of $54,899,128.
206
California gaming tribes support the state’s Office of Problem Gambling, in the
Department of Alcohol and Drug Programs, through payments to the Special Distribution
Fund. Funding for the Office is $3 million a year. The Office
*
was created by AB 673
(Statutes of 2003) to develop a problem gambling prevention program consisting of a
toll-free telephone number, public awareness campaigns, research, and training of health
care professionals and gambling industry personnel. This effort is just getting underway.
The state does not fund gambling treatment programs, in contrast to some other states
with casino gambling.
The California Council on Gambling estimates that the 3,399 callers who called in 2004
for help with problem gambling had an average gambling-related debt of $32,461, and
spent an average of $33,636 per year on gambling, resulting in a total of $45,745,199
spent on gambling that year. We estimate later in the paper, using prevalence and cost
data published in the Journal of the American Medical Association (JAMA), that problem
and pathological gamblers cost $1 billion a year in California.
Many states have laws requiring commercial casinos to address pathological gambling.
A review of California tribal casino websites finds that very few provide information
*
http://www.adp.ca.gov/OPG/OPGhome.shtml.
California Research Bureau, California State Library 85
about problem/pathological gambling or have links to resources to help individuals who
experience this serious problem.
The most recent California tribal-state gaming compacts provide for tribes to negotiate
written agreements with local jurisdictions including mitigation of gambling addiction.
The 2005 amended 1999 compact with the Quechan tribe, which has not yet been ratified
by the legislature, provides for the tribe to establish a self-exclusion program for patrons,
and create signage and advertising to encourage responsible gambling. Data developed
by the California Council on Problem Gambling finds that casino signs generate nearly
half of all calls to the problem gambling helpline, suggesting that this type of information
marketing is important. Friends and the Internet were the next more frequent sources of
referral, at about seven percent each.
207
86 California Research Bureau, California State Library
California Research Bureau, California State Library 87
CALIFORNIA STATE LOTTERY
B
ACKGROUND
The drawing of lots--a lottery--may be the oldest game of chance. A lottery is “A contest
in which tokens are distributed or sold, the winning token or tokens being secretly
predetermined or ultimately selected in a random drawing.”
208
Lotteries are based on the
pari mutuel system of wagering, in which all the money bet is divided up among those
who have winning tickets (after expenses and other deductions are made). The term
“parier mutuel,” meaning, “betting among ourselves,” originated in France in the 19
th
century, and became known as “Paris mutuals” and then “pari mutuels” in England.
209
New Hampshire authorized the first state-run lottery, a sweepstakes based on the results
of a horse race, in 1963. New York followed with monthly drawings in 1967, and in
1969 New Jersey began to offer weekly state lottery games promoted by mass marketing
that became the first modern successful lottery in the United States. By the year 2000,
lotteries were operating in 37 states plus the District of Colombia.
The California State Lottery Act, enacted by the voters by initiative in 1984, was passed
by 58 percent. The initiative also amended the state Constitution to prohibit “casinos of
the type currently operating in Nevada and New Jersey,” and required that at least 34
percent of lottery revenues go to public education.
210
Lotteries are the most popular of all legal wagering games. A 2005 poll by The Luntz
Research Companies found that 53 percent of American adults had purchased lottery
tickets in the last year. The second largest group—35 percent—had visited a casino. In
2002, the average Californian spent $77 on lotteries.
211
Figure 13
Gamblin
g
Participation in Previous 12 Months b
y
American Adults, 2005
0%
10%
20%
30%
40%
50%
60%
Lottery Casino Poker Horseracing Internet
Source: The Luntz Research Companies.
88 California Research Bureau, California State Library
California’s lottery currently offers a number of games: Super Lotto Plus, Daily 3, Daily
Derby, Scratchers (including a bingo variation authorized by legislation in 2003), Big
Spin, Fantasy 5, Hot Spot, and Mega Millions. The goal is to attract players by offering a
variety of games with either quick or large jackpots. Information about all California
State Lottery games is presented on the state’s official website via links from the
Lottery’s site, but tickets must be purchased from authorized retailers in order to play.
In 1996, the California Supreme Court ruled that the state lottery was not authorized to
offer electronic keno, since keno is a banked game, pitting the state against the player and
thus giving the state an interest in the outcome of each game, contrary to the state’s
constitutional restrictions on Nevada-style banked gaming (Western Telcon Inc. v.
California State Lottery).
212
There are currently 18,500 retailers that sell lottery products in California under contract
with the State Lottery. That number will increase to nearly 20,000 over the next six
months as the Lottery seeks additional outlets for its games. Sales commissions range
from four and one half percent to six percent. Retailers also receive cash bonuses for
cashing winning tickets ranging from two percent of the prize value for a winning
Scratchers ticket, to a half a percent of the jackpot prize for selling a top prize ticket such
as for MEGA Millions or a SuperLOTTO Plus Jackpot winner.
213
The California State Lottery is operated and administered by the Lottery Commission,
which is composed of five members appointed by the governor, and meets quarterly and
as needed. The Lottery’s Security Division and independent auditors maintain the
integrity of the games. The Security Division conducts background checks on employees
and vendors and monitors complaints against vendors. Retailers’ contracts may be
terminated for just cause, such as fraudulent activity. In general, however, the Lottery’s
primary motivation is to expand its vendor base and market, not decrease it through
enforcement actions.
COMPETITION, INNOVATION AND EXPANSION
State lotteries compete with other forms of gambling for customers, so like other
businesses, they must be innovative in order to maintain and gain market share.
Preprogrammed instant scratch-off tickets were first introduced in Massachusetts in 1974,
and are now offered in most states with lotteries. Instant ticket vending machines operate
in 30 states. Some state lotteries offer subscription programs, allowing players to sign up
in advance for drawings without having to go to a retailer to buy tickets. New games are
regularly introduced by all lotteries. Competition for the gaming dollar worldwide is
fierce:
…many lotteries around the world are worrying about generating revenues in a
softening economy, finding new channels of distribution, creating interesting new
products, and enhancing public awareness of how lottery revenues benefit good
causes.
214
California Research Bureau, California State Library 89
Video Lottery Terminals
Some states allow video lottery terminals (VLTs), which are played like slot machines.
By law, the California State Lottery does not operate VLTs. VLT revenues dwarf other
lottery revenues in states where they are allowed to operate.
215
The six states in which
lotteries operate VLTs reported net machine income of $3.2 billion in FY 2004-05, an
increase of 17 percent from the previous year.
VLTs are run by lotteries in South Dakota, Oregon, New York, Delaware, Rhode Island,
and West Virginia, by other state agencies in Montana, Indiana, Mississippi, Colorado,
Illinois, and are authorized for operation by racetracks in Iowa, New Mexico, and
Louisiana (see discussion of “racinos”). Maine and Pennsylvania expect to offer VLTs
by the end of 2006. New York has set a goal of one VLT for every 1,188 people.
216
South Dakota was the first state to offer VLTs in 1989, and now offers variations of
poker, blackjack, keno, and bingo games. The private sector runs the South Dakota’s
VLT games to a significant degree, with the state serving more as a regulator than an
operator. State administrative expenses consume only 0.5 percent of net machine
income; 49.5 percent is deposited in the state’s property tax reduction fund and 50
percent goes to licensed operators.
217
Multistate Games
In 1985, the smaller states of New Hampshire, Maine, and Vermont began the first multi-
state lottery in order to compete against larger states with bigger prizes. In 1987, six
states got together to offer Lotto America (Iowa, Kansas, Missouri, Oregon, Rhode
Island, West Virginia and the District of Columbia). The Multi-State Lottery Association
(MUSL), which is now comprised of 29 states (not including California), the District of
Columbia and the U.S. Virgin Islands, currently runs six games, of which Powerball is
the best known. The Powerball game is designed to sell about $2 billion a year or about
17 percent of the total lottery sales of all its members; the amount contributed to total
state sales varies from four to nearly 60 percent in different states.
218
Mega Millions is another large multistate lottery that currently includes 12 states:
California, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New
York, Ohio, Texas, Virginia and Washington.
*
It began in 1996 as The Big Game with
six states, and was given the name Mega Millions in 2002. Jackpots start at $12 million
and can roll over to higher levels. The largest jackpot, of $363 million, occurred in 2002.
The average jackpot in 2004 was $70 million. Smaller prizes range from $250,000 to $1
million. Each play costs one dollar.
With a combined population of over 150 million people in the 12 participating states,
Mega Millions jackpots attract attention that draws in more players. For example, in
2004, the New York lottery’s Mega Millions revenue increased by more than $100
million, prompted in part by a $239 million jackpot.
219
According to the game’s website,
*
Florida is the only state lottery not to participate in a multi-state game.
90 California Research Bureau, California State Library
on average 35 percent of all Mega Millions ticket sales go to support government services
in the member states, 50 percent is returned to players as prizes, five percent goes to
retailers who sell tickets and ten percent is used for lottery administrative expenses.
220
California is the most recent state to join Mega Millions. Its 2005 entry resulted in
considerable controversy, a lawsuit and pending legislation. The state entered into the
multi-state game without legislative approval, which the legislative counsel opined was
necessary, but with the Attorney General’s approval.
221
State law does not allow the
lottery to have games in which prizes do not increase as ticket sales increase. Mega
Millions jackpots increase with ticket sales, but eight other non-jackpot prizes are fixed.
In order to enable California to enter the game, the other states agreed to let the
California Lottery create its own non-jackpot prize levels.
222
Internet Lottery Games
In other parts of the world, especially the European Union, government lotteries are
going online, retailing their ticket games from web sites, interactive televisions and
mobile phones, but not in the United States. This is because the federal 1961 Wire Act
prohibits online gambling, although horse racing has since carved out an exemption (see
Chapter on horse racing).
Nonetheless, some states are developing Internet lottery games that are legal because the
transactions do not actually occur on the Internet and the outcome is predetermined. In
2004, the Kansas Lottery began offering an interactive Internet lottery game, eScratch,
while New Jersey offered Cyber Slingo. Once a player has purchased a ticket for a given
amount and number of plays, he/she can go to the website listed on the ticket to play the
game. If they win, they must return to the retail establishment to claim their prize.
Alternatively, they can ask the retailer to scan the ticket to determine if it is a winner.
223
However the real potential appears to be in allowing ticket sales on the Internet.
224
Currently state and multi-state lotteries provide information about gambling opportunities
on their websites, but do not offer direct access to gambling by allowing online purchase
of tickets. However Internet technology is transforming lottery games: “Traditional
online lottery systems are printing instant-win and extended-play instant games, and
tickets bought at retail, either in a regular scratch format or as an online ticket voucher,
have an Internet gaming component.”
225
REVENUES
State lotteries are the single largest contributor to state treasuries of any gambling
industry, earning $15.7 billion in 2005 on gross gambling revenues of $47.6 billion
(excluding VLTs)
226
. With thousands of retail outlets at the neighborhood level, state
lotteries also have the most extensive system of distribution of any gambling industry.
State lottery sales are significantly influenced by the top prize amount and the odds of
winning it. States set prize amounts, the number of combinations, and the probabilities of
California Research Bureau, California State Library 91
winning each prize, thereby determining the structure of the lottery and its games.
227
Multi-state games can offer larger prizes and attract more players.
In 2003, the California State Lottery was ranked tenth in the world based on total sales of
nearly $2.8 billion. The national lotteries of Japan, Spain, France, Italy, and the United
Kingdom were in the top five spots, followed by the state lotteries of New York,
Massachusetts, Texas, Florida, and California.
228
In 2005, California lottery sales
increased to $3.3 billion, resulting in gross revenues of $1.59 billion.
229
Efficiency in lottery operations is an important component in the amount of revenue
returned to the state. Table 12 provides information on the California State Lottery’s
revenues and expenses for 2003 and 2004.
Table 12
California State Lottery Revenue/Expense Analysis
(2003 and 2004)
2003 2004
Sales $2,781,569,856 $2,973,975,717
Prizes $1,451,804,079 (52.2%) $1,566,027,494 (52.7%)
Gross Revenue* $1,329,765,777 $1,407,948,223
Operating Expenses** $362,342,273 $370,821,346
Operating Income*** $967,423,504 $1,037,126,877
Net to state government**** $1,019,816,972 $1,094,256,988
Source: International Gaming & Wagering, June 2004, p. 28, and March 2005, p. 30, and the California
State Lottery.
*Total sales minus total prizes paid, or the net gaming revenue.
**Current year expenses, including retailer commissions.
***Net revenue from current year operations.
****Includes current year operations and nonoperating items such as interest and investments.
Table 13 examines the amount of revenue that each state lottery returned to state
governments in 2004, and the per capita transfer amount adjusted for population. West
Virginia, the state with the highest per capita transfer, benefited from its location as the
only state offering VLTs in its geographical region. That strategy is not open to
California, which placed 32
nd
out of 41 in this comparison. Many factors influence state
lottery operations, making state-to-state comparisons difficult. These include
demographic characteristics, product offerings, promotion and distribution methods, and
the competitive environment.
230
92 California Research Bureau, California State Library
Table 13
State Lottery Returns to State Governments, 2004
State
‘04 Transfer
in millions
Transfer
per capita
State
‘04 Transfer
in millions
Transfer per
capita
Arizona $107.8 $19.25 Missouri $230 $40.35
California $1090 $30.70 Montana $58.2 $74.67
Connecticut* $202.5 $44.02 Nebraska $20.8 $12.24
District of Columbia $73.5 $122.50 New Hampshire $73.7 $56.69
Delaware $222 $277.50 New Jersey $793 $92.21
Florida $1051 $61.82 New Mexico* $193.7 $101.95
Georgia $782 $89.89 New York $1890 $98.44
Idaho $25 $17.86 Ohio $648.1 $56.85
Illinois* $1239.7 $97.61 Oregon $364.7 $101.31
Indiana* $942.1 $151.95 Pennsylvania $818.7 $66.02
Iowa* $280.7 $96.79 Rhode Island $281 $255.45
Kansas $70 $25.93 South Carolina $287 $70.00
Kentucky $193.5 $47.20 South Dakota $115.5 $144.38
Louisiana* $656.6 $145.91 Texas $1000 $45.25
Maine $41.8 $32.15 Vermont $19.5 $32.50
Maryland $458 $83.27 Virginia $408 $55.14
Massachusetts $912 $142.50 Washington $117.6 $19.28
Michigan $644.5 $63.81 West Virginia $512 $284.44
Minnesota $100 $19.61 Wisconsin $154.89 $28.16
*Return figure includes lottery and non-lottery-operated FY 2004 gaming machine return.
Source: Public Gaming International, February 2005, p. 15.
While the states with the largest per capita returns have VLTs, Massachusetts and the
District of Columbia have achieved very high per capita returns without them. Returns
are a function of the types of games that are legally allowed, degree of competition,
efficiency of operations, and marketing effectiveness. Developing new content and
widening distribution channels are key areas that drive growth.
Differences in state lottery sales can partly be explained by the socioeconomic
characteristics of state residents. National studies generally find that lottery sales are
higher for individuals who belong to minority groups, have little or no formal education,
are residents of urban areas, and are between 45 and 65 years old.
231
Displacement Effect
When consumers spend money on lottery tickets they spend less on other items, some of
which would have been taxable. Thus general sales and excise tax revenues fall with
additional lottery revenues. This is called a “displacement effect.”
California Research Bureau, California State Library 93
The amount of displacement found in different studies varies:
232
• A multistate analysis spanning the years 1953 to 1987 found that the displacement
effect ranged from a two cent to a 14 cent reduction in sales tax revenue per one
dollar increase in state lottery revenues.
• The most recent multistate study, examining 1967 to 1999, found that sales tax
revenues declined by $1.35 per $1 in additional lottery revenues, in part due to
substitution of lottery purchases for taxable purchases and in part due to a reduced
likelihood that a state will raise sales taxes when lottery revenues are high.
There is also evidence of substitution of spending among games. Interstate lottery
competition can reduce single state lottery sales, and the introduction of new lottery
games reduces spending on traditional lottery games.
233
PUBLIC EDUCATION—CALIFORNIA’S STATE LOTTERY BENEFICIARY
State lotteries transfer a portion of their revenues to states to help fund important
programs such as education, economic development and natural resource programs. The
beneficiaries of the revenues vary in each state. The California and New York lotteries
provide funds for public education. The Pennsylvania lottery generates funds for older
residents, contributing more than $14.6 billion since 1971 to elder programs that provide
low-cost prescription drugs, specialized transportation, and rent and property tax
assistance.
By law, the California lottery must send a minimum of 34 percent of revenues to schools,
although over a 20 year period the average has been 37 percent due to unclaimed prizes
and other savings. As of November 2004, the California Lottery had sent nearly $16
billion to education during its 19 years of existence.
234
Most of that funding
($12,890,874,665) went to K-12 schools, as shown in Figure 14. The funds can be used
only for instructional purposes. Schools spend the majority of funds, 80 to 90 percent,
for teachers.
94 California Research Bureau, California State Library
Figure 14
California State Lotter
y
Education Allocations
(1985-2004)
0%
20%
40%
60%
80%
100%
K-12 C. Colleges CSU UC Other
Source: California State Lottery, 2004.
Total California state revenues in FY 2004-05 were $98.7 billion. Net lottery revenue
contributed about one percent of that amount.
The California State Lottery’s contribution to state public education in FY 2003-04 was
$1,094,601,888. That year the Governor’s budget proposed to spend $35,900,000,000 on
public education (K-12, higher education, other); lottery income contributed about three
percent of that amount.
Studies find that state lottery funds generally do not benefit the statutory recipients
because equivalent funds are merely shifted into other programs. Several studies have
examined the earmarking of lottery funds for education and found that “…the state was
robbing Peter to pay Paul,” and that “…lottery revenues earmarked for education had no
impact on education expenditures.”
235
According to a California school official, when
districts first received lottery money the state simultaneously reduced funding nearly the
same amount, making the deal a wash.
236
Proposition 98, which was enacted four years
after the lottery, sets a minimum level of school funding from the state’s General Fund.
Funds from the lottery are on top of that funding.
CONSUMER IMPACT—PROBLEM GAMBLING
A study published in 2002 found that the introduction of a state lottery results in
increased household gambling expenditures and participation, and a decrease in
nongambling expenditures by about two percent on average:
237
• Participation in lotteries among adults living in lottery states was 54.7 percent
versus 25.2 percent in non-lottery states.
• Lottery expenditures substituted away from other non-gambling consumption:
“The introduction of a state lottery is associated with a decline of $115 per quarter
in household non-gambling consumption.”
California Research Bureau, California State Library 95
• For low-income households, there was a larger $139 or three percent average
quarterly reduction in non-gambling consumption, financed by reduced
expenditures on food eaten in the home (3.1 percent) and home mortgage, rent
and other bills (6.9 percent).
As Table 14 shows, Blacks spent nearly twice as much on lottery tickets as did Whites
and Hispanics. According to the study author, the Black male high-school dropouts in
the sample reported average annual expenditures of over $1,000. Expenditures among
income groups were roughly equivalent, meaning that low-income households spent a
larger amount of their wealth on lottery tickets than other households.
Table 14
Lottery Participation Rates and Expenditures in Lottery States
(1998 survey data adjusted to 2000 dollars)
% Playing in the
previous year
Mean annual spending,
all adults
Overall 55.7% $128.4
Male 51.8% $153.4
Female 59.9% $105.3
White 57% $119.3
Black 46% $230
Hispanic 61% $107.5
Other 51.8% $81.8
Household income less than $27,000 50.5% $139.5
$27,000-$54,000 63% $127.1
More than $54,000 62.9% $158.9
High school drop out 54% $197.2
High school graduate 57.3% $155.1
Some college 58.8% $120
College graduate 52% $86.7
Source: 1998 National Survey on Gambling conducted by the National Opinion Research Council, as presented in
Kearney, NBER Working Paper 9330. p. 31.
A study in the Journal of the American Medical Association found that 3.6 percent of
lottery patrons were problem gamblers and 5.2 percent were pathological gamblers (see
the Chapter on Social Impacts for a discussion of problem and pathological gambling).
238
Lotteries appear to be a key entry point into this disorder, given their widespread and
ready availability and state-sponsored legitimacy.
An Oregon study reinforces this finding. An analysis of individuals in gambling
treatment and prevention programs in the state found that nearly 70 percent gambled
primarily at a lottery retailer near their home. The average gambling debt was $22,840,
and the average annual household income was $36,246.
239
Oregon has video lottery
terminals (VLTs), which are prohibited by law in California. VLTs have been called “the
96 California Research Bureau, California State Library
most addictive form of gambling in history,” because they create pathological addiction
nearly four times faster than other popular games of chance.
240
Adolescents who gamble are more likely to develop problem and pathological gambling
problems. Studies find that underage youth have little difficulty in purchasing lottery
tickets. One study found that 90 percent of young people in the United States had
purchased lottery tickets by the time they were seniors in high school.
241
An Oregon
study of 13 to 17 year olds found that 39 percent had played the Oregon Lottery at least
once, 30 percent within the last year. Over a third of those bought their tickets illegally at
grocery and convenience stores.
242
Figure 15 shows the types of gambling that adolescents had engaged in during the
previous year, as measured in 1999, according to a survey conducted by the National
Opinion Research Center at the University of Chicago. More minors played the lottery
than any other game.
Figure 15
Adolecent Past-Year Gambling by Type of Game, 1999
26.80%
9.30%
10.60%
11.60%
19.30%
39.70%
64.90%
0%
10%
20%
30%
40%
50%
60%
70%
C
as
i
n
o
R
ace
T
ra
c
k
S
to
r
e
B
i
n
g
o
U
n
l
icensed
L
o
tt
ery
P
riv
a
t
e
Source: National O
p
inion Research Center
,
1999.
Given that lotteries are the entry point into problem gambling for many adolescents, the
enforcement of California’s prohibition against the purchase of lottery tickets by minors
is important. Government Code § 8880.52 provides that:
No tickets or shares in Lottery Games shall be sold to persons under the age of 18
years. Any person who knowingly sells a ticket or share in a Lottery Game to a
person under the age of 18 years is guilty of a misdemeanor. Any person under
the age of 18 years who buys a ticket or share in a Lottery is guilty of a
misdemeanor. In the case of lottery tickets or shares sold by Lottery Game
Retailers or their employees, these persons shall establish safeguards to assure
that the sales are not made to persons under the age of 18 years.
There appears to be very limited enforcement of California’s laws against the purchase of
lottery tickets by persons under the age of 18. The State Lottery’s investigations unit
California Research Bureau, California State Library 97
relies on complaints and self-regulation by retailers, and does not undertake stings to
locate retailers who sell to underage customers. This type of enforcement has proven to
be critical to enforcing laws against underage purchase of alcohol and tobacco. In the last
five years, no retailer in California has had its contract with the State Lottery terminated
because of sales to underage players. Although state law provides that underage players
may not collect winnings, as a practical matter anyone can redeem a ticket that pays
under $500 at the retailer.
243
Lottery advertising is controversial, as it represents state government actively promoting
gambling. The National Gambling Impact Study Commission found that ads that are
persuasive, manipulative, or misleading (i.e. not explaining the poor odds of winning) are
particularly troublesome when targeted towards groups least able to afford to play. A
few states ban lottery ads designed to induce people to play.
244
Some state lottery websites prominently display a link to information about problem
gambling, including how to identify a problem, links to Gamblers Anonymous and a toll-
free help line number. In contrast, a small-type grey link at the bottom of the California
Lottery’s website is entitled “Play Responsibly.” While not featured prominently, it
contains useful information about problem gambling and provides links to the Lottery’s
help line, the California Council on Problem Gambling, NICOS Chinese Health Coalition
and other service providers. The California Lottery website does not include information
indicating that adolescents should not play.
The California Lottery contracts with the California Council on Problem Gambling to
respond to calls to its helpline. In 2004, 3,399 calls for help with problem gambling were
made to the helpline, predominantly from people who prefer casino gambling (82
percent). Nearly 41 percent of the callers played the lottery, but the lottery was the
referral source of only about two percent of the calls.
245
In contrast, casinos signs were
the referral source of nearly half of all calls. This suggests that the lottery is not
providing a strong message about where to find assistance with problem gambling. The
lottery does distribute pamphlets to its retail outlets, but a visit to several retailers
indicates that they are not being distributed effectively.
98 California Research Bureau, California State Library
California Research Bureau, California State Library 99
CALIFORNIA HORSE RACING
B
ACKGROUND
Horseracing has a long history in California. The Californians, inheritors of a proud
tradition from Spain and Mexico, were renowned horsemen and regularly held races on
Sundays for entertainment and wagering. After California became a state, organized
racing was conducted at district fairs. In addition, many communities had local horse
race tracks. Horses were the primary means of transportation, and races were analogous
in popularity to today’s car racing.
During the Great Depression, the need for state revenues and for a stable source of
support for county fairs led to the adoption of state-regulated horse racing and wagering.
The California Horse Racing Act of 1933 was ratified by the voters in 1933, and Article
IV, Section 19(b) was added to the state Constitution:
The Legislature may provide for the regulation of horse races and horse race
meetings and wagering on the results.
The California Horse Racing Act provides for a California Horse Racing Board to
oversee the industry, “…with the goal of protecting the public from fraud, promoting
California agriculture and quality racehorse breeding, and encouraging expansion of the
racing industry to maximize tax revenues in the public interest.”
246
The board is charged
with maintaining the integrity of the races, ensuring that the state and local jurisdictions
receive tax revenues, overseeing the licensing of tracks and operators, and preventing
crime.
Several of the state’s major racetracks were created in the 1930s, including Santa Anita
(1934), Hollywood Park (1938) and Bay Meadows (1934). The late 1930s through the
early 1980s was horse racing’s “golden era,” including the much celebrated Seabiscuit.
Attendance in 1972 at the tracks nationally was triple that of baseball, 72 million
people.
247
However over the last decade, attendance has declined considerably both
nationally and in the state (see discussion below).
Horseracing uses the pari-mutuel system of wagering, in which bettors bet against one
another instead of against the house. The money bet on a race is pooled, with
approximately 80 percent returned to the winning bettors and 20 percent paid out to
jockeys and horse owners, the racetrack, and state and local governments.
The Chairman of the Senate Select Committee on California’s Horse-Racing Industry
reports that the sport generates over $4 billion a year for the state’s agribusiness, tourism,
and entertainment economies and directly or indirectly employs more than 52,500
Californians. The California Horse Racing Board licenses nearly 14,000 individuals who
work in the industry (trainers, jockeys, etc.). More than 1,000 farms in California breed
racehorses.
248
100 California Research Bureau, California State Library
CALIFORNIA RACE TRACKS
The state has seven licensed racetracks (although Bay Meadows will close soon) and nine
licensed racing series at county fairs, as shown in Table 15.
Table 15
California Horse Racing Venues, 2005
Race Tracks Racing Fairs
Bay Meadows (San Mateo)—scheduled to
close and be replaced by housing
Alameda County Fair
Cal Expo (Sacramento) California State Fair, Sacramento
Del Mar (Del Mar) Humboldt County Fair
Golden Gate (Albany) Los Angeles County Fair
Hollywood Park (Inglewood) San Joaquin Fair
Los Alamitos (Los Alamitos) San Mateo County Fair
Santa Anita (Arcadia) Solano County Fair
Sonoma County Fair
The Big Fresno Fair
Source: California Horse Racing Board, www.chrb.ca.gov.
A person does not have to be at tracks to wager on the results of the race. Simulcast
facilities where races may be viewed and bets placed are located around the state at the
following locations:
Alameda County Fair, Antelope Valley Fair, Barona Casino, Bay Meadows Race
Track, CalExpo (Sacramento), Desert Expocentre (Indio), Earl Warren
Showgrounds (Santa Barbara), Fantasy Spring Casino, Fresno Club One, Fresno
District Fairground, Hollywood Park Race Track, Kern County Fair, Lake Perris
Sports Pavilion, Los Alamitos Race Course, Los Angeles County Fair, Los
Angeles Turf Club, Monterey County Fair, National Orange Show (San
Bernardino), Pacific Racing Association (Albany), Redwood Acres Fair (Eureka),
San Bernardino County Fair, San Joaquin Fair, Santa Clara County Fair, Santa
Anita Race Track, Santa Barbara County Fair, Shasta District Fair, Sonoma
County Fair, Solano County Fair, Stanislaus County Fair, Surfside Race Place
(Del Mar), Sycuan Casino, Tulare County Fair, Ventura County Fair, Viejas
Casino & Turf Club
California’s horse racing industry, like its counterparts nationally has experienced
declining attendance for the better part of a decade. From a 28 percent share of
America’s gambling market in 1982, horse racing declined to a 5.2 percent share in 2000,
the “…victim of shifts in consumer preference…from the track window to the slot
machine.”
249
Since 1990, attendance at California racetracks has declined by 35 percent
and on-track handle has decreased by 59 percent. There were 938 horse racing days in
California Research Bureau, California State Library 101
California in 2004, with an average daily attendance of 9,540 and an average daily
handle
*
of more than four million dollars.
250
The 2005 attendance and handle numbers at
the CalExpo spring harness meet were down more than 25 percent from the previous
year.
251
The growth is in off-track and Internet betting. According to analysts, “Without off-track
betting and simulcasting, horse racing as we know it today would not exist.”
252
Off-track
betting at simulcast locations generated $13.1 billion nationally in 2001, 82 percent of the
industry total. Off-track handle now accounts for nearly three quarters of wagering on
California horse races and is increasing rapidly, particularly for Advance Deposit
Wagering (see discussion). Wagers actually made at the state’s racetracks account for
less than 22 percent of total wagers. Off-track betting in the state’s simulcast facilities
accounts for nearly 40 percent, with out-of-state wagers nearly as significant, at 38
percent.
253
Competition from offshore Internet betting services that offer a wider
selection of betting options at lower prices is one reason for declining track revenues.
254
California’s horse racing industry is consolidating. Magna Entertainment Corporation
operates Santa Anita Park and Golden Gate Fields. In August 2005, the California Horse
Racing Board approved the purchase of Hollywood Park by the owner-operator of Bay
Meadows. Bay Meadows will close and be replaced by housing.
ACCOUNT WAGERING
In 2001, Governor Gray Davis signed a bill (AB 471 Hertzberg, Chapter 198, Statutes of
2001) to permit in-state Internet and telephone gambling on authorized horse races, and
allowing California-licensed operators to accept bets from people in any state that
authorizes interstate betting. This is called “advance deposit wagering” (ADW).
According to I. Nelson Rose, a leading authority on gambling law, this may have been
“...the second largest expansion of legal gambling in the history of the United States.”
(According to Rose, the largest expansion was California’s authorization of Indian
gaming in 2000).
255
California’s entrance into long distance electronic gambling on horse races followed
Congress’ 2000 expansion of the Interstate Horseracing Act to allow wagers across state
lines by phone or other electronic media, which presumably includes the Internet (15
U.S.C. §§ 3001-3007). The Act governs the relationship between the off-track betting
operators, “…licensed Internet and interactive television horserace betting services, the
tracks, the horse owners and trainers, and the state racing commissions concerning
wagers placed in one state on the outcome of races being held in another state.”
256
The
state where the bettor is located and the state where the “off-track betting operator” is
located must both have authorized interstate betting. Twelve states have authorized the
acceptance of ADW over the Internet for off-track pari-mutuel wagering.
The California Horse Racing Board is the state’s lead agency responsible for adopting
regulations and approving all arrangements involving ADW. From the California Horse
*
“Handle” is the sum of wagers (or “pari-mutuel pool”) made on a race.
102 California Research Bureau, California State Library
Racing Board’s state website, one can directly access three authorized ADW companies:
XpressBet, youbet.com and TVG. XpressBet enables betting on horse races in England
and Australia, creating a state-licensed international Internet gambling opportunity.
Conversely, bettors in other countries can bet on California horse races. For example,
Darwin All Sports, an account wagering system based in Australia, has an agreement that
allows it to merge its wagers into California pari-mutuel pools. California’s total ADW
handle increased by more than $89 million from 2003 to 2004 (about 28 percent), to $403
million, and has increased 37 percent in 2005 over the previous year for three fair meets
(Sonoma, San Mateo, and Humboldt).
257
Internet gambling on horse races outside of the established state-regulated wagering
systems is increasing at a rapid rate. Offshore Internet gambling sites may offer higher
return rates, as they do not need to make payments to jockeys, owners, tracks or state and
local governments. This hurts the horse racing industry, which needs the income
provided by state-regulated pari-mutuel wagering to survive.
Federal legislation introduced by Senator Kyl (R-AZ) in 1998 and 1999, and again 2005,
would prohibit all wagering over the Internet, including for horse racing. The immediate
impetus is a World Trade Organization (WTO) decision involving a dispute between the
United States and Antigua over Antigua’s attempt to secure rights to host Internet casinos
serving U.S. residents.
258
A WTO appeals panel decision in April 2005, found that the
entire U.S. gambling service sector was covered by the General Agreement on Trade in
Services (GATS) and thus the ability of local, state and federal governments to regulate
all forms of gambling was limited by the rules of GATS. The WTO ruling found that the
government does have the right to restrict remote gambling to protect public morals and
public order, but must consistently apply restrictions to domestic and foreign operations.
The fact that the United States allows an exemption for ADW on horse races over the
Internet weakens the U.S. position.
REGULATION
The California Horse Racing Board is composed of seven members appointed by the
governor. Its purpose:
…is to regulate pari-mutuel wagering for the protection of the betting public, to
promote horse racing and breeding industries, and to maximize State of California
tax revenues… Principal activities of the board include: protecting the betting
public; licensing of racing associations; sanctioning of every person who
participates in any phase of horse racing; designating racing days and charity days;
acting as a quasi-judicial body in matters pertaining to horse racing meets;
collecting the state’s lawful share of revenue derived from horse racing meets; and
enforcing laws, rules, and regulations pertaining to horse racing in California.
259
The board is financed by horse racing fees (nearly $8.5 million in 2005-06). Judging
from the board’s agendas, it spends a considerable amount of time creating and enforcing
safety standards and investigating and fining violators. Drug abuse is a particular
California Research Bureau, California State Library 103
concern. Equine research at the University of California, Davis, receives a share of the
pari-mutuel tax (.06 percent in 2003 and 2004), amounting to $2,183,975 in 2004, for
research and for the equine analytical chemistry laboratory which carries out the board’s
drug testing programs.
The board delegates its enforcement responsibility at each track to three stewards, who it
licenses, and they serve as judges in determining legal violations. Stewards can “…level
fines, suspend licenses, bar individuals from the track, and suspend horses from racing.
They determine the official results of races, and can order the redistribution of purses.”
260
Their decisions can be appealed to the board.
RACINOS
Over the last decade, the horse racing industry has experienced declining attendance and
increased competition from other forms of legalized gambling, primarily lotteries and
casinos: “The [horse racing] industry was taking a real beating when lotteries and
commercial casinos were introduced…”
261
The response in some jurisdictions has been
to allow other types of gambling at the tracks, resulting in “racinos”-- “racing” plus
“casino.”
According to the American Gaming Association, the racetrack casino sector of the
commercial gaming industry experienced substantial growth in 2004: “The 23
operational racetrack casinos in seven states generated nearly $2.9 billion in gross
gaming revenues, a 30 percent increase over 2003 figures.”
262
Table 16
Racetrack Casino State Statistics, 2004
State # Racetrack
casinos
Gross gaming
revenue
Distribution to
state and local
government
Number of
employees
Delaware 3 $553.32 million $196.26 million 2,370
Iowa 3 $337.48 million $98.31 million 2,207
Louisiana 3 $280.97 million $42.6 million 1,856
New Mexico 5 $149.68 million $37.42 million 518
New York 4 $192.45 million $136.64 million 1,813
Rhode Island 2 $383.8 million $234.1 million 1,057
West Virginia 4 $882.4 million $327.63 million 4,404
Total 24 $2.86 billion $1.07 billion 14,225
Source: American Gaming Association, 2006
In California, Hollywood Park in Los Angeles operates the third largest card club in the
state. Minnesota permits card games at racetracks, with limitations on the types of
games, amount of wagers and number of tables. A number of states have considered
allowing expanded gambling operations at racetracks. A proposal to do so was opposed
by tribal gambling interests and defeated by California voters in November 2004. In
104 California Research Bureau, California State Library
some other states, tribes are buying racetracks and/or operating casino facilities at
racetracks (Oklahoma, Wisconsin, Minnesota among others).
In the mid-1990s, video lottery terminals were allowed at racetracks in Rhode Island,
Oregon, Louisiana, Delaware, and New Mexico. They have been very profitable. For
example, in FY 2004-05, the West Virginia Lottery’s racetrack VLT net machine income
totaled $894.5 million, up 4.6 percent from the previous year.
263
In 2004, New York began implementing a video gaming system in eight of its racetracks,
and similar legislation has been introduced in a number of states. The first New York
racino to open was Saratoga Gaming and Raceway, with 1,324 video gaming machines.
In the facility’s first month of operation, it earned $5.1 million from $81 million in
wagers, of which the state received $3.7 million. During that month, video gaming
machines averaged more than $11,500 per hour in revenues, generating approximately
$185,000 per day.
264
Two of the New York racinos being planned will house 4,500 and
5,500 VLT machines each. In addition, Governor Pataki has proposed authorizing eight
additional facilities, with the only restriction being that they are not located within 15
miles of an existing facility (not necessarily at a racetrack).
Other states allow slot machines at racetracks. Their revenues are subsidizing the racing
side of the house. For example, New Mexico’s horseracing industry was “on the verge of
collapse” when the legislature approved slot machines at the tracks (as part of tribal-state
gaming compacts). Revenues from slot machines have led to facility improvements and
bigger horse racing purses. However slot machine players generally do not convert to
racing enthusiasts.
265
Slot machines draw recreational gamblers to the tracks, but there seems to be very little
crossover between the trackside and the gaming side. Nonetheless, racing revenue is also
rising. The additional traffic and revenue have allowed for stronger racing programs and
facility upgrades, leading to larger purses, higher horse sales and growth in the breeding
industry, according to observations drawn from racinos in Ontario, Canada, Iowa,
Minnesota, Texas and New Mexico.
266
REVENUES
According to the California Horse Racing Board’s most recent annual report, $4.1 billion
was wagered on California horse racing during the 2004-05 fiscal year (FY), $138
million less than in FY 2002-03. Payments of over $3.3 billion were returned to holders
of winning tickets, an 80.1 percent return.
267
The remaining nearly 20 percent supported
purses for winning owners and jockeys, racetrack commissions, off-track betting
operations and taxes. In 2004, the state received $39.5 million in licensing fees and
breakage
*
(1.03 percent), local governments retained more than $7 million (0.19 percent),
the tracks kept $153 million (four percent), and horsemen earned $149 million (four
percent).
268
*
“Breakage” is the odd cents not paid to winning ticket holders.
California Research Bureau, California State Library 105
In FY 1999-2000, the state received $44 million from wagering on California horse races,
($4.5 million more than in FY 2004-05), of which $37.5 million went to the Fair and
Exposition Fund and $4.5 million to the General Fund. Donations to local charities from
legally required benefits races totaled more than $1 million.
269
(Most charity proceeds are
directed to equine-related charities.)
County Fairs
Horse racing license fees help support the state’s 79 local fairs.
270
The Department of
Food & Agriculture’s 2005/06 Expenditure Plan for the Fair and Exposition Fund and
Satellite Wagering Account projected a slight increase in horse racing fees to result in
over $39 million in revenues. Nearly $8.5 million of that amount funds the California
Horse Racing Board, and the department receives over $4 million for its support of the
state’s fairs and expositions. About $26.3 million is allocated for local assistance, of
which $14.8 million is for general fair programs and funding. Once various
reimbursements and fees are subtracted, the local fair revenue base was $9.7 million.
271
Given that there were 79 fairs scheduled in California in 2005, the average payment per
fair from horse racing fees was less than $125,000.
According to the Department, county fair economic activity results in more than $136
million in direct state and local income from sales, income and other tax sources and
28,000 jobs, with a total statewide economic impact of $2.5 billion.
272
SOCIAL IMPACT
Race betting has the fewest players relative to other forms of legal gambling, but a 2001
survey found that each player represents substantially more revenue. Race bettors spent
an average of $171 per month compared to casino ($164), lottery ($95) and bingo players
($104).
273
Studies find that adults who bet on horse racing (both on and off-track) have the highest
incidence of problem and pathological gambling of any gambling patrons. Fourteen
percent of pari-mutuel bettors are estimated to be problem gamblers and 25 percent are
pathological gamblers.
274
The California Horse Racing Board does not have any
programs designed to assist people with gambling problems and seems to provide state-
sanctioned encouragement for gambling (for example their web site links directly to sites
that offer online account deposit wagering on horse races--see
http://www.chrb.ca.gov/advance_deposit_wagering.htm).
106 California Research Bureau, California State Library
California Research Bureau, California State Library 107
CALIFORNIA’S CARD CLUBS
B
ACKGROUND
Card clubs (also called cardrooms) have existed in California since before statehood.
They were a particularly popular form of entertainment during the Gold Rush, when
gambling was pervasive. However in 1860, all house-banked games (meaning that each
player wagers money against the gambling establishment) were prohibited by the
legislature. From the 1860s through the 1980s, the poker club, or cardroom, was the
major form of gambling in the state, with the house acting as a neutral overseer of the
games.
275
The clubs were regulated at the local level with minimal state oversight.
Rather than having a stake in the game (house banked) and taking a percentage of the
wager, California card clubs provide a house dealer and charge a player participation fee
by time period (generally every half hour) or by hand played. Third party players are
paid by a card club or an independent business to play in the games, usually to start a new
game or keep a shorthanded game going.
Card clubs are limited in the types of games that they can offer by the California
Constitution, which reserves house-banked Nevada-style casino games for casinos
operated by tribes that have federally-approved tribal-state gaming compacts.
As of July 2005, there were 98 licensed card clubs and four clubs with provisional
licenses in California (one has since received a regular license, according to the state
Department of Justice; see Table 17); in February 2006, there were 86 licensed card
clubs. In contrast, in 2001, the state had 113 card clubs with 1,473 tables. The industry
is consolidating but business is booming; the number of tables had increased to 1,515 in
July 2005, primarily due to the popularity of poker. Some clubs are open 24 hours, with
people waiting in line to play poker.
276
Cardroom revenues statewide have increased by nearly 75 percent over the last eight
years (see Figure 17). Revenues in the five cardroom states—California, Florida,
Minnesota, Montana and Washington—rose from $844 million in 2003 to $1.01 billion in
2004.
277
Many card clubs are small businesses but a few are quite large (see Table 17). The
Hollywood Park Casino in Inglewood is co-located with a racetrack. It offers a variety of
games 24 hours a day and is the most profitable of Hollywood Park’s divisions. The
Hawaiian Gardens Casino has 180 tables and 1,675 employees, with yearly revenues of
$85 million.
The state currently has a moratorium on the authorization and expansion of cardrooms
until 2010, which does not allow local jurisdiction to expand gaming beyond that
permitted on January 1, 1996 (Business and Professions Code §19962). However a
number of local ordinances in effect as of that deadline already allowed for considerable
expansion, and in addition state law allows expansion of up to 25 percent in the number
108 California Research Bureau, California State Library
of licensed cardrooms, gambling tables (total and per card room), hours of operation and
in the maximum wager over the limits imposed in 1996 by a city or county (Business and
Professions Code § 19961). Thus in actuality state law allows for considerable cardroom
expansion. For example, according to press accounts the Hawaiian Gardens Casino is
expanding from five tables in 1997 to a planned 300 tables by the end of the year.
278
POKER
Poker is the most widely known card game and in its various formats is played more than
any other game. Its popularity has increased considerably and has brought new
customers to the state’s card rooms, drawn by televised tournaments of Texas Hold’Em.
According to the American Gaming Association, 18 percent of American adults played
poker in 2004, a 50 percent increase over the previous year. Poker draws in younger
players, ages 21 through 39, who also provide incremental revenue at other table games,
as well as purchasing food and beverages.
Some forms of poker are house-banked and can be offered only by tribal casinos in
California, including blackjack, craps (with cards, not dice), baccarat, Caribbean Stud
Poker, Let It Ride, Spanish 21, Three Card Poker, and Pai Gow poker. New games are
introduced regularly, with the most successful being variations on blackjack or poker that
offer larger jackpots.
279
Poker tournaments have become very popular. The California Gambling Control
Commission recently clarified that both state and local city approval must be obtained by
a card room before the number of tables, which is set by licensing regulations, can be
expanded to accommodate a tournament. The Alcohol Beverage Control (ABC) Board
followed with an Industry Advisory that ABC-licensed premises cannot hold, or allow
anyone else to hold, unlicensed poker tournaments.
Online poker does not have these restrictions and offers cheaper fees. One analyst asserts
that online poker is having the effect on card rooms that “Napster” had on the music
industry—widespread low or no cost access that bypasses traditional retailers.
280
SHARED STATE AND LOCAL CONTROL
In 1997, the legislature enacted the California Gambling Act, which among other things
created the Division of Gambling Control in the Department of Justice and the California
Gambling Control Commission, an independent agency with quasi-judicial powers and
five members appointed by the governor. The Act established a concurrent state
regulatory jurisdiction with local governments over cardrooms and created uniform
statewide minimum regulatory standards. Local governments may enact more stringent
controls by local ordinance on matters such as size, location, hours of operation, security,
and wagering limits.
The state administers a comprehensive licensing and registration system for cardrooms,
their key employees, and work permit holders. The Division and the Commission are
California Research Bureau, California State Library 109
jointly responsible for ensuring that card club licenses, approvals, and permits are not
issued to unqualified or disqualified persons. The Division investigates the background
of applicants for gambling licenses, including owners, directors, employees and vendors,
and forwards its findings to the Commission, which issues licenses. The Division also
monitors the conduct of licensees, regulates accounting and internal controls, reviews and
approves gaming equipment and rules of the games, investigates suspected violations and
complaints, and initiates disciplinary actions.
281
Since 1984, when state licensing by the Department of Justice began, 304 applications for
card club licenses have been approved, 123 were denied, 49 were revoked, and two have
been surrendered. Key employees must also be licensed. There are currently 254
licensed key card room employees. Since 1984, 43 applications for key employee
licenses have been denied and four were revoked. Many more have been withdrawn.
Third party providers of proposition player services run a business in which a player is
paid by a card club or an independent business to play in the games, usually to start a new
game or keep a shorthanded game going. For example, Network Management Group,
Inc., bills itself as the largest provider of third-party proposition player services in the
California gambling industry, employing more than 650 associates in over a dozen card
rooms.
282
Contracts for proposition player services must be approved in advance by the Division of
Gambling Control, and businesses that utilize the services must register with the
California Gambling Control Commission. Some clubs do not have contracts with third
parties, but have banking businesses that may register with the Gambling Control
Commission on a voluntary basis. The goal is to protect patrons from money laundering,
loan sharking,
*
and organized crime. According to the Division, although many card
rooms have these businesses on their premises, only about 25 are registered. It would
require an investigation to locate the other businesses, and the Division does not have
sufficient resources to uncover them.
283
Both the Division and the Commission are special funded by fees. All applications for
state card club licenses include a nonrefundable fee of $500. Card clubs pay licensing
fees set in statute in 1998 (Business & Professions Code § 19951). Fee revenue is less
now than in 1998, when inflation is taken into account. Cardroom revenues have
increased by nearly 75 percent since that time.
• A club with one to five tables pays $250 for each table.
• A club with five to eight tables, or earning $200,000 to $499,999 in gross
revenues, pays $450 per table.
• Clubs with nine to 14 tables, or earning $500,000 to $1,999,999 in gross revenues,
pay $1,050 for each table.
*
Loan sharking is the practice of lending money to heavy gamblers at extremely high interest rates,
making it difficult for the gambler to ever pay off the debt. As a consequence, the gambler may fall under
the control of the loan sharking operation.
110 California Research Bureau, California State Library
• Clubs with 15 to 25 tables, or earning $2 million to $9,999,999 in gross revenues,
pay $2,150 per table.
• Clubs with 26 to 70 tables, or earning ten million dollars or more in gross
revenues, pay $3,200 per table.
• Clubs with 71 or more tables pay $3,700 for each table.
As shown in Figure 16, fees paid by California cardrooms to the state have not increased
appreciably for six years (“other revenues” on the chart include application fees,
background deposits and initial license fees). Since fees are intended to support the
state’s regulatory operations, low fees impede the ability of the state to enforce its
gambling control laws.
Figure 16
State Fees Paid b
y
California Cardrooms
(Fiscal Years 1997-98 to 2005-06)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
Other revenues
Annual license fees
Source: California Department of Justice, Division of Gambling Control, 2006.
REVENUES AND TAXES
A 1995 survey found that California card clubs are the largest in the nation, with a total
handle (wagering total) of $8.9 million and gross revenues of $711 million.
284
According
to the American Gaming Association, California cardrooms earned $688 million in 2003,
an increase from $563 million in 2002, fueled by the popularity of poker and other table
games.
285
The gross gaming revenues reported by cardrooms to the Division of Gambling
Control are shown in Figure 17.
California Research Bureau, California State Library 111
Figure 17
California Cardroom Gross Gaming Revenues, 1998-2004
$0
$100
$200
$300
$400
$500
$600
$700
1998 1999 2000 2001 2002 2003 2004
$ millions
Source: California Department of Justice, Division of Gambling Control, 2005.
The state does not tax cardrooms, although they pay licensing fees as described above,
but local governments may negotiate a tax, typically on the table fees collected by the
cardrooms. These can be very lucrative sources of revenue. For example, the Lake
Elsinore Hotel & Casino pays a gaming fee of more than $74,000 a year for 18 table
games, as well as property, sales, and hotel-room taxes.
286
Some cities are particularly dependent on card room revenues as a major source of
municipal funds. Cities such as Commerce, Bell Gardens, Colma, Hawaiian Gardens,
Gardena, and San Pablo depend on local cardrooms for a significant portion of their
income. This dependence has raised questions as to whether these cities can adequately
regulate club operations, as they are in essence a “municipal partner.”
287
Figure 18
Percent of Local Revenues Derived from Card Clubs (2002)
51%
18%
33%
35%
45%
0%
10%
20%
30%
40%
50%
60%
Bell Gardens City of
Commerce
Gardena Colma Hawaiian
Gardens
Source: Little Hoover Commission, 2002
112 California Research Bureau, California State Library
In 2005, the small town of Colma’s ordinance allowing unlimited card betting was
declared illegal by the Attorney General as a violation of the state’s moratorium on card
club expansion, a finding that reportedly could cost the city half of the $3.8 million in
fees that the Lucky Chances Casino generates for the town each year.
288
The California
Gambling Control Division subsequently ordered Lucky Chances Casino to halt
unlimited card betting. The casino’s owner is advocating removing the betting cap via a
local ordinance and state legislation. (He was recently indicted for allegedly diverting
card room money and owing nearly $1 million in taxes.)
289
The Colma dispute over wagering limits has raised a larger issue, as some 30 local
jurisdictions apparently do not comply with the state’s moratorium on card club
expansion. The result is a patchwork of wagering limits in different jurisdictions and
clubs that may create a competitive disadvantage for some card clubs.
290
CRIME
Gambling in card clubs has been associated with a number of crimes including
embezzlement, bookmaking, loan sharking, money laundering, criminal gangs, job
selling, prostitution, cheating and gambling by minors. For example, in 2000, 55 people
were indicted in connection with alleged illegal activity at the Bay 101 and Garden City
cardrooms in San Jose. Testimony before the grand jury described loan-sharking, drug
sales, credit-card and check fraud, and buying stolen computer chips, all of which were
alleged to have taken place on a routine basis.
291
Proposals to allow or expand local card clubs can be extremely contentious, particularly
since most are located in urban areas. For example, some members of the Vietnamese-
American community in San Jose have been vocal in their opposition to the city’s two
cardrooms, which they claim have exploited gambling addiction in the Vietnamese
community and led to increased crime, domestic violence and child neglect.
292
In 2000,
San Jose’s two cardrooms produced $7.5 million in tax revenue, based on a 13 percent
tax on gross receipts. Asian games provide about 70 percent of the clubs’ combined
revenues.
Gambling by minors in card clubs is particularly problematic given the popularity of
youth poker and its role as a gateway to adolescent problem gambling. Gambling by
minors is also illegal. According to Division of Gambling Control’s records, only one
cardroom has been cited for minor gambling but pled guilty to having a minor on the
premises, a lesser charge. Three other cardrooms have received violation notices for
having a minor on premises. A Division investigator contends, “I’m sure more is
occurring out there. We just do not have the staff to be on site in the cardrooms as much
as we would like.”
293
Local governments are also responsible for enforcing gambling
laws in cardrooms.
Cardrooms are subject to the Federal Bank Secrecy Act and must track cash buy-ins and
cash-outs at the gaming tables, and report all transactions in excess of $10,000 in any
California Research Bureau, California State Library 113
gambling day to the IRS. The IRS has audit and investigation authority for compliance
purposes.
OWNERSHIP
State law prohibits California card club proprietors from owning an interest in out-of-
state gambling operations that would be illegal under California law, with the exception
of companies that own racetracks. Since slot machines are illegal (except in Indian
casinos), companies that are engaged in casino operations legal in other states may not
operate a card club in California. State law also requires that every owner, director and
key employee be licensed, including shareholders of corporations, effectively excluding
most publicly owned companies from operating card clubs. Over the last five years,
several bills have been introduced in the legislature to remove one or both of these
prohibitions, but they have either been defeated or vetoed.
According to the Little Hoover Commission, these prohibitions were enacted as attempts
to keep organized crime out of California.
294
However publicly traded gambling
companies with good reputations now dominate the gambling market and even manage
casinos for California Indian gaming tribes. The Commission concludes that state’s card
club ownership prohibitions are not necessary to protect the public against criminal
activities and are “...an anachronistic attempt to protect public safety.”
295
The
prohibitions do have the effect of limiting the capital resources available to card clubs
and thus restricting their expansion, a goal of anti-gambling forces and other competitors
in the gaming industry such as tribal casinos.
LOCATIONS
Of the state’s 58 counties, 24 do not have any card rooms and 13 only have one card
room. Los Angeles County has over half the licensed tables in the state, while the city of
Sacramento has the most card rooms of any city. The size and location of card rooms
varies considerably, as Table 17 shows (updated lists can be found at
http://www.cgcc.ca.gov/cardrooms/CardRoomData.htm).
Table 17
California Card Clubs by City, December 2005
Active Clubs
No. of
Tables
Club Address City Zip
License
Issuance
License
Expiration
Napa Valley Casino 8 3466 Broadway American Canyon 94589 12/01/04 11/30/05
Kelly's 6 408 “O” St. Antioch 94509 08/01/05 02/28/06
Nineteenth Hole, The 5 2746 W. Tregallas Antioch 94509 10/01/05 09/30/06
Outlaws Bar & Grill 2 9850 E. Front Rd. Atascadero 93423 12/01/04 07/31/06
Dealer's Choice Cardroom 3 13483 Bowman Rd. Auburn 95603 12/01/04 06/30/06
Golden West Casino 25 1001 S. Union Ave. Bakersfield 93307 03/01/05 02/28/06
Bell Gardens Bicycle Club 170 7301 Eastern Ave. Bell Gardens 90201 01/01/05 12/31/05
Bruce's Casino 1 116 S. Main Blythe 92225 07/01/05 06/30/06
Cibola Club 1 138 N. Main Blythe 92225 10/01/04 09/30/05
Black Sheep Casino 2 3181 Cameron Park Dr., #108 Cameron Park 95682 08/01/05 07/31/06
Old Cayucos Tavern 2 130 N. Ocean Ave. Cayucos 93430 12/01/04 11/30/05
Angie's Poker Club 3 114 W. 15
th
St. Chico 95928 11/01/05 04/30/07
Village Club 12 429 Broadway Chula Vista 91910 01/01/05 12/31/05
Lucky Derby Casino 7 7433 Greenback Lane, Ste. C Citrus Heights 95610 08/01/05 07/31/06
Phoenix Lounge Casino 7 5948 Auburn Blvd. Citrus Heights 95621 08/01/05 07/31/06
Clovis 500 Club 6 500 Clovis Ave. Clovis 93612 06/01/05 05/31/06
Commerce Casino 243 6131 E. Telegraph Rd. Commerce 90040 01/01/05 12/31/05
Crystal Park Casino 22 123 E. Artesia Blvd. Compton 90220 01/01/05 02/28/06
114 California Research Bureau, California State Library
Table 17
California Card Clubs by City, December 2005
Active Clubs
No. of
Tables
Club Address City Zip
License
Issuance
License
Expiration
Club Caribe 10 7617 Atlantic Ave. Cudahy 90201 02/01/05 01/31/06
Aldo's Cardroom 2 1225 Airport Dr. Delano 93215 10/01/05 09/30/06
St. Charles Place 1 315 Main St. Downieville 95936 09/01/05 08/31/06
Tommy's Casino & Saloon 3 467 W. Main St. El Centro 92243 01/01/05 12/31/05
Oaks Card Club 40 4097 San Pablo Ave. Emeryville 94608 02/01/05 01/31/06
Klondike Casino 2 1930 Fourth St. Eureka 95501 10/01/05 01/31/07
S & K Card Room 4 306 F St. Eureka 95501 11/01/05 01/31/06
Lake Bowl Cardroom 5 511 E. Bidwell St. Folsom 95630 10/01/05 09/30/06
Hustler Casino 65 15331 So. Vermont Gardena 90247 02/01/05 01/31/06
Normandie Club 45 1045 W. Rosecrans Gardena 90247 12/01/04 05/31/06
Garlic City Club 5 40 Hornlien Ct. Gilroy 95020 09/01/05 03/31/07
Gloria's Lounge & Casino 2 30435 Road 68 Visalia 93291 11/01/05 10/31/06
Gold Rush Casino 5 106 E. Main St. Grass Valley 95945 10/01/05 01/31/06
Central Coast Casino-G.B. 2 359 Grand Ave. Grover Beach 93433 12/01/04 06/30/06
Jalisco Pool Room 4 920 Guadalupe St. Guadalupe 93434 07/01/05 06/30/06
Cottage, The 3 106 W. Seventh St. Hanford 93230 11/01/04 10/31/05
Hawaiian Gardens Casino 180 11871 Carson St. Hawaiian Gardens 90716 09/01/05 08/31/06
Palace Card Room 8 22821 Mission Blvd. Hayward 94541 11/01/05 10/31/06
California Research Bureau, California State Library 115
Table 17
California Card Clubs by City, December 2005
Active Clubs
No. of
Tables
Club Address City Zip
License
Issuance
License
Expiration
Hollywood Park 102 3883 W. Century Blvd. Inglewood 90301 01/01/05 12/31/05
Hotel Del Rio & Casino 4 209 Second St. Isleton 95641 11/01/05 10/31/06
Rogelio's, Inc. 2 34 Main St. Isleton 95641 09/01/05 03/31/07
Royal Flush Card Room 2 44 North 19½ Ave. Lemoore 93245 11/01/05 10/31/06
Livermore Casino 3 2223 First St. Livermore 94550 09/01/05 08/31/06
Lucky Buck Card Club 5 1620 Railroad Ave. Livermore 94550 02/01/05 01/31/06
Axtion Jaxon Cardroom 3 29 N. Sacramento St. Lodi 95240 08/01/05 07/31/06
La Primavera Pool Hall & Café 2 224 S. “C” St. Madera 93638 05/01/05 04/30/06
Casino Real 6 1030-B West Yosemite Manteca 95336 07/01/05 06/30/06
Marina Club 7 204 Carmel Ave. Marina 93933 11/01/05 10/31/06
Mortimer's Card Room 5 3100 Del Monte Blvd. Marina 93933 09/01/05 11/30/05
Ginny's Club 1 5402 Lindhurst Ave. Marysville 95901 03/01/05 02/28/06
Rooney's Cardroom 4 515 Fourth St. Marysville 95901 09/01/05 08/31/06
Gold Sombero 4 2217 Yosemite Parkway Merced 95340 05/01/05 04/30/06
Poker Flats Casino 4
1714 Martin Luther King Jr.,
Way
Merced 95340 08/01/05 07/31/06
Empire Sportsmen's Assoc. 5 5801 N. McHenry Modesto 95356 12/01/04 11/30/05
Hemphill's Card Room 3 3385 California Blvd. Napa 94558 10/01/05 09/30/05
116 California Research Bureau, California State Library
Table 17
California Card Clubs by City, December 2005
Active Clubs
No. of
Tables
Club Address City Zip
License
Issuance
License
Expiration
Mike's Card Casino 5 112 N. Yosemite Ave. Oakdale 95361 04/01/05 03/31/06
Brooks Oceana Cardroom 3 1795 Front St. Oceana 93445 12/01/04 06/30/06
Ocean's Eleven Casino 45 121 Brooks St. Oceanside 92054 12/01/04 11/30/05
California Grand Casino 14 5867 Pacheco Blvd. Pacheco 94553 11/01/05 10/31/06
Central Coast Casino-P.R. 2 1428 Spring St. Paso Robles 93446 11/01/05 10/31/06
101 Casino, The 15 5151 Montero Way Petaluma 94954 01/01/05 12/31/05
River Cardroom, The 7 246 Petaluma Blvd., North Petaluma 94952 05/01/05 04/30/06
Mint, The 3 940 West Morton Ave. Porterville 93257 05/01/05 06/30/06
Don Juan Club & Casino 1 2785 Don Juan Dr. Rancho Cordova 95670 12/01/04 06/30/05
Rancho's Club 7 2740 Mills Park Dr. Rancho Cordova 95670 09/01/05 01/31/07
Casino Club 5 1885 Hilltop Dr. Redding 96002 01/01/05 12/31/05
Oasis Card Room 3 117 Ridgecrest Blvd., #A Ridgecrest 93555 11/01/05 02/28/07
Diamond Jim's 16 118 20
th
Street West Rosamond 93560 10/01/05 09/30/06
Capitol Casino 8 411 N. 16th St. Sacramento 95814 06/01/05 05/31/06
Duffy's Cardroom 1 1944 El Camino Ave. Sacramento 95815 04/01/05 03/31/06
Limelight Cardroom 5 1014 Alhambra Blvd. Sacramento 95816 09/01/05 05/31/07
Silver Fox 7 6010 Stockton Blvd. Sacramento 95824 08/01/05 07/31/06
Cap's Saloon 3 12 W. Gabilan St. Salinas 93901 12/01/04 11/30/05
California Research Bureau, California State Library 117
Table 17
California Card Clubs by City, December 2005
Active Clubs
No. of
Tables
Club Address City Zip
License
Issuance
License
Expiration
Artichoke's Joe's Casino 51 659 Huntington Ave. San Bruno 94066 08/01/05 07/31/06
Lucky Lady 7 5526 El Cajon Blvd. San Diego 92115 01/01/05 01/31/06
Palomar Card Club 5 2724 El Cajon Blvd. San Diego 92104 10/01/05 02/28/07
Garden City 40 360 South Saratoga Ave. San Jose 95129 10/01/05 09/30/06
Sutter's Place, Inc. dba Bay 101 40 1801 Bering Dr. San Jose 95112 01/01/05 12/31/05
Club San Rafael 4 721 Lincoln Ave. San Rafael 94901 01/01/05 12/31/05
Ocean View Cardroom 4 709 Pacific Ave. Santa Cruz 95060 03/01/05 02/28/06
Ven A Mexico 2 955 Front St. Soledad 93960 12/01/04 11/30/05
Cameo Club 6 5757 Pacific Ave. Stockton 95202 01/01/05 01/31/06
Delta Club Card Room 6 6518 A Pacific Ave. Stockton 95207 12/01/04 11/30/05
Saigon Casino Club 4 146 E Market St. Stockton 95202 12/01/04 11/30/05
Comstock Cardroom 5 125 W. 11th St. Tracy 95376 11/01/05 10/31/06
Turlock Poker Room 4 270 W. Main St. Turlock 95380 06/01/05 05/31/06
Player's Poker Club 4 906 N. Ventura Ave. Ventura 93001 09/01/05 03/31/07
Sundowner Cardroom (Visalia) 1 15638 Ave., 296 Visalia 93292 05/01/05 04/30/06
Caesar's Club 3 184 Main St. Watsonville 95076 12/01/04 11/30/05
Philippine Gardens 5 410 Rodriguez St. Watsonville 95077 10/01/04 09/30/05
El Resbalon 1 154 N. Valencia Woodlake 93286 12/01/04 06/30/06
118 California Research Bureau, California State Library
Table 17
California Card Clubs by City, December 2005
Active Clubs
No. of
Tables
Club Address City Zip
License
Issuance
License
Expiration
La Fuerza 2 175 E. Antelope Woodlake 93286 09/01/05 08/31/06
Total Tables 1417
Provisionally Licensed Clubs
No. of
Tables
Club Address City Zip
Club One, Inc. 35 1033 Van Ness Ave. Fresno 93721
Lucky Chances 43 1700 Hillside Blvd. Colma 94014
Pastime Club 2 726 First St. Benicia 94510
Lake Elsinore Hotel and Casino
(Sahara Dunes)
18 20930 Malaga Rd. Lake Elsinore 92350
Total Tables 98
Sources: The Division of Gambling Control, Department of Justice, and the California Gambling Control Commission, 12/2005.
California Research bureau, California State Library 119
120 California Research Bureau, California State Library
California Research Bureau, California State Library 121
INTERNET GAMBLING
B
ACKGROUND
The Internet’s global reach and the ability of individuals to access it by wire and wireless
devices have enabled an unprecedented movement of goods and information across
national borders. Gambling is no exception. Internet gambling offers a powerful means
to reach people in their homes and allows gambling without the need for a physical
gaming establishment.
Global gaming operations were quick to understand the potential and ramped up
operations in the late 1990s. Virtually all of the estimated 250 to 300 companies that
operated about 1,400 Internet gambling services in 2003 were privately held and located
offshore in 55 different jurisdictions. As shown in Figure 19, revenues were estimated to
have been $1.5 billion in 2000, $5.7 billion in 2003, $8.2 billion in 2004, and $10.7
billion in 2005.
296
The American Gaming Association estimates that in 2006, Internet
gambling will be a $12 billion to $15 billion market worldwide.
297
Figure 19
Estimated Worldwide Internet Gambling Revenues
(in $ billions)
$10.7
$8.2
$1.5
$5.7
$0
$2
$4
$6
$8
$10
$12
2000 2003 2004 2005
b
i
l
l
i
o
n
s
Sources: International Gaming & Wagering Business, 2002, and Los Angeles Times , 2005.
A 2003 Government Accounting Office (GAO) study estimated that United States
players make up between 50 and 70 percent of Internet gamblers worldwide, despite the
fact that Internet gambling is illegal in the United States (except on horse racing--see
chapter on horse racing).
298
The industry is moving towards legalization in some countries, most recently in the
United Kingdom, which has instituted a comprehensive licensing and regulatory regime
for Internet, iTV and mobile phone gambling. Major Internet gambling companies are
now traded on the London Stock Exchange. For example PartyGaming, the parent
company of PartyPoker.com, is licensed in Gibraltar and was valued at $8.5 billion on the
London Stock Exchange when it went public on June 30, 2005.
299
It is now valued at
$9.6 billion. SportingBet and BetOnSports are also publicly traded in London.
122 California Research Bureau, California State Library
SportingBet acquired 700,000 new customers in a recent quarter, almost equal to the
number of people who signed up the previous year. The company reports taking in
$530,000 a day just from its poker business. American investment houses own substantial
amounts of stock in these highly profitable, fast-growing companies, even though online
gambling is illegal under federal law.
300
PLAYERS
Internet gambling sites can turn a personal computer or a cell phone into a virtual
duplicate of a casino video slot machine. Online games include blackjack, video poker,
bingo, craps, roulette, baccarat, and keno—virtually every form of gambling. Players
deposit “front money,” which includes payment in advance by credit/debit card, wire
transfer, mailed checks, money orders, or payment aggregators. Many sites allow players
to obtain a small number of chips for free. Even with low stakes betting, the fastest
games can run through hundreds of dollars an hour.
Two of the online market’s fastest growing areas are betting exchanges and online poker.
Poker accounts for nearly a quarter of Internet gaming revenues; sports betting and online
casinos each account for 35 percent of revenues.
301
Sport betting is one of the most popular forms of at-home gambling, although it is illegal
in many jurisdictions. Industry analysts estimate that online sports betting generated
$4.29 billion in revenues in 2005, more than double the $1.7 billion earned in 2001.
302
One 24-hour online site advertises that over 7,000 players are logged in during peak
times. According to the site, payments can be made by cash advances through credit card
companies and by direct access to bank accounts.
Online poker is especially popular with young men and has even become a problem on
school campuses where kids play it on their mobile phones. Recently the president of the
sophomore class at Lehigh University robbed a bank in an attempt to pay off $5,000 in
Internet gambling debts.
303
A 2001 study found that 14 of the top 20 most recognized Internet gambling sites were
online casinos.
304
While 83 percent of gamblers played online, only one third of that
group, or 28 percent of all gamblers, played for real money. The rest were drawn by
websites that offered free games. Other findings included:
• Seventy-three percent of the gamblers who played both on-and-offline had lost
money in the past month, compared to 80 percent of players at bricks and mortar
casinos.
• Three of five online gamblers visited more than one gambling site a day, and one-
fifth visited four or more.
• Gamblers who played both at land-based casinos and online lost an average (net
loss) of $122 a month, double that of any other group.
California Research Bureau, California State Library 123
• Players who wagered exclusively online tended to confine their gambling to bingo
and lottery sites, and lost the least of any of the real-money gambler groups.
• One quarter of online bingo players gambled for real money, averaging about
$104 a month, compared to their casino counterparts who spent $164 per month.
THE LEGALITY OF INTERNET GAMBLING IN THE UNITED STATES
The Internet “…is a means, not a location, it exists and functions outside of traditional
governmental spheres of central control, sovereignty, and regulation…[and] presents
considerable challenges to any attempt to regulate its use.”
305
State governments have the primary responsibility for determining what forms of
gambling may legally take place within their borders, and for this reason gambling has
traditionally been treated as a state’s rights or 10
th
amendment issue. Prohibitions vary
from state to state. Nevada makes it a crime to make or accept a wager over the Internet
unless the operator is a state licensee. Certain aspects of Internet gambling are prohibited
in Illinois, Louisiana, Oregon, and South Dakota (excluding the state lottery), and are
covered by broader laws in other states. Washington State recently made it a felony to
play poker on the Internet.
306
If and how state prohibitions can be effectively enforced is an open question given that
Internet gambling consists of interstate transactions. Some state Attorneys General have
been active in attempting to regulate online gambling. For example, in 1998-99, the
Florida Attorney General distributed “cease and desist” letters to at least ten media
companies providing publishing or broadcasting advertisements for offshore computer
gambling sites.
307
Federal gambling law (the Wire Act, the Illegal Gambling Business Act, and the Travel
Act) prohibits most interstate and extraterritorial gambling, including transmitting bets
over state lines. However the language of the law has become outdated by technology
and various courts have interpreted it differently. For example, the Wire Act has been
used primarily to prosecute cases involving sports betting. It does not clearly prohibit
Internet gambling sites.
308
According to one analysis, “The Department of Justice has
limited its few criminal complaints to American citizens licensed in foreign countries
who were taking bets from the United States.”
309
The growing participation by Americans in online gambling, as well as large investments
by many of Wall Street’s largest firms in shares of online casinos and betting parlors,
underscores “…a striking gap between the federal law enforcement position on online
gambling and the realities behind what has emerged as a booming business.”
310
Several bills have been introduced in Congress to create a regulatory scheme that would
identify and block financial transactions related to illegal Internet gambling, but none has
passed. How to address off-the-track Internet betting on horse racing, allowed in some
states including California, is one unresolved issue (see chapter on horse racing).
Multistate lotteries also raise issues. A major concern of the Department of Justice is
124 California Research Bureau, California State Library
how a law making it a federal crime to place a bet over the Internet would be enforced,
raising memories of Prohibition. For this reason, most bills target businesses by making
it a crime to conduct gambling online.
Given the loopholes in anti-Internet gambling laws, the federal government has
concentrated its prohibition efforts on credit card companies and advertisers. In 2003, the
Department of Justice (DOJ) sent letters to the National Association of Broadcasters, the
Magazine Publishers of America and other trade groups warning that ads for Internet
gambling are “ubiquitous,” misleading the public into believing that such gambling is
legal, when it is not. The DOJ threatened to prosecute major communications companies
under aiding and abetting statutes for accepting advertising from online gaming
companies, raising First Amendment concerns.
311
According to the Government Accountability Office (GAO), major U.S. credit card
companies have tried to restrict the use of their cards for Internet gambling by denying
authorization for Internet gambling transactions and by developing transaction codes that
banks can use to block payments at their discretion. Attempts by Visa and Mastercard to
prohibit the use of their credit cards for Internet gambling purposes have not always been
effective, however, although GAO estimates that they have slowed the growth of the
industry. This is because payments are actually made through banks, some of which
operate in jurisdictions where Internet gambling is legal. Furthermore, it is difficult to
distinguish between legal (i.e., bets on horse racing) and illegal gambling transactions.
Debts incurred through potentially illegal activities are unenforceable. Some losing
bettors have refused to pay their credit card gambling debts, claiming that the banks
issuing the credit cards facilitated illegal activities.
312
Online payment providers that aggregate payments, such as PayPal, can also be used to
circumvent Internet gambling prohibitions, since banks cannot necessarily determine the
type of activity being charged. In addition, wire transfers, private label debit cards, direct
deposit/withdrawal and personal checks are other ways to transfer funds. Finally,
electronic cash allows an individual to use real money to purchase electronic cash units to
make any transaction over the Internet. The authors of one analysis conclude that, “From
the U.S. experience, regulating prohibition of Internet gambling effectively is
unfeasible.”
313
If Internet gambling operators are U.S. citizens, they may be prosecuted under state and
federal criminal and/or civil laws for accepting bets from residents in every state.
314
Individual citizens are not likely to be charged for betting online, however, and thus
online gambling is available to consumers as a practical matter.
315
An International Business
As of 2003, Internet gambling had been legalized in over 50 countries and jurisdictions,
including Europe, the Caribbean, Australia, and the Pacific islands. In April 2005, online
casinos became legal in the United Kingdom. Other European countries are considering
similar actions. Sportingbet pic, a publicly traded company on the London Stock
California Research Bureau, California State Library 125
Exchange, recently joined forces with Paradise Poker to form the world’s largest online
betting company, with over two million customers. Partypoker.com, another large
website, is licensed in Gibraltar.
At least two U.S. courts have held that foreign casino businesses accepting bets from
customers in the United States may violate federal law. However extradition treaties
ordinarily cannot reach offshore operators and may be contrary to U.S. treaty obligations
under the General Agreement on Trade in Services (GATS).
316
Whether the federal government can restrict virtual casinos that originate in areas where
casino gambling is a legal activity has been the subject of a World Trade Organization
(WTO) dispute brought by the nation of Antigua, which houses some Internet gaming
operations. In April 2005, a WTO appeals panel ruled that the U.S. federal ban on
Internet gambling violated WTO treaty obligations, and that the entire U.S. gambling
service sector was covered by the GATS, thus limiting the ability of federal, state and
local government to limit gambling. According to one commentator, the ruling also puts
state lotteries and tribal-state gaming compacts at risk because GATS prohibits
government monopolies.
The fact that the United States allows an exemption for account deposit wagering
*
on
horse races over the Internet weakens the U.S. position. The WTO ruling found that the
government does have the right to restrict remote gambling to protect public morals and
public order, but must consistently apply restrictions to domestic and foreign operations.
Congress is considering removing the exemption allowing account deposit wagering for
horse racing in order to strengthen the U.S. position.
317
SOCIAL AND ECONOMIC COSTS OF INTERNET GAMBLING
Congress created the National Gambling Impact Study Commission in 1996, to study the
social and economic impacts of gambling. Concerns about Internet gambling raised by
the Commission in its 1999 report included: increased and unregulated underage
gambling, more pathological and problem gambling with associated personal, family and
community costs, lack of consumer protections and criminal abuse. The use of virtual
cash, unlimited accessibility, and the solitary nature of gambling on the Internet are all
potential risk factors for the development of problem gambling.
318
Critics contend that gambling on the Internet offers a particularly addictive and child-
alluring form of gambling, as evidenced by the number of websites that offer free
electronic games as an introduction to gambling. Research shows that young people are
particularly at risk of becoming addicted to gambling. Parents may have little control,
even with the most advanced software protections.
The convenience of easy access to gambling in one’s home may lead to more personal
bankruptcies for consumers of all ages (see a more extended discussion, under Economic
*
See discussion of account deposit wagering in the chapter on horse racing.
126 California Research Bureau, California State Library
Impacts). According to an analysis by Deloitte, “Managing the issues of problem and
under-age gaming will be critical to the industry’s success…”
319
Law enforcement officials are concerned about an increased risk of fraud in today’s
unregulated Internet gaming environment, and the enhanced opportunity for international
money laundering by organized crime and terrorists. According to GAO, “Law
enforcement officials said they believed that Internet gambling could potentially be a
powerful vehicle for laundering criminal proceeds [due to]…the volume, speed and
international reach of Internet transactions and the offshore locations of Internet
gambling sites.”
320
However gaming industry officials contend that all e-commerce is
susceptible to money laundering, not just gaming.
I. Nelson Rose, a prolific analyst of gaming law, concludes that:
There is general agreement that a complete prohibition [of Internet gambling] is
impossible to enforce, while complete legalization without regulation would cause
untold social harm, particularly to children and compulsive gamblers. Lawmakers
at all levels and in all branches of government are now faced with the necessity of
finding a way to control this constantly evolving invention.
321
California Research Bureau, California State Library 127
SOCIAL IMPACTS OF GAMBLING
P
ROBLEM AND PATHOLOGICAL GAMBLING
Background
If everyone could gamble responsibly, as most people do for recreation and leisure, a
discussion of the social impacts of gambling might be relatively brief. However a
significant percentage of people who gamble do so excessively, harming themselves,
their families, and their communities. As access to gambling--either state-promoted or
authorized--increases, the prevalence of problem and pathological gambling is also
increasing. This addiction creates social costs analogous to the impact of excessive
alcohol consumption or of tobacco and illegal drug use.
322
Problem gambling refers to gambling that significantly interferes with a person’s basic
occupational, interpersonal, and financial functioning. Pathological gambling is the most
severe form and is classified as a mental disorder with similarities to drug abuse
including “…features of tolerance, withdrawal, diminished control, and relinquishing of
important activities.”
323
Pathological gamblers are important to the fiscal health of the gaming industry,
generating 15 percent of the industry’s gross revenues, according to a study by the
National Opinion Research Center at the University of Chicago.
324
A 1999 study by the
Australian Productivity Commission found that problem gamblers accounted for about
one-third of the gambling industries’ market in the country, and that problem gamblers
lost, on average, around $12,000 a year compared with under $650 for other gamblers.
325
Clinical Definition
In 1980, the American Psychiatric Association (APA) recognized compulsive gambling
as a mental disorder. The World Health Organization also recognizes this mental
disorder.
Pathological gambling is classified as an impulse control disorder or a nonsubstance-
related addictive disorder, a “…failure to resist an impulse, drive, or temptation to
perform some act that is harmful to the person or others.”
326
It is characterized by “High
rates of mood, psychotic, anxiety, attention-deficit, personality, and substance use
disorders.”
327
An individual suffering from pathological gambling is unable to participate
responsibility in gambling with any sense of moderation, and is unable to stop. The APA
states:
The essential features of this disorder are a chronic and progressive failure to
resist impulses to gambling, and gambling behavior that compromises, disrupts,
or damages personal, family, or vocational pursuits. The gambling preoccupation,
urge and activity increase during periods of stress. Problems that arise as a result
of gambling lead to an intensification of the gambling behavior. Characteristic
problems include extensive indebtedness and consequent default on debts and
128 California Research Bureau, California State Library
other financial responsibility, disrupted family relationships, inattention at work,
and financially motivated illegal activities to pay for gambling.
328
The diagnostic criteria for pathological gambling includes at least five of the following
behaviors (DSM-IV):
*
1. Is preoccupied with gambling.
2. Needs to gamble with increasing amounts of money in order to achieve the
desired excitement.
3. Has repeated unsuccessful efforts to control or stop gambling.
4. Is restless or irritable when attempting to control or stop gambling.
5. Gambles as a way of escaping from problems or of relieving feelings of
helplessness, guilt, anxiety, and depression.
6. After losing money, often returns another day in order to get even (“chasing
losses”).
329
Studies have suggested “…neurobiological explanations for the similarities and high rates
of co-morbidity between substance abuse disorders and pathological gambling.”
330
Recent studies of medicines prescribed to calm tremors of Parkinson’s disease have
found an association with a heightened risk of pathological gambling, according to an
analysis of adverse drug reactions reported to the Food and Drug Administration. The
link seems to be related to increased dopamine, which leads to impulsive behavior.
331
Prevalence
A meta-analysis of prevalence studies published in the Journal of the American Medical
Association (JAMA) estimated an adult population prevalence rate for pathological
gamblers in the United States of 1.2 percent for the previous year and 1.6 percent over a
lifetime.
332
Problem gamblers comprised an additional 2.8 percent during the previous
year, and 3.85 percent over a lifetime. The problem increases considerably among
gambling patrons—4.6 percent (problem gamblers) and 5.4 percent (pathological
gamblers) for casino gamblers, 3.6 percent and 5.2 percent for gamblers at lottery
terminals, and 14.3 percent and 25 percent for gamblers in pari-mutuel locations.
The National Council on Problem Gambling cites similar estimates: two million (one
percent) U.S. adults meet the criteria for pathological gambling in a given year. Another
four to eight million adults (two to three percent) are problem gamblers who do not meet
the full diagnostic criteria for pathological gambling, but meet one or more of the criteria
and are experiencing problems due to their gambling behavior.
333
The National Gambling Impact Study Commission estimated in its 1999 report that of the
125 million Americans who gambled at least once a year, about 5.5 million had some
*
Diagnostic and Statistical Manual of Mental Disorders, IV ed. (DSM-IV)
California Research Bureau, California State Library 129
form of gambling problem (2.5 million pathological gamblers and three million problem
gamblers), while another 15 million were “at risk” of developing a gambling problem.
334
If we apply the JAMA estimates to California, using 2000 Census data, we find that
336,419 adults are pathological gamblers and 588,733 adults are problem gamblers
(lifetime prevalence). This means that 925,151 adults in California had a serious
gambling problem in 2000, a number that is probably closer to one million now.
Researchers have also concluded that the rate of problem gambling increases when more
gambling alternatives become available in a community.
• A study by the National Opinion Research Center found that adults living within
50 miles of a casino had double the probability of pathological or problem
gambling.
335
• A 1998 study in seven jurisdictions with new casinos estimated that 16 percent of
local residents had a gambling problem.
336
• A 1999 study by the Australian government found that “The prevalence of
problem gambling is related to the degree of accessibility of gambling,
particularly gaming machines.”
337
• In Nevada, which has casinos located in every corner of the state, the Nevada
Council on Problem Gambling estimates that as many at six percent of Nevada
adults may suffer from a gambling problem, a number twice the estimated
national prevelance.
338
In a 2003 Gallup Lifestyle Poll, eight percent of those who had participated in gambling
activities said they sometimes gambled more than they should, and six percent said that
gambling had been a source of problems within their families. Twelve percent of 18-to-
29 year olds agreed that gambling had been a problem for someone in their family,
compared to four percent of those aged over 50.
339
A 1999 Gallup Poll found that 41
percent of adults and 10 percent of teens reported knowing someone outside their family
for whom gambling had become a problem.
340
The California Council on Problem Gambling operates a helpline for problem gamblers
that received 3,399 calls in 2004. The largest number (12 percent) of calls originated in
the San Bernardino County area. Over half the callers were male (53 percent). Nearly
half the callers were married (48 percent) and 11 percent were divorced or separated.
Most of the callers were middle-aged, as shown in Figure 20.
130 California Research Bureau, California State Library
Figure 20
A
g
e of Callers to California Problem Gamblin
g
Hotline,
2004
0%
5%
10%
15%
20%
25%
30%
Under 21 21-25 26-35 36-45 46-55 56-65 66-75 76+
Age
Percent of All Calls
Source: California Council on Problem Gambling, 2004.
As discussed previously, Indian casinos were the primary gambling preference of over
three quarters of the calls to the state’s problem gambling helpline in 2004 (77.5 percent).
Another five percent preferred gambling in Nevada casinos. Thus casino gambling is by
far the largest source of problem gambling in California.
Vulnerable Groups
High risk groups include adults in mental health and substance abuse treatment, who have
rates of problem and pathological gambling four to ten times higher than the general
population.
341
Men have a prevalence rate two to three times higher than women
(although they call the state helpline in roughly equal numbers). Adolescents are more
likely than adults to become problem and pathological gamblers.
Some ethnic groups are especially vulnerable to problem gambling. A study in St. Louis,
Missouri, found that African Americans comprised 31 percent of persons with problem
and pathological gambling.
342
In California, the Commission on Asian & Pacific Islander
American Affairs (APIAs) has identified problem gambling as a serious concern, citing
research that “…APIAs may have significantly higher rates of problem gambling
compared with that of the mainstream population.” For example, the Commission cites
anecdotal reports that as many 70 percent of the gamblers at the Lucky Chance card room
in Colma are Asian Pacific Islanders.
343
Newspaper accounts verify that Indian casinos and card clubs target their marketing
efforts at the APIA community. The Barona tribal casino recently opened an office in
San Gabriel Valley, which is 22 percent Asian American; “Every property in Southern
California tries to appeal to the Asian community, because Asians have a propensity to
play table games…”
344
In Northern California, buses from the Cache Creek Casino
operated by the Rumsey Band of Wintun Indians pick up Chinese gamblers from San
Francisco, following practices long established by Nevada casinos. Casino San Pablo
targets Asian language advertising and “…celebrates the Chinese, Vietnamese, and
California Research Bureau, California State Library 131
Cambodian new years and employs APIA music promoters, celebrities, and performers
from Vietnam and Cambodia to provide entertainment at the casino.”
345
The Commission’s report cites a study by the NICOS
*
Chinese Health Coalition in San
Francisco that found that gambling was the number one social concern in the Chinese
American community. The NICOS study also found that 84 percent of Chinese
American adults in the community reported gambling in the previous year; 15 percent
were classified as problem gamblers and 21 percent were classified as pathological
gamblers.
346
The Commission and a community coalition have formed the Asian and Pacific Islander
Problem Gambling Task Force to gather information and make recommendations, which
include securing more revenues from all sectors of the gambling industry for prevention
and treatment services for problem and pathological gamblers. The United Cambodian
Association of Minnesota and the Lao Family Community of Minnesota have also
developed prevention and education programs to inform young people about the risks of
adolescent gambling.
People who work in the industry are particularly vulnerable to problems with their own
gambling behaviors. In a notable case, the president of Caesars Atlantic City was fired
and lost his license in 2001, due to compulsive gambling.
347
Employees who have
problem gambling behaviors may be afraid to seek help. However some gambling
companies have developed training programs and responsible gambling programs and
policies to help their employees who have gambling problems.
348
Adolescents
A number of studies have found that adolescents who engage in adult forms of gambling
are more likely to develop problem and pathological gambling problems:
• A 1998 study by the National Research Council estimated that as many as 1.1
million adolescents, or six percent of teenagers between the ages of 12 and 18,
were pathological gamblers, a higher rate than adults.
349
350
• As many at 30 percent of American youth wager money on some game of chance
weekly and four percent gamble daily; between four and eight percent have a very
serious gambling problem, with another ten to 15 percent at risk for developing a
gambling problem.
351
• Young adults ages 18-24, especially males, comprise a disproportionate number
of adults with significant gambling disorders, almost double their representation
in the population (they represent 12.7 percent of the population but 20.4 percent
of the population with a gambling problem).
352
*
The organizations, whose names form the acronym “NICOS,” are: North East Medical Services, IPA
(Chinese Community Health Care Association), Chinese Hospital, On-Lok Senior Health Services, and
Self-Help for the Elderly.
132 California Research Bureau, California State Library
A study by the Annenberg Public Policy Center at the University of Pennsylvania found
that the number of American men ages 14 to 22 who gamble once a month rose 20
percent from 2004 to 2005. Of the 2.9 million young people who gamble on cards at
least once a week, 80 percent are men. Over half of male college students gamble on
cards at least once a month. Poker competitions and Internet betting websites are
especially popular, and college students are the target demographic. One poker website,
absolutepoker.com/, based in Canada, offers to pay a semester’s tuition for tournament
winners. In a notable case, the president of the sophomore class at Lehigh University
robbed a bank in an attempt to pay off $5,000 in Internet gambling debts.
353
A 1998 Oregon study found that 75 percent of 13-17 year olds in the state had gambled
for money at least once, 66 percent within the last year. Boys and older adolescents were
more likely to gamble than girls and younger adolescents. The study measured self-
reported youth gambling on a continuum of involvement ranging from 0 (no gambling),
to 1 (social, no problem), 2 (signs of gambling problems), 3 (gambling-related disorder
with impairment) and 4 (impaired gambler who seeks treatment). The study found that
11.2 percent of Oregon adolescents were level 2 gamblers and 4.1 percent were level 3
gamblers, equating to an estimated 20,000 to 29,000 youth in the state with a gambling
problem, and between 4,700 and 13,600 youth with a gambling-related disorder.
354
In the 2000 Census, 27 percent of California’s population was under age 18; of that
group, 42 percent or 3.9 million youth were ages ten to 18. If we apply Oregon’s
gambling problem/disorder prevalence percentages to California,
*
we could expect to
find that 436,800 youth are level 2 problem gamblers and 159,900 youth are level three
gamblers who have gambling-related disorders with impairment. In total, 600,000
California youth could have serious gambling problems.
In California, it is a misdemeanor for a person under 21 years of age to play any
gambling game, or loiter in any room where gambling is conducted. Any gambling
licensee or employee who allows a minor to gamble is also guilty of a misdemeanor
unless he/she can demonstrate that the minor presented a fake identification card
[Business & Professions Code § 19941(a) and (b)]. However persons 18 and older can
play the state lottery, and the state’s 1999 tribal-state gaming compact, which applies to
most Indian casinos in the state, allows individuals 18 or older to gamble. Beginning in
2003, tribal-state gaming compacts began providing that no persons under age 21 may be
present in any room where class III gaming activities are taking place unless enroute to a
nongaming area.
Adolescent excessive gambling can result in a number of long-term negative
consequences, including truancy, dropping out of school, severed relationships with
family and friends, and mental health and behavioral problems including illegal behavior
to finance gambling. In addition, there is a moderate correlation between adolescent
gambling and other risk behaviors including alcohol, drug, and tobacco use. A study of
adolescent pathological gamblers found the following significant negative behaviors:
355
*
Oregon has a different mix of gambling opportunities than California, particularly video lottery terminals,
which are more accessible and may create more adolescent problem gambling.
California Research Bureau, California State Library 133
…91% of adolescents with a pathological gambling problem show signs of
having a preoccupation with gambling; 85% indicate chasing their losses; 70% lie
to family members, peer and friends about their gambling behavior; 61% use their
lunch money and/or allowance for gambling; 61% become tense and restless
when trying to cut down on their gambling; 57% report spending increasing
amounts of money gambling; 52% gamble as a way of escaping problems; 27%
report skipping school (more than five times) to gamble in the past year; 24%
have taken money from a family member to gamble without their knowledge;
21% have developed familial problems resulting from their gambling behavior;
and 12% report having stolen money from outside the family to gamble.
Adolescent pathological gamblers report starting as early as age ten, often with family
members, which means that early prevention efforts--of which there are few--need to
begin in the elementary grades. Youth often fail to comprehend the risks and odds
associated with gambling. They find Internet gambling particularly attractive. Sites
incorporating video technology offer blackjack, roulette, slots, poker and other casino
games and sports betting. “Practice sites” where no money is needed to play expose
youth to adult games without adult supervision or control. The similarity of video games
with online gambling games can be deceptive since the more one plays video games, the
more one can improve, compared to gambling, which is a game of chance each time.
The availability of gambling in the community affects youth participation even though it
is illegal. A study of the impact of gambling in Atlantic City in the mid 1980s found that
86 percent of high school students in New Jersey had gambled in the past year and 91
percent had participated in some form of gambling during their lifetime.
356
Young men in the military are vulnerable to developing gambling problems. There are
4,150 video slot machines located in officers’ clubs, activity centers and bowling alleys
on overseas bases taking in about $2 billion a year, of which $127 million remains with
the armed forces to help pay for recreational programs such as golf courses and family
activity centers. A PricewaterhouseCoopers report found “a general lack of accessible
treatment for gambling addiction” in the military.
357
Gambling opponents argue that slot machines are increasingly designed to attract
children. Machines that give cash payments without authorization enable youth
gambling. Machines that are distributed in the community at convenience locations such
as gas stations, liquor stores, restaurants and laundromats, exacerbate adolescent (and
adult) problem gambling because they are so easily accessible.
358
Electronic Technologies and Problem Gambling
Video poker, slot machines, and other video gambling terminals are the most addictive
forms of gambling as well as the most effective at generating revenue.
359
“These
machines combine quick-cycling, sensory-rich experiences, the psychologically attractive
principle of intermittent reward, and the statistically inevitable house advantage which
are assured to produce significant gambling losses over time.”
360
A recent article in the
134 California Research Bureau, California State Library
Atlantic Monthly calls them the “crack cocaine” of the gambling world, and points out
that the United States has twice as many publicly available gambling devices (740,000)
that take money as it does ATMS that dispense it.
361
A study by the State of Oregon of gambling treatment and prevention programs in the
state found that the primary gambling activity of gamblers enrolled in treatment was
video poker (74.5 percent), followed by slot machines (10 percent), cards (5.2 percent),
betting on animals (1.6 percent), Keno (1.5 percent), and bingo (1.4 percent).
362
A 2005
study for the California Office of Problem Gambling found that “Policies that
significantly enhance access to electronic gambling machines, casino table games and
other continuous gambling forms can be expected to generate increases in problem
gambling.”
363
Electronic technology has also made it easier than ever for a pathological or problem
gambler to access money to play. Cash can be transferred from a player’s bank account
to a machine on the casino floor and ATM machines are readily accessible. The National
Gambling Impact Study Commission recommended that this ready access to gambling
cash be restricted, but its recommendations were not adopted as public policy or by the
industry. According to articles in trade magazines, the industry is focused on making it
easier for people to obtain quick cash and credit to gamble through cashclub cards and
other devices that let the casino keep the entire transaction fee.
364
The National Gambling Impact Study Commission examined the issue of ready access to
credit in casinos, which can contribute to problem and pathological gambling. The
Commission found that 40 to 60 percent of the cash wagered by individuals in casinos is
not physically brought onto the premises. Casinos extend billions of dollars of credit,
accounting for nearly ten percent of casino revenues in Nevada. This figure does not
include credit extensions from ATM’s, debit and credit cards, or other credit providers.
365
There is a significant monetary benefit to casinos by enabling gamblers to spend money
easily. When bill acceptors were introduced in casinos, they enabled people to play more
quickly by eliminating coins, and thus “…dramatically increased slot machine revenues”
by 30 to 40 percent.
366
Many casinos place ATM machines near their gambling
machines. Credit cards and debit cards can allow people, especially compulsive
gamblers, to run up debts they cannot pay. The question then arises as to who is
responsible for those debts—the casino or the player—and whether credit card companies
can and will enforce collection.
Public Health Impacts
Suicide
A number of studies have attempted to document whether excessive gambling losses lead
to suicide. There are many tragic stories but prevalence studies are unclear; some find an
effect and some do not. This is because gambling may be one of several interacting or
independent variables contributing to an individual’s decision to commit suicide.
Clinical studies have reported elevated levels of “suicidality” in pathological gamblers,
California Research Bureau, California State Library 135
ranging from 17 to 80 percent for thoughts-of-suicide and from four to 23 percent for
actual attempts. An Australian study of coroner’s files estimated that approximately 1.7
percent of suicides during 1997 were gambling related.
367
Studies of individuals in
treatment for pathological gambling and of members of Gambler Anonymous have found
rates of attempted suicide of 17 to 24 percent.
368
Males aged 15 to 35 are the group at highest risk for both suicide and the development of
gambling problems.
Domestic Violence and Child Neglect
Testimonial accounts before the National Gambling Impact Study Commission suggest
that individuals who suffer from problem or pathological gambling engage in destructive
family behavior, such as domestic violence, divorce, child neglect and homelessness.
However the data is inconclusive, and quantifying social costs by isolating gambling
from other contributing factors, such as drug and alcohol abuse, has proven difficult. A
National Opinion Research Center survey conducted for the Commission found that 53.5
percent of identified pathological gamblers reported having been divorced; the U.S. per
capita divorce rate at the time of the survey was 41 percent. Two studies found that
between one quarter and one half of the spouses of compulsive gamblers had been
abused.
369
The Commission on Asian & Pacific Islander American Affairs’ Annual Report 2005
found that “…gambling leads to problems related to child welfare and domestic
violence.” The report presents testimony from a Santa Clara social service worker who
estimated that about 20 percent of the APIA child neglect cases he sees are caused by
problem gambling. For example, children are left unattended in cars in parking lots while
their parents gamble. A family counselor in San Francisco estimated that about 30
percent of the APIA domestic violence cases he sees are related to gambling.
370
Social Costs
The National Gambling Impact Study Commission found that individuals with problem
and pathological gambling “…had higher rates of receipt of past-year unemployment and
welfare benefits, bankruptcy, arrest, incarceration, divorce, poor or fair physical health,
and mental health treatment.” Out-of-control gambling is an important contributor to this
cluster of problems and the related social costs.
*
A study conducted for the Commission
estimated the annual cost in the United States at that time to be $1,200 for each adult
pathological gambler and $715 for each adult problem gambler, or an estimated $5 billion
annual/$40 billion in lifetime costs ($6 billion annual/$48 billion in 2006 dollars). Each
*
The definition of “social costs” in the gambling literature is not clear, and, in general, studies do not
isolate gambling’s contribution to the array of social costs associated with problem and pathological
gambling. As Walker and Barnett point out, “…simply observing that gambling is correlated with such
problems does not imply that gambling causes them.” Douglas M. Walker, A.H. Barnett, “The Social
Costs of Gambling: An Economic Perspective,” Journal of Gambling Studies, Vol. 15, No. 3, September
1999, p. 195.
136 California Research Bureau, California State Library
adult problem gambler cost society an estimated $5,130 and each pathological gambler
cost society an estimated $10,550 over his/her lifetime
371
If we update these estimated costs to 2006, and apply them to California, we find that
each adult problem gambler in the state annually costs society an estimated $865, or
$6211 over his/her lifetime, while each adult pathological gambler annually costs an
estimated $1,453, or $12,774 over a lifetime. Given our previous estimate of 588,733
adult problem gamblers and 333,419 adult pathological gamblers in the state, based on
JAMA data, the annual estimated cost of pathological gamblers in California is
$488,816,807, while the annual estimated cost of problem gamblers is $509,254,045, or
nearly one billion dollars in total. Table 18 presents average estimated financial and
health effects.
Table 18
Lifetime Financial and Health Effects for
Problem and Pathological Gamblers (1998 data)
Characteristic Non-gambler
Problem
Gambler
Pathological
Gambler
Any unemployment benefits, 12
months
4.6% 10.9% 15%
Welfare benefits, 12 months 1.9% 7.3% 4.6%
Household income, 12 months $36,000 $45,000 $40,000
Household debt $22,000 $14,000 $48,000
Health poor/fair last year 22.8% 16.3% 31.1%
Depression NA 16.9% 29.1%
Divorce 18.2% 29.8% 53.5%
Emotionally harmful family
arguments about gambling
NA 15.8% 53.1%
Alcohol/drug dependent, ever 1.1% 12.4% 9.9%
Job loss, last year 2.6% 10.8% 13.8%
Bankruptcy, ever 3.9% 10.3% 19.2%
Arrested, ever 4% 10.4% 21.4%
Source: National Opinion Research Center at the University of Chicago, National Gambling Impact Study Commission
Report, 1999, pp. 7-21, 7-26.
Prevention and Treatment
Primary prevention efforts seek to delay or prevent the onset of activities that can lead to
harmful gambling. These include public education and careful enforcement of
prohibitions against gambling by minors. Secondary prevention efforts target social
gamblers to ensure that they do not develop problems related to gambling. Once a person
has a gambling problem, prevention efforts seek to stop the behavior and minimize the
harm caused by that behavior.
California Research Bureau, California State Library 137
Pathological gambling is a compulsive disorder that can be treated, but it is often a
hidden addiction. There are various treatment approaches. Gamblers Anonymous is a
self-help program that recommends that its members do not go near or enter a gambling
establishment. There are also pharmaceutical treatments utilizing drugs that obstruct or
impede the pathway of nerve cells to the brain’s reward center.
The gambling industry recognizes that gambling addiction is a problem in the industry.
According to a study by the National Opinion Research Center, 96 percent of the 25
largest casinos provide gambling treatment coverage for their employees.
372
States that authorize state lotteries, like California, generally have programs to assist and
treat problem and pathological gamblers. California’s Office of Problem Gambling was
founded in 1997, in the Department of Mental Health, and moved by 2003 legislation to
the Department of Drug and Alcohol Programs in order to take advantage of the state’s
network of county alcohol and drug abuse service providers. The 2003 legislation
directed the Office to develop a problem gambling program including, as a first priority, a
statewide plan to address problem and pathological gambling. The Office is also directed
to establish a toll-free telephone service; undertake public awareness campaigns; sponsor
research into prevalence, causation, and best treatment practices; and, offer training for
health care and law enforcement professionals.
The Office was appropriated $3 million from the Special Distribution Fund in FY 2004-
05, but did not spend the funds. In FY 2005-06, the Office expects to expend most of its
$3 million in funding. It is a very small amount compared to the size of gambling in
California and the estimated prevalence of problem and pathological gamblers. The
Office’s website is not easy to find on the Department of Alcohol and Drug homepage, as
the user must scroll down past prominently featured drug and alcohol abuse programs.
There is no state funding for treatment services in California. In recommending that the
state provide treatment funding, the Commission on Asian & Pacific Islander Americans
noted that “Other states, such as Wisconsin, have set aside between 0.5% and 1 % of all
gross [gambling] revenues for treatment, prevention, and education of pathological
gambling.”
373
One percent of gross gambling revenues in California would generate
about $120,000,000.
The California Council on Problem Gambling reports that most callers to its gambling
problem help line have exhausted their resources and do not have funds to cover the cost
of gambling addiction treatment. A typical six-week intensive treatment might cost
$2,800, with a reference to Gambler’s Anonymous (which is free) for aftercare. Given
our previous estimate of one million problem and pathological gamblers in the state,
treatment costs could top $2.8 billion a year if they all requested it.
In March 2005, the Office of Problem Gambling issued a report, Situational Assessment
of Problem Gambling Services in California, which found that there are few trained
problem gambling counselors and problem gambling service programs in California. The
138 California Research Bureau, California State Library
assessment concluded that “…there is clearly an enormous gap between the need for
problem gambling treatment in California and the availability of such services.” Nearly
three quarters of crisis and treatment respondents did not know where to refer their clients
for problem gambling services or only referred them to Gambler Anonymous.
374
The Commission on Asian & Pacific Islander American Affairs, in its Annual Report
2005, found one “culturally competent” gambling prevention and treatment service in the
state, in San Francisco—the NICOS Chinese Health Coalition. Despite the large number
of Asian and Pacific Islander Americans in Southern California, and widespread
marketing of gambling to that community, there are no prevention and treatment
programs directed to that community.
Very few treatment programs in California target adolescent gamblers and “The vast
majority of schools [colleges]...have no formal or informal policy regarding gambling.”
Most counselors on campuses have very little training in understanding what constitutes a
gambling problem. Experts recommend youth education, starting young, the same
prevention strategy used for drugs and alcohol.
375
A study in Oregon found that 28 percent of gamblers enrolling in treatment and
prevention programs accessed the system through the Help line; ten percent through
recommendations of a current or former program participant; and, ten percent through a
family or friend. A goal of the treatment system is to respond in a timely manner. The
average number of workdays between first call to a program and a first appointment was
less than four days.
376
There are four statewide help line numbers that problem gamblers in California can call.
In 2003, there were 13,349 calls to these help lines; 60 percent were from Southern
California, 20 percent from the San Francisco Bay Area, and 15 percent from the
Sacramento and Fresno areas.
377
Data developed by the California Council on Problem
Gambling finds that casino signs generate nearly half of all calls to the problem gambling
help line, suggesting that this type of information marketing is important. Friends and the
Internet were the next most frequent sources of referral.
378
Some states and casinos have instituted voluntary self-exclusion programs, in which an
individual can request in writing to be refused entrance to all gaming venues.
California’s Gambling Control Act provides for the exclusion of individuals from gaming
establishments (Business and Professions Code § 19844) for violations of law or
offensive behavior such as intoxication, but not to preclude problem gambling. However
some efforts are underway.
The California Gambling Control Commission is developing a problem gambling
regulation in which a voluntary, confidential “self-exclusion” list would be maintained by
the Division of Gambling Control. Gambling establishments would be prohibited from
issuing credit, cashing a check or marketing to individuals on the list.
379
In addition, the
Division is coordinating with the casino and card club industries, the Commission and the
Office of Problem Gambling to write regulations that would require card clubs to have
California Research Bureau, California State Library 139
problem gambling materials available for patrons, a Help line phone number posted,
trained staff and a voluntary self exclusion program.
The recent tribal-state compact with the Quechan Tribe of the Fort Yuma Indian
Reservation (negotiated in 2005, but not ratified) provides for the tribe to establish a self-
exclusion program for problem gamblers, the first compact to do so. The California
Tribal Business Alliance, composed of six tribes with casinos, has announced a
responsible gambling policy that includes a self-exclusion program, employee training,
casino advertising standards, a toll-free help line and problem-gambling information to be
posted on casino web sites.
Australia’s Responsible Gambling Code
In response to a government-commissioned report that found that one in 50 adults in
Australia have a gambling problem, the industry’s Australian Gaming Council crafted a
responsible gambling code. In the code, the industry acknowledges that problem
gambling is a community issue and makes a commitment to develop measures to reduce
the potential for harm including training staff, allowing self-exclusion arrangements, and
providing better public information about the likelihood of winning.
380
CRIME
Crime and gambling interact in a number of ways, including: illegal gambling, which is a
direct violation of the law; crimes committed by problem and pathological gamblers; and,
crimes associated with legal gambling.
Public Corruption
The National Gambling Impact Study Commission pointed out in its 1999 report that
“...the shape and operation of legalized gambling has been largely a product of
government decisions…[and a]…key determinant of the various industries’ potential
profits and losses.”
381
Thus it is not surprising that legal gambling is at times associated
with public corruption. An article published in 1998, entitled “Follow the Money:
Gambling, Ethics and Subpoenas,” found “…significant congressional fears that the
gambling industry could become sufficiently powerful to change U.S. policy and the
economy (locally, regionally and nationally).”
382
A scandal currently unfolding in Washington, D.C. involves, in part, $66 million in
contributions from six gaming tribes made to indicted lobbyists, in part to block rival
casinos. Casino-owning tribes also contributed millions of dollars to congressional
campaigns at the lobbyists’ direction.
383
Federal law allows Indian tribes to contribute to
an unlimited number of candidates, political parties, political actions committees, and
state parties, unlike other donors, who are subject to limits.
384
There are many examples of gambling money influencing the public policy and
regulatory process, legally through substantial campaign contributions to elected officials
and at times illegally. In British Columbia, a scandal involving charity gambling was
140 California Research Bureau, California State Library
called “Bingogate,” and a second scandal involving the approval of casino locations led
to the resignation of the provincial premier.
385
In California, two cases involving non-disclosure of otherwise legal tribal campaign
contributions are moving through the courts. The National Gambling Impact Study
Commission recommended that states adopt tight restrictions on contributions to state
and local campaigns by corporate, private or tribal entities that have applied for or been
granted the privilege of operating gambling facilities.
Financial Crimes
The large amount of money that circulates in casinos offers occasions for money
laundering and other financial crimes. For this reason, the United Nations’ Law on
Prevention of Money Laundering lists “gaming establishments, automated casino clubs,
organizers of lottery games, special event raffles, lotteries and other games of chance” as
obligated to implement measures to detect and prevent money laundering.
386
U.S. federal
and state laws require similar precautions.
According to one literature review, “The connection between gambling and crime has
been well-documented, with adult gambling-related criminal offenses typically including
fraud, theft, fencing stolen goods, embezzlement, tax fraud and evasion, forgery, selling
drugs and counterfeiting.”
387
Victim Crimes
Research suggests that crime rises as casinos attract visitors who either commit or are the
victims of crime. This phenomenon may also occur in other venues that attract cash-
bearing participants.
388
Unique to gambling enterprises, problem and pathological
gambling increases among local residents and is associated with crimes that generate
money to gamble or pay off gambling debts.
A study using data from every U.S. County between 1977 and 1996, found that casinos
(including Indian casinos and riverboat casinos) increased crime (defined as FBI Index 1
Offenses: aggravated assault, rape, murder, robbery, larceny, burglary, and auto theft)
after a lag of three or four years. Prior to the opening of a casino, casino and noncasino
counties had similar crime rates, but after six years, casino counties had eight percent
more property crimes and ten percent more violent crimes than noncasino counties.
Border counties experienced about half the rate of increase as casino counties. The
study’s authors conclude that, “…casinos create crime, rather than attract it from
elsewhere.”
389
• The aggravated assault rate was 112 incidents per 100,000 population higher five
years after a casino opened in a county.
• The rape rate was higher by eight to twelve incidents per 100,000 population in
the fourth and fifth years after a casino opened.
California Research Bureau, California State Library 141
• Increases in robberies began almost immediately after a casino opened; after five
years the rate per 100,000 population was about 70 incidents higher.
• Property crimes increased dramatically after a casino opened: the rate of larceny
per 100,000 population increased from about 300 to 1,400 over seven years;
burglary increased from about 80 to over 500; and, auto theft increased from
about 200 to nearly 500 incidents per 100,000 population.
The authors of this study speculate that violent crime increases more rapidly after a
casino opens because it is committed by criminals drawn to the gambling operation,
while the impact of property crime is delayed as local residents, who may become
problem or pathological gamblers, exhaust their resources. The most significant crime
effects were for property crimes such a larceny and burglary, where obtaining resources
was the primary motivation for the crime.
A 2002 national study, using county-level data, found that four years after a Native
American casino opened, property crimes (primarily auto theft and larceny) and violent
crimes increased by about ten percent.
390
Similar findings were found in a study of casino gambling and crime in Wisconsin:
“…the emergence of casino gambling significantly increased county crime rates...” by
about 8.6 percent in casino counties and by 7.5 percent in counties adjacent to two or
more counties with casinos.
391
At the time of this study, there were 17 casinos in
Wisconsin owned by 11 Indian tribes, most located in rural areas. Thus these findings
are especially applicable to California.
Casinos are associated with increased consumption of alcohol, which also may have an
impact on crime rates. Many tribal casinos are located in rural areas and reached by
narrow winding roads, leading to problems with drunken driving. The Wisconsin study
found that arrests for Driving While Intoxicated, liquor law violations, and disorderly
conduct comprised 45 percent of Non-FBI Index arrests.
392
Crime has substantial social costs. A national study of crime in casino counties found
total costs in 1995-96 for increased crime associated with the casinos of $65 per adult in
casino counties, not counting the judicial and regulatory costs, costs related to
employment and lost productivity, and social service and welfare costs. The 1996
Wisconsin study found that the cost to the public for increased crime resulting from the
introduction of Indian casinos was nearly $51 million ($63.8 million in 2005 dollars).
393
Other studies have found that problem and pathological gamblers impose high costs on
society. A 1990 Maryland study found that 62 percent of the members of a Gamblers
Anonymous group had committed illegal acts as a result of their gambling: 80 percent
had committed civil offenses
*
and 29 percent had committed criminal offenses. A study
*
A civil offense is an infraction of a law that is not a crime. This may be something like a routine traffic
offense such as speeding. The only penalty for a civil offense is a fine.
142 California Research Bureau, California State Library
of 400 members of Gamblers Anonymous found that 57 percent admitted to stealing an
average of $135,000 to finance their gambling; the total stolen was over $30 million.
394
A 1996 study in Plymouth, England found that adolescents who gamble excessively on
slot machines engage in stealing to fund their habit. In examining police reports over a
one-year period, the authors found that in 3.9 percent of the juvenile cases the offense
was gambling-related; of these, 86 percent involved theft or burglary. The offender was
male in 93 percent of the cases. This was a first time offense for over one third of the
offenders.
395
Given that casinos create external social costs for the larger society, the policy issue
arises as to whether they should compensate for those costs. The authors of one study
estimate that taxes compensating for the casino-induced increase in FBI Index 1 crimes
would represent about 25-30 percent of casino revenues.
396
Policy options for reducing
this impact would have to effectively and directly address problem and pathological
gambling. The authors of the Wisconsin study made the following recommendations to
the state as it renegotiated its tribal-state gaming compacts:
397
• The tribes should fund enhanced law-enforcement activities in casino and
adjacent counties, including road patrols, especially in areas around bars.
• The tribes should fund community assistance, such as creating and activating
neighborhood-watch programs.
• Tribes should not sell alcoholic beverages in their casinos.
• Drug-detection units of state police should be enhanced and made available to
sheriffs and police.
• Police officer and prosecutors in all counties should include gambling screening
questions in all arrest reports and crime reports.
Illegal Games
Estimates of the amount of illegal gambling in the U.S. range from $80 billion to $360
billion a year. Sport betting is the largest illegal gaming enterprise in most states.
398
Sports betting
A 2002 Gallup Poll survey found that ten percent of American adults had bet on a
sporting event in the previous year. Sport betting is illegal under federal law in all states
but Nevada, Oregon, Delaware and Montana. In 2005, $2.25 billion was legally wagered
in Nevada’s sports books.
399
The National Gaming Association estimated in 1999 that illegal wagers on sporting
events are as much as $380 billion annually. According to one report, the United States
has the world’s largest illegal bookmaking network, principally on sports.
400
The FBI
estimates that more than $2.5 billion is illegally wagered annually on college basketball’s
California Research Bureau, California State Library 143
March Madness playoffs each year. There is evidence that sports wagering can act as a
gateway to other forms of gambling, and threaten the integrity of sports and athletes.
401
As previously discussed in the chapter on Internet Gambling, sport betting is one of the
most popular forms of at-home gambling, accounting for about 35 percent of the Internet
gambling industry’s revenues.
402
Cockfighting
Cockfighting has been illegal in California since 1905, and is illegal in every state but
New Mexico and Louisiana. However it is a growing problem in California, along with
other forms of illegal animal fighting. According to news accounts, a number of large
cockfighting derbies have been broken up in recent years, resulting in the arrests of
dozens of people and thousands of birds confiscated. A cockfighting bust in Amador
County resulted in the arrest of 30 people including the ranch owner, who is facing felony
conspiracy and gambling charges.
403
In 2003, officials estimated that some 50,000 gamecock operations existed in Southern
California alone. During the containment of Newcastle disease that year, one third of the
flocks eradicated were illegal gamecocks.
404
Cockfights offer opportunities for money laundering, drug trafficking, and violence.
Training or causing a bird to fight or even watching a cockfight is a misdemeanor, with a
penalty of up to one year in jail and a $5,000 fine. Legislation that would make it a
felony for second and subsequent offenses, with a maximum one year prison sentence
and $25,000 fine, was proposed but not enacted by the legislature this session (see early
versions of SB 156, Soto).
HEALTH ISSUES
Smoking
“Gambling, cigarettes and cigars” is a combination that makes for smoky casinos and
tribal and charity bingo halls. According to an industry publication, “…it is generally
acknowledged that the prevalence of smokers is higher among gamblers than the general
population.”
405
Smoking and exposure to secondhand smoke are serious health hazards in
California Indian casinos, as discussed in that section of this report.
The gambling industry has been active in opposing laws restricting smoking in public
places. A study of revenues at three video lottery terminal gaming facilities located at
racetracks, and run by the state lottery in Delaware, found a significant decline after the
implementation of a smoke-free law, depending on whether there were alternative
gaming venues in the region. Competing gambling venues in nearby states continued to
allow smoking, drawing customers.
406
144 California Research Bureau, California State Library
Alcohol
Alcohol abuse is a significant contributor to crime in and around gambling enterprises.
Fifteen California Indian gaming tribes are authorized by the Department of Alcohol
Beverage Control (ABC) to sell alcohol at their casinos (see list on page 74). Drunken
driving and violent and disorderly behavior are problems, according to local law
enforcement. Researchers studying the interaction between crime and Indian casinos in
Wisconsin recommended that alcohol not be sold at the casinos.
407
An alternative is well-
trained servers following clear policies on limited alcohol service.
California Research Bureau, California State Library 145
ECONOMIC IMPACTS OF GAMBLING
B
ACKGROUND
Gambling is a product for which there is considerable consumer demand, as the polling
and financial data presented in Chapter 1 indicate. Some form of commercial gambling
is legal in every state except for two, and in 1998, gambling accounted for over ten
percent of leisure expenditures by Americans. The gambling industry has since expanded
considerably and seems to have considerable potential to grow further in the casino and
Internet gaming sectors.
408
Like many discretionary consumer goods, spending on
gambling is cyclical. When aggregate income slows, so does gambling revenue.
In this chapter, we review the economic literature examining gambling through standard
measures such as job creation and personal income. Many jurisdictions have pursed
gambling enterprises as economic development opportunities, most famously Atlantic
City and Las Vegas. The literature generally finds a positive economic development
benefit when gamblers are drawn from outside an area to a destination resort.
Destination resorts create jobs in the casinos, but also in hotels, restaurants, casino supply
firms, outdoor recreation, and retail shopping. They attract a high proportion of their
visitors from outside the region in which they operate, exporting social costs.
409
For
example, about 85 percent of Nevada’s gambling revenues come from out-of-state
tourists.
However the calculus for urban casinos is different. They attract people primarily to
gamble for a few hours, not to experience a destination resort, and so stimulate
considerably less job creation and economic development. They are also more likely to
displace other local consumer spending (the “cannibalization effect”). Shifting
expenditures from one area to another does not represent new income for the local
economy. The convenience of urban casinos and their proximity to large numbers of
people means that the negative social impacts caused by excessive gambling are likely to
be felt locally. Urban casinos are also likely to reduce the demand for rural casinos. One
analyst recommends that, “It is better to concentrate casinos in one specific area, creating
competition between them (forcing them to attract outside gamblers) than to establish
several local monopolies.”
410
DIRECT EMPLOYMENT
The National Gambling Impact Study Commission found that in 1996, the legal gambling
industry employed over half a million people, primarily in casinos and in the pari-mutuel
(horse-racing) industry, with total salaries of more than $15 billion.
411
Studies conducted
for the Commission found decreased unemployment, a slight increase in construction
employment and earnings, a substantial increase in earnings in the hotel and lodgings and
recreation and amusement industries, and reduced welfare outlays, but no change in
overall per capita income in communities near casinos (commercial and tribal). None of
the tribal casinos were unionized, and paid on average $18,000 in annual salaries, $8,000
less than the largest, unionized casinos.
412
146 California Research Bureau, California State Library
A Point of Comparison—Commercial Casinos
In 1997, Coopers & Lybrand L.L.P. conducted a national survey of employees in the
commercial, non-Indian casino gaming industry for the American Gaming Association.
Total industry employment at that time was estimated to be 330,000 employees in ten
states (not including California, where only Indian tribes may operate casinos). Over half
of those employees were in Nevada, where much of the industry is unionized. The
sample size was approximately 54 percent of all casino employees. Key results
include:
413
• Commercial casinos are major employers. Employment had increased by 16
percent in the previous year and a half, compared to total nonagricultural job
growth in the U.S. of 2.2 percent.
• Commercial casinos offer benefits. All of the companies participating in the
survey offered health benefits and a retirement or profit sharing program.
• Less than half of all employees in the commercial casino gaming industry
nationwide, and under one third in Nevada, actually worked in the casino. The
rest worked in hotels, restaurants, and other jobs associated with the casino.
The types of jobs provided by the gaming industry are predominantly “service workers,”
according to a Price WaterhouseCoopers study for the American Gaming Association,
which concluded “…it appears that the industry is providing ‘entry-level’ positions to a
diverse workforce.”
414
Other studies have found that non-unionized casino jobs are, for
the most part, low paying and/or part time jobs with no benefits.
415
Most Indian casinos
in California are not unionized.
Local Impact
In 1998, the National Opinion Research Center analyzed data from 1980 to 1997, to
determine the impact of casinos on jobs and other economic indicators. The Center
sampled 100 communities and reported that communities with a casino within a 50-mile
radius experienced:
• A one percent decrease in the unemployment rate.
• A 17 percent decrease in per capita unemployment insurance payments.
• A 13 percent decrease in welfare costs.
416
A number of studies find that the major economic benefit a casino can bring to an area is
if it attracts gamblers from out of the area. If casino revenue comes mainly from local
residents, displacing other local expenditures, jobs may be merely transferred from other
sectors of employment.
417
For example, a study of the impact of casinos on the local economy of Greenville,
Mississippi during 1990-1997, found increased personal income and retail spending
which the authors’ attributed to the opening of two casinos and wages paid to casino
California Research Bureau, California State Library 147
employees. However the casinos relied heavily on local residents for their business,
attracting few tourists, and “Residents are as likely to know someone employed by the
casinos as they are someone wiped out by a gambling addiction.”
418
Casinos in areas attracting tourists fared better in a study by the University of Southern
Mississippi, which found that non-residents generated 82 percent of all gaming revenues
in the North Mississippi region (close to Memphis) and 66 percent of gaming revenues on
the Gulf Coast.
419
STATE AND LOCAL REVENUES
“Legalized gaming,” said Biloxi’s Mayor, A.J. Holloway, “is going to be what
saves us.”
420
A 1995 gambling industry report found that the commercial casino industry paid $2.9
billion in federal, state, and local taxes.
421
Some jurisdictions, such as Atlantic City, New
Jersey, and states such as Nevada and Mississippi, are particularly dependent on revenues
derived from commercial casinos. For example, Mississippi’s casinos pay 12 percent of
their revenues to state and local governments, two-thirds to the state and one-third to
localities. Mississippi Gulf Coast casinos generated $1.4 billion in profit in 2004, and
paid $168 million in state and local taxes.
422
Increasing public revenue has been one of the main motivations for states and localities to
legalize gambling, particularly state lotteries and expanded casino venues. However in
California, the public revenues have been comparatively modest:
• The state lottery provides about one percent of the state’s General Fund revenues
and about three percent of education revenues.
• Horse racing provided about $4 million to the state General Fund in FY 2004-05,
around $39 million to the Fair and Exposition Fund, and about $7 million to local
governments.
• Card room licensing fees have not kept pace with increasing industry revenues,
and are less now than they were than seven years ago, adjusting for inflation.
• Some gaming tribes make payments to the Special Distribution Fund and the
Revenue Sharing Trust Fund (see Table 8). These fees and payments over a five-
year period represent less than one percent of the gross gaming revenues earned
by the gaming tribes over a four year period. In addition, five gaming tribes will
make an estimated $35 million in payments to the state’s General Fund in FY
2005-06 and will support a $1 billion transportation bond issue over a ten year
period.
• Since Indian casino revenues are not taxable, their presence may divert funds
from a taxable activity and thus negatively impact state and local revenues.
148 California Research Bureau, California State Library
Casino gambling creates public costs as well as benefits. These include the regulatory
costs of gaming boards and other regulatory institutions; police, prosecutorial and
judicial/correctional costs; expenditures for new roads and fire protection; social costs
due to problem and pathological gambling (lost of productive work time, family welfare
costs, treatment costs, crime costs); and local environmental and planning costs. These
have previously been discussed in more detail.
BANKRUPTCIES
In 1998, the Congress directed the Department of the Treasury to study the interaction
between gambling and bankruptcy. The subsequent 1999 report found that:
On average, frequent high-risk gambling is associated, in our data, with a 6-
percentage point increase in the lifetime probability of declaring bankruptcy.
Other levels of gambling activity (non-frequent, non-high-risk) are not associated
with elevated probabilities of declaring bankruptcy. Since only an estimated 2.7
percent of the population gambles frequently in high-risk venues, the impact of
these activities on overall bankruptcy rates is relatively small.
423
Contrary to other studies, which have found a localized impact of increased bankruptcies
associated with casino operations, the Treasury report found “…no statistically
significant casino effect (proximity to a casino) with regard to county bankruptcy rates.”
In contrast, a 2002 study by the National Bureau of Economic Research found that four
years after a Native American casino opens, bankruptcy rates increase ten percent in
counties with a casino and seven percent in counties within 50 miles of a casino.
424
The California Council on Problem Gambling reports that 61 percent of the 3,399 callers
to its problem gambling hotline in 2004 used credit cards to finance their gambling, and
nearly 49 percent were maxed out. They spent an average of $33,636 a year on
gambling, and had an average debt of $32,461. The total spent on gambling per year by
these callers was $45,745,199, and their total debt was reported to be $41,809,983.
Financial problems are one of the main reasons that gamblers call the California problem
gambling hotline, according to the Council.
425
A 2005 study by the Federal Reserve Bank of St. Louis found “strong evidence” that
destination casinos export bankruptcy back to visitors’ home states, especially in the
Southern United States.
426
A study of bankruptcy rates from 1990 to 2002 found that
“…adding legalized casino gambling to a local economy correlates positively to
increasing bankruptcy rates over time…explained in part by the effects of problem
gamblers.” The authors speculate that over time casino patrons are increasingly drawn
from the local population, causing economic distress in other businesses in the
community.
427
A 1996 study by SMR Research Corporation found that gambling was one of several
variables affecting bankruptcy rates, along with easy credit, unemployment, lender
marketing, and consumer debt loads.
428
The study found that counties with gambling
California Research Bureau, California State Library 149
facilities had higher bankruptcy filing rates (4.67 per thousand residents) than counties
with no facilities (3.96 per thousand residents). Bankruptcy rates in Atlantic City were
71 percent higher than in the rest of the state, and in Las Vegas 50 percent higher than the
national average, although the reasons for this difference were not identified in the study.
Based on interviews, SMR found that 20 percent of compulsive gamblers were forced to
file for bankruptcy protection because of gambling losses. This finding was supported by
another study of gamblers receiving treatment from compulsive gambling treatment
centers in Minnesota, which found that 21 percent had declared bankruptcy. A
subsequent study by Abt Associates, Inc. found that the amount of debt held by
compulsive gamblers was relatively large, especially for low-income compulsive
gamblers (see Figure 21).
429
Figure 21
Gamblin
g
Debts Amon
g
Compulsive Gamblers in
Minnesota
(ratio of gambling debt to annual income, 1996)
1.11
4.45
0.94
0.76
0.78
1.42
012345
Less than $10,000
$10,000-$20,000
$20,000 -$30,000
$30,000-$40,000
$40,000-$50,000
$50,000+
Income
Source: Abt Associates, 1997, as cited in U.S. Treasury, 1999.
A 1996 Wisconsin study, also cited in the Treasury report, sought to determine the extent
of compulsive gambling in the state and found that one fifth of the self-identified “serious
problem gamblers” had filed for bankruptcy, with an average debt of $39,000. The study
projected that Wisconsin had 32,000 serious problem gamblers, costing $300 million a
year in the form of bankruptcies, treatment, unemployment compensation, lost tax
revenue and law enforcement.
The weight of these studies suggests that problem and pathological gamblers have
relatively high rates of bankruptcies. However when considered in the aggregate, the
U.S. Treasury concluded that, “…gambling has no measurable effect on statewide
bankruptcy rates (italics added).”
430
The report recommended that, “Public education
regarding bankruptcy and gambling should be considered as a part of our efforts to
inform and educate the public on financial security and public health issues.”
431
150 California Research Bureau, California State Library
California Research Bureau, California State Library 151
APPENDIX A
List of Petitioners by State
U.S. Bureau of Indian Affairs
Groups Petitioning the Bureau of Indian Affairs to be Federally Recognized
Tribes in California as of February 2005
152 California Research Bureau, California State Library
California Research Bureau, California State Library 153
Ione Band of Miwok Indians (Ione)
Letter of Intent to Petition 1916, status clarified administratively 1994
Mono Lake Indian Community (Lee Vining)
Letter of Intent to Petition 1976
Washoe/Paiute of Antelope Valley (Coleville)
Letter of Intent to Petition 1976
Antelope Valley Paiute Tribe (Coleville)
Letter of Intent to Petition 1976
United Maidu Nation (Susanville)
Letter of Intent to Petition 1977
Kern Valley Indian Community (Weldon)
Letter of Intent to Petition 1979
Death Valley Timbi-Sha Shoshone Band (Death Valley)
Letter of Intent to Petition 1979
Acknowledged 1983
United Lumbee Nation of North Carolina and America (Exeter, CA)
Letter of Intent to Petition 1980
Decline to acknowledge 1985
Coastal Band of Chumash (Buelton)
Letter of Intent to Petition 1982
Southern Sierra Miwuk Nation (formerly American Indian Council of Mariposa
County, aka Yosemite)
Letter of Intent to Petition 1982
Shasta Nation (Yreka)
Letter of Intent to Petition 1982
Juaneño Band of Mission Indians (also Juaneño Band of Mission Indians,
Acjachemen Nation) (San Juan Capistrano)
Letter of Intent to Petition 1996
Tolowa Nation (Fort Dick)
Letter of Intent to Petition 1983
North Fork Band of Mono Indians (Clovis)
Letter of Intent to Petition 1983
Dunlap Band of Mono Indians (aka Mono Tribal Council of Dunlap)
Letter of Intent to Petition 2002
Nor-Rel-Muk Nation (formerly Hayfork Band; formerly Nor-El-Muk Band of
Wintu Indians) (Hayfork)
Letter of Intent to Petition 1984
San Luis Rey Band of Mission Indians (Oceanside)
Letter of Intent to Petition 1984
154 California Research Bureau, California State Library
Wintu Indians of Central Valley, California (Central Valley)
Letter of Intent to Petition 1984; certified letter returned by P.O. 1997
Wintoon Indians (Anderson)
Letter of Intent to Petition 1984; certified letter returned by P.O. 1997
Chukchansi Yokotch Tribe (Raymond)
Letter of Intent to Petition1985; letter withdrawn 2000
Yokayo Tribe of Indians (Ukiah)
Letter of Intent to Petition 1987
Wukchumni Council (Fresno)
Letter of Intent to Petition 1988
Choinumni Council (Stockton)
Letter of Intent to Petition 1988
Coastanoan Band of Carmel Mission Indians (El Monte)
Letter of Intent to Petition 1988
Muwekma Ohlone Tribe (formerly Ohlone/Costanoan Muwekma Tribe) (San Jose)
Letter of Intent to Petition 1989
Decline to acknowledge 2002
Indian Canyon Band of Coastanoan/Mutsun Indians (Hollister)
Letter of Intent to Petition 1989
Salinan Nation (aka Salinan-Chumash Nation) (San Jose)
Letter of Intent to Petition 1989
Amah Mutsun Band of Ohlone/Costanoan Indians (formerly Amah Band of
Ohlone/Cosstanoan Indians) (Woodside)
Letter of Intent to Petition 1990
Tsnungwe Council (Salyer)
Letter of Intent to Petition 1992
Esselen/Costanoan Tribe of Monterey County (Monterey)
Letter of Intent to Petition 1992; letter withdrawn 1996
Ohlone/Costanoan-Esselen Nation (Monterey)
Letter of Intent to Petition 1992
Chukchansi Yokotch Tribe of Mariposa California (Mariposa)
Letter of Intent to Petition 1993
Wintu Tribe of Northern California (Project City)
Letter of Intent to Petition 1993
Salinan Tribe of Monterey & San Luis Obispo Counties (King City)
Letter of Intent to Petition 1993
Gabrielino/Tongva Nation (San Gabriel)
Letter of Intent to Petition 1994
Gabrielino/Tongva Indians of California Tribal Council (Culver City)
California Research Bureau, California State Library 155
Letter of Intent to Petition 1997
Costanoan-Rumsen Carmel Tribe (Chino)
Letter of Intent to Petition 1994
Costoanoan Ohlone Rumsen-Mutsun Tribe (Watsonville)
Letter of Intent to Petition 1994
Federated Coast Miwok (Novato)
Letter of Intent to Petition 1995; restored as Graton Rancheria by Act of Congress
12/27/2000
Fernandeno/Tatviam Tribe (Sylmar)
Letter of Intent to Petition 1995
Wadatkuht Band of the Northern Paiutes of the Honey Lake Valley (Susanville)
Letter of Intent to Petition 1995
San Fernando Band of Mission Indians (formerly Ish Panesh United Band of
Indians) (Newhall)
Letter of Intent to Petition 1995
Tinoqui-Chalola Council of Kitanemuk and Yowlumne Tejon Indians (Covina)
Letter of Intent to Petition 1996
Ani Yvwi Yuchi (Yucca Valley)
Letter of Intent to Petition 1996
Coastal Gabrieleño Diegueño Band of Mission Indians (Santa Ana)
Letter of Intent to Petition 1997
Calusa-Seminole Nation (Santa Cruz)
Letter of Intent to Petition 1998
The Displaced Elem Lineage Emancipated Members (aka DELEMA) (Santa Rosa)
Letter of Intent to Petition 1998
Konkow Valley Band of Maidu (Oroville)
Letter of Intent to Petition 1998
Gabrieleño Band of Mission Indians of California (Beaumont)
Letter of Intent to Petition 1998
T’Si-akim Maidu (Quincy)
Letter of Intent to Petition 1998
Sierra Foothill Wuksachi Yokuts Tribe (Sanger)
Letter of Intent to Petition 1999
Costanoan Tribe of Santa Cruz and San Juan Bautista Missions (Madera)
Letter of Intent to Petition 1999; letter withdrawn 2000
Traditional Choinuymni Tribe (Sanger)
Letter of Intent to Petition 2000
Honey Lake Maidu (Susanville)
Letter of Intent to Petition 2000
156 California Research Bureau, California State Library
North Valley Yokut Tribe (Stockton)
Letter of Intent to Petition 2000
Tejon Indian Tribe (Wasco)
Letter of Intent to Petition 2000
Calaveras Band of Miwuk Indians (West Point)
Letter of Intent to Petition 2001
Xolon Salinan Tribe (Bay Point)
Letter of Intent to Petition 2001
Barbareño/Ventureño Band of Mission Indians (Thousand Oaks)
Letter of Intent to Petition 2002
Dumna Wo-Wah Tribal Government (formerly Dumna Tribe of Millerton Lake)
(Fresno)
Letter of Intent to Petition 2002
The Chiricahua Tribe of California (El Cajon)
Letter of Intent to Petition 2003
Digueño Band of San Diego Mission Indians (Colton)
Letter of Intent to Petition 2003
Choctaw Allen Tribe (Willows)
Letter of Intent to Petition 2003
Callattakapa-Choctaw Tribe (San Diego)
Letter of Intent to Petition 2004
Monachi Indian Tribe (Exeter)
Letter of Intent to Petition 2004
Nashville-Eldorado Miwok Tribe (Elk Grove)
Letter of Intent to Petition 2004
California Research Bureau, California State Library 157
ENDNOTES
1
Martin A. Sullivan, “Gambling Taxes: The Fun Way to Raise Revenue?” State Tax Notes, August 2,
2004, p. 365.
2
Alan Meister, Casino City’s Indian Gaming Industry Report, 2005-2006 Updated Edition, (Casino City
Press, Newton, Massachusetts, 2005), p. 10.
3
Analysis Group/Economic, Inc., The Economic and Fiscal Benefits of Indian Gaming In California, July
1998, as cited in William N. Evans and Julie H. Topoleski, The Social and Economic Impact of Native
American Casinos, Working Paper 9198, National Bureau of Economic Research, September 2002, p. 34.
4
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 123.
5
John L. Ortiz, Sean P. Corcoran, California’s Gaming Propositions: How Has the Expansion of Gaming
Rights Affected Local Communities, Working Paper, October 2004, pp. 1,2, 16.
6
William N. Evans and Julie H. Topoleski, The Social and Economic Impact of Native American Casinos,
Working Paper 9198, National Bureau of Economic Research, September 2002, p. 1.
7
David Collins and Helen Lapsley, “The Social Costs and Benefits of Gambling: An Introduction to the
Economic Issues,” Paper presented at the International Symposium on the Social Costs and Benefits of
Gambling, Canadian Centre on Substance Abuse, September 2000, p. 20.
8
Marc N. Potenz, Thomas R. Kosten, and Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
9
California Council on Problem Gambling, Helpline Statistical Report, 2004, p. 8, see
www.calproblemgambling.org
.
10
Marc N. Potenz, Thomas R. Kosten and Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
11
National Gambling Impact Study Commission, National Gambling Impact Study Commission Report,
April 1999, pp. 4-14.
12
Marc N. Potenz, Thomas R. Kosten and Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
13
Marc N. Potenz, Thomas R. Kosten and Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
14
Matt Bradley, “Campuses Slow to Deal With Growth in Gambling,” The Christian Science Monitor,
January 25, 2006.
15
Thomas L. Moore, Gambling Treatment Programs Evaluation Update—2002, State of Oregon,
Department of Health Services, 2003, p. iii.
16
William J. Miller and Martin D. Schwartz, “Gambling: Socioeconomic Impacts and Public Policy:
Casino Gambling and Street Crime,” The Annals of the American Academy of Political and Social Science,
556 Annals 124, March 1998.
17
Earl L. Grinols, David B. Mustard and Cynthia Hunt Dilley, Casinos, Crime and Community Costs, June
2000, p. 26.
18
William N. Thompson, Ricardo Gazel and Dan Rickman, Casinos and Crime in Wisconsin: What’s the
Connection? Milwaukee: Wisconsin Policy Research Institute, 1996, p. 19.
19
See Roger Dunstan, Gambling in California, California Research Bureau: Sacramento, California,
1997, pp. II 1-10.
158 California Research Bureau, California State Library
20
William A. Taggart and Jacqueline Wilks, “Gaming in the American States: ‘Finding Some Action’ Has
Never Been Easier,” Gaming Law Review, Vol. 9, No. 1, 2005, p. 9.
21
Martin A. Sullivan, “Gambling Taxes: The Fun Way to Raise Revenue?” State Tax Notes, August 2,
2004, p. 365.
22
Monica Kearns, “Slot Machines and Video Gaming in the States,” Legisbrief, Vol 11. No. 3, National
Conference of State Legislatures, January 2003, p. 1.
23
Josh Kleinbaum, “Charities See No Limit to Poker Fundraising,” LA Daily News, November 13, 2005.
24
I. Nelson Rose, “Casinos on Cruise Ships, Why Not on Airplanes?” Gambling and the Law, No. 114,
2005.
25
The Gallup Poll, Gambling a Common Activity for Americans; Growth in Casino Gambling, Gallup Poll
News Services, March 24, 2004.
26
Harrah’s Survey 2003, Profile of the Casino Gambler, accessed November 16, 2005, at
www.americangaming.org/assets/files/harrahs_survey.pdf
.
27
William N. Thompson, Gambling in America, ABC-CLIO, Santa Barbara, California, 2001, p. 127.
28
“Investing in the Gaming Industry—Initial Results of an Important New Report,” International Gaming
& Wagering Business, November 2004, p. 27.
29
David Snook, “Predators Gathering at the Gate,” International Gaming & Wagering Business, Vol. 23,
No. 2, p. 21.
30
Marc Cooper, “Sit and Spin,” The Atlantic Monthly, December 2005, p. X.
31
Dan Morain, “The Times Poll: Tribal Casinos Should Ante Up, Voters Say,” Los Angeles Times, April
24, 2004, p. B1.
32
Gallup Poll, Gambling a Common Activity for Americans, Gallup Poll News Service, March 24, 2004
and American Gaming Association, 2005 AGA Survey of Casino Entertainment, p. 27.
33
William R. Eadington and July A. Cornelius, The Business of Gaming: Economic and Management
Issues, Institute for the Study of Gambling and Commercial Gaming, University of Nevada, Reno, 1999, p.
23.
34
Federal Reserve Bank of Minneapolis, “Taking Food From Mouths?” Fedgazette, The Bank, March
2003.
35
Gallup Poll, “Gaming in America-1999: A Comparison of Adults and Teenagers,” Gallup Poll News
Service, June 22, 1999.
36
“California Casinos Target Asian-Americans,” Casino City Times, November 21, 2005, accessed at
www.casinocitytimes.com
.
37
Little Hoover Commission, Card Clubs in California: A Review of Ownership Limitations, The
Commission, April 2002, p. 6.
38
James Rutherford, “Casino Russia,” International Gaming & Wagering Business, December 2004, Vol.
25, No. 12, p. 1.
39
California Department of Justice, Division of Gambling Control, “Ultimate Bingo Game System
Considered to be a Slot Machine,” Tribal Casino Advisory, No. 4, May 19, 2005.
40
California Department of Justice, Division of Gambling Control, “Volcanic Bingo Advisory,” Gambling
Establishment Advisory, No. 6, June 15, 2004.
41
California Department of Justice, Division of Gambling Control, “California Roulette and California
Craps as House-Banked Card Games,” Tribal Casino Advisory,” No. 2, April 20, 2004.
California Research Bureau, California State Library 159
42
California Department of Justice, Division of Gambling Control, “Multiple Player Stations as ‘Gaming
Device’ (Revised)” Tribal Casino Advisory,” No. 1A, June 9, 2004.
43
Roger W. Hoskins, “Game’s Up, Says State DOJ to Charities’ Casino Nights,” Modesto Bee, October
14, 2005.
44
Shane Goldmacher, “California Bingo and Card Club’s Middle East Connection,” Capitol Weekly,
February 23, 2006.
45
Eric Bailey, “Charity Bingo Halls Fear Their Number May be Up,” Los Angeles Times, November 29,
2005.
46
Roger Dunstan, Indian Casinos in California, California State Library, California Research Bureau,
September 1997, p. 23.
47
25 U.S.C. § 2702(1).
48
Sebastian Sinclair, “California: The Next Billion-Dollar Gaming Market,” International Gaming &
Wagering Business, February 1999, p. 8.
49
Steven Andrew Light, Kathryn R.L. Rand and Alan Meister, “Spreading the Wealth: Indian Gaming
and Revenue-Sharing Agreements,” North Dakota Law Review, 80:657, 2004.
50
Sebastian Sinclair, “California’s New Rush,” International Gaming & Wagering Business, July 2000, p.
10.
51
Department of Housing and Community Development, 2004 Field Directory of the California Indian
Community, Sacramento, California, 2004.
52
California Gambling Control Commission, Indian Gaming Special Distribution Fund and Indian
Gaming Revenue Sharing Trust Fund Shortfall Distribution Report per Government Code Section
12012.90, July 21, 2005.
53
Editorial, “Tribal Templates,” Riverside Press-Enterprise, September 12, 2005.
54
“California Tribe Fights for New Gambling Agreement,” San Diego Union-Tribune, November 1, 2005.
55
James P. Sweeney, “Quechan Tribe Sues Over Stalled State Compact,” San Diego Union Tribune,
January 25, 2006.
56
California Tribal Business Alliance, First Full Year of Payments is More Than All Other Gaming Tribes
Combined, The Alliance, October 31, 2005.
57
Chet Barfield, “Viejas Tribe to Pay for Traffic Impacts of Casino Addition,” San Diego Union-Tribune,
December 8, 2005.
58
James P. Sweeney, “Tribal lobby May Join in Debate Over Compacts,” San Diego Union Tribune,
January 16, 2006.
59
Anthony R. Pico, Chairman, Viejas Band of Kumeyaay Indians, Sacramento Press Club Remarks, April
13, 2004.
60
Roger Dunstan, Indian Casinos in California, California State Library, California Research Bureau,
September 1998, p. 2.
61
Larry Morandi, Tribal Trust Lands: From Litigation to Consultation, National Conference of State
Legislatures, August 2004, p. 8.
62
Code of Federal Regulations, “Title 25--Indians, Part 151-Land Acquisitions,” at 25CFR151.
63
George Skibine, “Testimony of George T. Skibine, Acting Deputy Assistant Secretary-Indian Affairs
For Policy and Economic Development, Department of the Interior, at the Oversight Hearing Before the
Senate Committee on Indian Affairs on Section 20 of the Indian Gaming Regulatory Act,” California Tribal
160 California Research Bureau, California State Library
Business Alliance, Tribal Sovereignty, Indian Gaming, and Local Government Relationships, (The
Alliance, 2005).
64
Earl E. Devaney, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming, Committee on
Indian Affairs, United States Senate, One Hundred Ninth Congress, First Session, April 27, 2005, p. 9.
65
James P. Sweeney, “Indian Tribes Facing Heightened Scrutiny in Search for Land,” San Diego Union
Tribune, November 23, 2005.
66
Dave McKibben, “Anaheim Mayor Wants Stiffer Casino Ban,” Los Angeles Times, February 1, 2006.
67
Earl E. Devaney and Thomas Heffelfinger, “Statements” Oversight Hearing on the Regulation of Indian
Gaming, Committee on Indian Affairs, United States Senate, April 27, 2005, p. 7 and 15.
68
Peter Heg, “Counties Ballot Measures Test Voter Clout on Casinos,” Sacramento Bee, October 17,
2005, A3.
69
Leslie Lohse, “Statement,” Oversight Field Hearing on a Discussion Draft Bill Regarding Indian
Gaming and Its Needs and Effects in Northern California, U.S. House of Representatives, Committee on
Resources, Sacramento, California, June 6, 2005, pp. 4-5.
70
Donald L. Barlett, James B. Steele, “Wheel of Misfortune,” Time, December 16, 2002, Vol. 160, No. 25,
p. 59.
71
California Tribal Business Alliance, “Update on pending land-into-trust applications for gaming in
California,” [email protected]/
May 5, 2006.
72
Editorial, “Tribe, County Must Negotiate a Better Plan,” San Diego Union Tribune, August 26, 2005.
73
James P. Sweeney, “Governor, Two Tribes Reach Deal on Casinos,” San Diego Union Tribune, August
26, 2005.
74
Charles McCarthy and Jennifer M. Fitzenberger, “Bill Targets New Casino in Madera,” The Fresno Bee,
August 24, 2005.
75
“California Tribe Accepts County, City Conditions,” Merced Sun Star, August 23, 2005.
76
Michelle Dearmond and Chris Richard, “Legislators and Others Say It’s Not What Voters Approved In
A 2000 Ballot Measure,” The Riverside Press Enterprise, August 20, 2005.
77
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, p. 33, accessed at www.ccnn.ucr.edu
.
78
Kelly B. Kramer, “Current Issues in Indian Gaming: Casino Lands and Gaming Compacts,” Gaming
Law Review, Vol. 7, No. 5, 2003, p. 334.
79
25 U.S.C. § 2703(6).
80
25 U.S.C. § 2703.
81
15 U.S.C. § 1175(a)
82
McNeil Staudenmaier and Lynch, p. 232.
83
Thomas B. Heffelfinger, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming,
Committee on Indian Affairs, United States Senate, One Hundred Ninth Congress, First Session, April 27,
2005, p. 10.
84
Phil Hogen, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming, Committee on Indian
Affairs, United States Senate, One Hundred Ninth Congress, First Session, April 27, 2005, pp. 5, 6.
85
Marian Green, “Unsettled Business,” Indian Gaming Business, Spring 2006, pp. 6-7.
86
I. Nelson Rose, “Gambling and the Law: Is it Bingo, or a Slot Machine?” Gaming Law Review, vol. 7,
No. 2, 2003, p. 99.
California Research Bureau, California State Library 161
87
I. Nelson Rose, Bingo or A Casino? Class II Gaming Machines in San Pablo, June 13, 2005, p. 22.
88
Heidi McNeil Staudenmaier and Andrew D. Lynch, “The Class II Gaming Debate: The Johnson Act vs.
The Indian Gaming Regulatory Act,” Gaming Law Review, Vol. 8, No. 4, 2004, p. 228.
89
John Simerman, “San Pablo Hits Jackpot With Bingo,” Contra Costa Times, February 21, 2006.
90
James P. Sweeney, “Bill Would Limit Definition of Gaming Devices,” San Diego Union-Tribune,
September 17, 2005.
91
James P. Sweeney, “Tribes Play it Safe With Gaming Bill,” San Diego Union Tribune, January 23,
2006.
92
Paula Lorenzo, Chair, California Tribal Business Alliance, “Letter to Governor Schwarzenegger,”
January 17, 2006.
93
David Snook, “Predators Gathering at the Gate,” International Gaming & Wagering Business, Vol. 23,
No. 2, p. 18.
94
Marc Cooper, “Sit and Spin,” The Atlantic Monthly, December 2005, p. 123.
95
Marc Cooper, “Sit and Spin,” The Atlantic Monthly, December 2005, pp. 121, 124.
96
James P. Sweeney, “Second Tribe Agrees to Unplug Its Video Lottery Terminals,” The San Diego
Union Tribune, January 8, 2005, p. A4.
97
Division of Gambling Control, “House Banked Games Played with Dice,” Tribal Casino Advisory, No.
3, February 1, 2005.
98
James P. Sweeney, “Lockyer to Casinos: No Games With Dice,” The San Diego Union Tribune,
February 5, 2005, p. A1.
99
See I. Nelson Rose, “National Indian Gaming Commission Cannot Regulate Class III Gaming,”
Gambling and the Law, No. 118, 2006, accessed at www.gamblingandthelaw.com
.
100
National Indian Gaming Commission, Analysis of the Economic Impact of Indian Gaming in 2004,
cited in Kathryn R.I. Rand and Steven Andrew Light, “Statement,” Committee on Indian Affairs, U.S.
Senate, April 27, 2005, p. 106.
101
Norman H. DesRosiers, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming,
Committee on Indian Affairs, United States Senate, One Hundred Ninth Congress, First Session, April 27,
2005, p. 23.
102
Viejas Gaming Regulation, www.viejas.com/vbki/html/tg_viej-reg.htm.
103
Tracy Burris, “How Tribal Gaming Commission Are Evolving,” Gaming Law Review, Vol. 8, No. 4,
2004, p. 244.
104
Liz Bowen, “Governor Calls Alturas Rancheria Casino Bluff,” Pioneer Press, March 15, 2006.
105
Glenn F. Bunting, “Head of Tribal Gaming Panel Resigns,” Los Angeles Times, January 18, 2005, p.
B4.
106
Earl E. Devaney, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming, Committee on
Indian Affairs, United States Senate, One Hundred Ninth Congress, First Session, April 27, 2005, p. 8.
107
National Indian Gaming Commission, National Indian Gaming Commission Announces Indian Gaming
Revenue for 2004, accessed November 11, 2005, at www.nigc.gov/nigc/documents/releases/PR-7-05-1.jsp
.
108
Alan Meister, Casino City’s Indian Gaming Industry Report, Casino City Press, Newton,
Massachusetts, 2005-06 Edition, p. 2.
109
Donald L. Barlett, James B. Steele, “Wheel of Misfortune,” Time, December 16, 2002, Vol. 160, No.
25, p. 47.
162 California Research Bureau, California State Library
110
Alan Meister, Casino City’s Indian Gaming Industry Report, Casino City Press, Newton,
Massachusetts, 2005-06 Edition, p. 2.
111
“Few Big Winners,” Fedgazette, Federal Reserve Bank of Minneapolis, March 2003.
112
Alan Meister, Casino City’s Indian Gaming Industry Report, Casino City Press, Newton,
Massachusetts, 2005-2006 Updated Edition, pp. 10, 14.
113
Alan Meister, Casino City’s Indian Gaming Industry Report, Casino City Press, Newton,
Massachusetts, 2005-2006 Updated Edition, p. 10.
114
Michelle DeArmond, Steve Moores, and Jonathan Shikes, “Tribe Fear Indian Gaming Ventures
Assume Too Much Risk, as Some See Their Debts Rise,” The Riverside Press Enterprise, August 21, 2005.
115
National Indian Gaming Commission, Use of Net Gaming Revenues Bulletin, No. 01-05, January 18,
2005, p. 3.
116
Michelle DeArmond, Steve Moores, and Jonathan Shikes, “Tribe Fear Indian Gaming Ventures
Assume Too Much Risk, as Some See Their Debts Rise,” The Press Enterprise, August 21, 2005.
117
Alison L. McConnell, “IRS’ Anderson Says Attorneys at Fault for Tribal Bond Confusion,” The Bond
Buyer, September 22, 2005.
118
“Road to Economic Independence,” Community Development; Indian Gaming and the Path to Self-
Reliance, supplement to International Gaming & Wagering Business, April 2001, pp. 11-13.
119
Davie Palermo, “Good Ol’Days Long Gone in Vegas,” International Gaming & Wagering Business,
Vol. 23, No. 2, February 2002, p. 16.
120
American Gaming Association, Commercial Casino State Statistics, 2004, accessed at
http://www.americangaming.org
/.
121
Gary C. Anders, “Indian Gaming: Financial and Regulatory Issues,” Annals of the American Academy
of Political and Social Sciences, 556, March 1998, pp. 101-102.
122
Alan Meister, “Tribal-State Gaming Compacts and Revenue Sharing: A California Case Study,”
Gaming Law Review, Vol. 7, No. 5, 2003, p. 350.
123
Alan Meister, Casino City’s Indian Gaming Industry Report, Casino City Press, 2005-2006 Updated
Edition, pp.28, 40-43.
124
John E. Anderson, “Casino Taxation in the United States,” National Tax Journal, Vol. LBIII, No. 1,
June 2005, p. 305.
125
Alan Meister, Casino City’s Indian Gaming Industry Report, Casino City Press, 2005-06 Updated
Edition, p. 10, and personal communication for unpublished 2001 revenue data.
126
California Gambling Control Commission, Revenue Sharing Trust Fund Report of Distribution to Non-
Compact Tribes for the Quarter Ended September 30, 2005, The Commission, November 3, 2005.
127
James P. Sweeney, “Gaming payout a ‘big money grab,’” San Diego Union Tribune, April 2, 2006.
128
Franchise Tax Board, Frequently Asked Questions About the Income Taxation of Native Americans,
State of California, www.ftb.ca.gov/forms/misc/674.html
.
129
Judy Zelio, Piecing Together the State-Tribal Tax Puzzle, National Conference of State Legislatures,
(Denver, Colorado: 2005), p. 4.
130
Scott A. Taylor, “An Introduction and Overview of Taxation and Indian Gaming,” Arizona State Law
Journal 29:251, p. 263.
131
United States Supreme Court, Moe v. Confederated Salish & Kootenai Tribes of Flathead Reservation
(425 U.S. 463, 483), 1976.
California Research Bureau, California State Library 163
132
California State Board of Equalization v. Chemehuevi Indian Tribe, 106 S. Ct. 839. (1985).
133
Gary J. Jugem, Assistance Chief Counsel, State Board of Equalization, “Letter,” December 30, 1997.
134
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 128.
135
Department of Revenue, Indian Guide to Washington State Excise Taxes, State of Washington, 2004.
136
Geeta O’Connell Anand, “Conn. Nears Tax Accord with Tribes,” The Wall Street Journal, November
1, 2000.
137
“News Briefs from San Diego County,” The Associated Press, June 21, 2005.
138
Rincon San Luiseno Band of Mission Indians and HCAL Corporation vs. Dan McAllister, Treasuree-
Tax Collector of San Diego County, United States District Court Southern District of California, Case No.
04-CV-1159 H (BLM).
139
Jim Landers, “The Effect of Casino Gambling on Sales Tax Revenues in States Legalizing Casinos in
the 1990s,” State Tax Notes, December 26, 2005, pp. 1074-1075.
140
Jim Landers, “The Effect of Casino Gambling on Sales Tax Revenues in States Legalizing Casinos in
the 1990s,” State Tax Notes, December 26, 2005, pp. 1078-1081.
141
California Gambling Control Commission, Revenue Sharing Trust Fund Report of Distribution to Non-
Compact Tribes for the Quarter Ended September 30, 2005, the Commission, November 3, 2005.
142
Jonathan B. Taylor, Joseph P. Kalt, American Indians on Reservations: A Databook on Socioeconomic
Change Between the 1990 and 2000 Census, The Harvard Project on American Indian Economic
Development, January 2005, p. viii.
143
Ann Johnson-Stomberg, “Humboldt’s Yurok Tribe Agrees to Casino Pact,” Ukiah Daily Journal, June
24, 2005.
144
Alan Berube and Bruce Katz, Katrina’s Window: Confronting Concentrated Poverty Across America,
October 2005, p. 1.
145
Steven Andrew Light, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming,
Committee on Indian Affairs, U.S. Senate, April 27, 2005, p. 32.
146
William N. Evans, Julie H. Topoleski, The Social and Economic Impact of Native American Casinos,
Working Paper 9198, National Bureau of Economic Research, September 2002, p. 2.
147
Jonathan B. Taylor, Joseph P. Kalt, American Indians on Reservations: A Databook on Socioeconomic
Change Between the 1990 and 2000 Census, The Harvard Project on American Indian Economic
Development, January 2005, p. xi.
148
Jonathan B. Taylor, Joseph P. Kalt, American Indians on Reservations: A Databook on Socioeconomic
Change Between the 1990 and 2000 Census, The Harvard Project on American Indian Economic
Development, January 2005, p. xii.
149
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, pp. 1-4, 24, accessed at www.ccnn.ucr.edu
.
150
E. Jane Costello, Scott N. Compton, Gordon Keeler, Adrian Angold, “Relationship Between Poverty
and Psychopathology,” Journal of the American Medical Association (JAMA), October 15, 2003, Vol. 290,
No. 15, pp. 2023-2027.
151
“First Chapter in New Book,” Community Development: Indian Gaming and the Path to Self-Reliance,”
supplement to International Gaming & Wagering Business, April 2001, pp. 5-9.
152
Todd Murphy, “Building for the Future,” International Gaming & Wagering Business, February 2001,
pp. 1012.
164 California Research Bureau, California State Library
153
“As Gaming Profits Grow, So Does Indian Infighting,” Gambling Magazine, accessed November 18,
2005 at www.gamblingmagazine.com/articles/14/14-1220.htm.
154
Carole Goldberg-Ambrose, “Pursuing Tribal Economic Development at The Bingo Palace,” Arizona
State Law Journal, 29:97, p. 105.
155
Center for California Native Nations, “News Release,” An Impact Analysis of Tribal Government
Gaming in California, University of California, Riverside, p. 2, accessed at www.ccnn.ucr.edu
.
156
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, p. vi, accessed at www.ccnn.ucr.edu
.
157
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, pp. 24, 27, accessed at www.ccnn.ucr.edu
.
158
Chet Barfield, “Tribes Gain Power From Prosperity,” San Diego Union Tribune, January 30, 2006.
159
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, p. 9, accessed at www.ccnn.ucr.edu
.
160
Analysis Group/Economic, Inc., The Economic and Fiscal Benefits of Indian Gaming In California,
July 1998, as cited in William N. Evans, Julie H. Topoleski, The Social and Economic Impact of Native
American Casinos, Working Paper 9198, National Bureau of Economic Research, September 2002, p. 34.
161
John L. Ortiz and Sean P. Corcoran, California’s Gaming Propositions: How Has the Expansion of
Gaming Rights Affected Local Communities, Working Paper, October 2004, pp. 1, 2, 16.
162
William N. Evans, Julie H. Topoleski, The Social and Economic Impact of Native American Casinos,
Working Paper 9198, National Bureau of Economic Research, September 2002, p. 1.
163
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, pp. vii, accessed at www.ccnn.ucr.edu
.
164
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 123.
165
Viejas Band of Kumeyaay Indians, 2002 Financial Statement, accessed November 9, 2005, at
//viejas.com/vbki/html/ei_finanstmnt.htm
.
166
Rob Schmidt, “A Hard-Luck Tribe Hits the Big Time,” Indian Gaming Business, February 2005, p. 7.
167
Michelle DeArmond, Steve Moores, Jonathan Shikes, “Tribes fear Indian gaming ventures assume too
much risk, as some see their debts rise,” The Press Enterprise, August 21, 2005.
168
Peter Hecht, “Tribes and Developers Vie for a Chance to Roll the Dice,” Sacramento Bee, January 22,
2006, p. A 3.
169
William N. Thompson, A Casino for San Pablo: A Losing Proposition, pp. 19, and 25.
170
John Simerman, “San Pablo Hits Jackpot With Bingo,” Contra Costa Times, February 21, 2006.
171
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 105.
172
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 113.
173
Brooke Williams, “Complaints of Safety Violations Addressed,” SignOnSanDiego.com, April 5, 2005.
174
National Labor Relations Board, in San Manuel Indian Bingo and Casino and Hotel Employees &
Restaurant Employees International Union, AFL-CIO, CLC and Communication Workers of America AFL-
CIO, CLC, Party in Interest and State of Connecticut, Intervenor, 341 NLRB No. 138, May 28, 2004.
175
Dorothy Korber, “Ex-Workers Press Casino Fight,” Sacramento Bee, January 24, 2006, p. B1.
California Research Bureau, California State Library 165
176
Eric Nilsson, Angela Jamison, and David Farris, “Summary of Findings,” Wages and Healthcare
Benefits of Workers at Agua Caliente Casino, March 2003, p. 3.
177
James P. Sweeney, “As State, Tribes Argue, Casinos Keep Going Up,” San Diego Union Tribune,
October 30, 2000.
178
Marc A Le Forestier, Deputy Attorney General, for Bill Lockyer, Attorney General, “Letter to Lester
Lingo Re: Tuolomne Band of Me-Wuk Indians: Draft Mitigated Negative Declaration,” September 1, 2000,
p. 2.
179
Brooke Williams, “Casino Waste Worried Workers, Neighbors,” San Diego Union Tribune, June 26,
2005.
180
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 116.
181
Chet Barfield, “Pauma Casino’s Add-On Has County Crying Foul,” SignOnSanDiego.com, August 4,
2005.
182
Don Speich, “Casino Feared in Land Deal North of Novato,” Marin Independent Journal, September 2,
2005.
183
Arthur Chang, “Remarks” Forum on Tribal Sovereignty, Indian Gaming, and Local Government
Relationships, California Tribal Business Alliance, October 26, 2005.
184
California Environmental Protection Agency, Proposed Identification of Environmental Tobacco Smoke
as a Toxic Air Contaminant,” The Agency, June 24, 2005, p. ES-9.
185
California Environmental Protection Agency, Proposed Identification of Environmental Tobacco Smoke
as a Toxic Air Contaminant,” The Agency, June 24, 2005, p. ES-4.
186
Janet Wilson, “Air Panel to Act on Cancer Studies,” Los Angeles Times, January 26, 2006.
187
Brad Ramos, “Remarks,” Forum on Tribal Sovereignty, Indian Gaming, and Local Government
Relationships, California Tribal Business Alliance, October 26, 2005.
188
“Tribe, County Must Negotiate a Better Plan,” Editorial, San Diego Union Tribune, August 26, 2005.
189
Center for California Native Nations, An Impact Analysis of Tribal Government Gaming in California,
University of California, Riverside, p. 30, accessed at www.ccnn.ucr.edu
.
190
Guy Kovner, “Money Requested for River Rock Casino Policing,” The Press-Democrat, June 6, 2005,
A1.
191
John Simerman, “San Pablo Hits Jackpot With Bingo,” Contra Costa Times, February 21, 2006.
192
The Abaris Group, Casino San Pablo Public Health & EMS Impact Study, (Walnut Creek, California,
2005).
193
County of San Diego, Update on Impacts of Tribal Economic Development Projects in San Diego
County, April 2003, p. 121.
194
“Some Gambler Lured to Transport People,” San Diego Union-Tribune, December 21, 2004, accessed
November 9, 2005, at www.casinocitytimes.com
.
195
William Evans, JL. Topoleski, The Social and Economic Impact of Native American Casinos, National
Bureau of Economic Research, September 2002.
196
Earl. E. Devaney, “Testimony,” Oversight Hearing on the Regulation of Indian Gaming, Committee on
Indian Affairs, United States Senate, One Hundred Ninth Congress, First Session, April 27, 2005, p. 9.
197
Thomas Heffelfinger, “Response to Questions,” Oversight Hearing on the Regulation of Indian
Gaming, Committee on Indian Affairs, United States Senate, One Hundred Ninth Congress, First Session,
April 27, 2005, p. 18.
166 California Research Bureau, California State Library
198
Arthur Chang, “Remarks,” Forum on Tribal Sovereignty, Indian Gaming, and Local Government
Relationships, California Tribal Business Alliance, October 26, 2005.
199
Arthur Chang, “Remarks,” Forum on Tribal Sovereignty, Indian Gaming, and Local Government
Relationships, California Tribal Business Alliance, October 26, 2005.
200
Melissa Savage, Traffic Safety on Tribal Lands, National Conference of State Legislatures, October
2004, pp. 1-4.
201
James P. Sweeney, “Off-Reservation Gambling Limited By Interior Policy,” The San Diego Union
Tribune, May 30, 2005, p. A1.
202
Sean Wilson, “County Hits $300,000 Jackpot With Grant,” Corning Observer, accessed November 8,
2005 at www.rollinghillscasino.com
.
203
William R. Eadington, Calling the Bluff: Analyzing the Legalization of Casino-style Gaming (Institute
for the Study of Gambling & Commercial Gaming, University of Nevada, Reno, 1995), p. 2.
204
John E. Anderson, “Casino Taxation in the United States,” National Tax Journal, Vol. LVIII, No. 2,
June 2005, p. 320.
205
California Council on Problem Gambling, Helpline Statistical Report, 2004, p. 8. See
www.calproblemgambling.org
.
206
William N. Thompson, A Casino for San Pablo: A Losing Proposition, p. 22.
207
California Council on Problem Gambling, Inc., Helpline Statistical Report, 2004, pp. 9-10.
208
Answers.com definition, at: http://www.answers.com/topic/lottery.
209
Definition of “Pari Mutuel,” www.sportsbookgamblingguide.com/sports_terms.htm.
210
California State Constitution, Article IV, Section 19 (d) and (e).
211
Martin A. Sullivan, “Gambling Taxes: The Fun Way to Raise Revenue?” State Tax Notes, August 2,
2004, p. 370.
212
California Supreme Court, Western Telcon, Inc. et al v. California State Lottery, (13 Cal. 4
th
475; 917
P.2d 651; 53 Ca. Rptr. 2d 812), Decided June 24, 1996.
213
North American Association of State and Provincial Lotteries, “Retailer Commissions,” accessed
October 3, 2005, at www.naspl.org/commissions.html
.
214
Patricia McQueen, “Challenges and Innovations in Mexico,” International Gaming & Wagering
Business, January 2002, p. 38.
215
William N. Thompson, Gambling in America, (ABC-CLIO, Santa Barbara, California, 2001). p. 230.
216
“Big Numbers for New York,” Public Gaming International, May 2004, p. 8.
217
“The South Dakota Video Lottery Program,” Public Gaming International, May 2004, p. 6.
218
“MUSL; The Little Company Behind the Curtain,” Public Gaming International, August 2003, p. 6.
219
“Big Numbers for New York,” Public Gaming International, May 2004, p. 8.
220
http://www.megamillions.com/aboutus/where_money_goes.asp, accessed October 14, 2005.
221
Steve Geissinger, “Gaming Foe to Roll Out Mega Millions Suit,” Los Angeles Daily News, June 24,
2005.
222
“California Lottery Joins Mega Millions,” Public Gaming International, February 2005, p. 12.
223
“Value-Added Gaming Through the Internet,” Public Gaming International, August 2004.
California Research Bureau, California State Library 167
224
Mark Balestra, “‘Monitor’ Studies Online Players,” International Gaming & Wagering Business, Vol.
23, No. 1, January 2002, p. 16.
225
Patricia A. McQueen, “Technology In an Instant,” International Gaming & Wagering Business,
December 2004, p. 21.
226
Patricia A. McQueen, “Lotteries net $15.7 billion for good causes in FY 2005,” International Gaming &
Wagering Business, April 2006, p. 18.
227
Thomas A. Garrett, Russell S. Sobel, State Lottery Revenue: The Importance of Game Characteristics,
Working Paper 2002-011A, Federal Reserve Bank of St. Louis, p. 4.
228
Patricia A. McQueen, “Super Sales,” International Gaming & Wagering Business, Vol. 25, No. 6, p. 1.
229
Patricia McQueen, “Lotteries Net $15.7 billion for good causes in FY 2005,” International Gaming &
Wagering Business, April 2006, p. 20.
230
Patricia McQueen, “Lotteries Net $15.7 billion for good causes in FY 2005,” International Gaming &
Wagering Business, April 2006, p. 18.
231
Thomas A. Garrett, Russell S. Sobel, State Lottery Revenue: The Importance of Game Characteristics,
Working Paper 2002-011A, Federal Reserve Bank of St. Louis, p.1.
232
Jim Landers, “The Effect of Casino Gambling on Sales Tax Revenues in States Legalizing Casinos in
the 1990s,” State Tax Notes, December 26, 2005, p. 1074.
233
John E. Anderson, “Casino Taxation in the United States,” National Tax Journal, Vol. LBIII, No. 1,
June 2005, pp. 313-314.
234
The California State Lottery, Contributions to Public Education, November 9, 2004, p. 29.
235
John E. Anderson, “Casino Taxation in the United States,” National Tax Journal, Vol. LBIII, No. 1,
June 2005, pp. 314-315.
236
Michael Fisher, “Lotto Dreams Get Mega-Sized,” The Press-Enterprise, June 22, 2005.
237
Melissa Schettini Kearney, State Lotteries and Consumer Behavior, NBER Working Paper Series,
Working Paper 9330, National Bureau of Economic Research, Cambridge, MA, November 2002.
238
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
239
Thomas L. Moore, Gambling Treatment Programs Evaluation Update—2002, State of Oregon,
Department of Human Services, 2003, p. iii.
240
R.B. Breen, M. Zimmerman, “Rapid Onset of Pathological Gambling in Machine Gamblers,” Journal
of Gambling Studies, Vol. 18, No. 1, 2002, as cited in Martin A. Sullvan, “Gambling Taxes: The Fun Way
to Raise Revenue?” State Tax Notes, August 2, 2004, p. 372.
241
William N. Thompson, Gambling in America, ABC-CLIO, Santa Barbara, California, 2001. p. 90.
242
Matthew J. Carlson, Thomas L. Moore, “Executive Summary,” Adolescent Gambling in Oregon: A
report to the Oregon Gambling Addiction Treatment Foundation, December 1, 1998.
243
Conversation with Bill Hertog, Chief, California State Lottery investigations unit, January 27, 2005.
244
National Gambling Impact Study Commission, Report, the Commission, 1999, p. 3-17.
245
California Council on Problem Gambling, Inc., Helpline Statistical Report, 2004, p. 10.
246
Senate Select Committee on California’s Horse Racing Industry, Horse Racing in California, The
Committee, Sacramento, California, 2005, p. 1.
247
Anthony N. Cabot, Eugene Christiansen, “Why the Future of Horseracing is at Risk: The WTO
Decision and Senator Kyl,” Gaming Law Review, Vol. 9, No. 3, 2005, p. 201.
168 California Research Bureau, California State Library
248
Senate Select Committee on California’s Horse Racing Industry, Horse Racing in California, The
Committee, Sacramento, California, 2005, cover letter and p. 5.
249
Anthony N. Cabot, Eugene Christiansen, “Why the Future of Horseracing is at Risk: The WTO
Decision and Senator Kyl,” Gaming Law Review, Vol. 9, No. 3, 2005, p. 201.
250
California Horse Racing Board, Statistical Report of Operations, 2004, The Board, 2005, p. 1.
251
California Horse Racing Board, “Board Approves 2006 California Horse-Racing Calendar,” CHRB
News Release, September 22, 2005.
252
Anthony N. Cabot, Eugene Christiansen, “Why the Future of Horseracing is at Risk: The WTO
Decision and Senator Kyl,” Gaming Law Review, Vol. 9, No. 3, 2005, pp. 201-202.
253
Senate Select Committee on California’s Horse Racing Industry, Horse Racing in California, The
Committee, Sacramento, California, 2005, p. 2.
254
Eugene M. Christiansen, “Supply and Demand for Most Gambling is Now in Balance,” International
Gaming & Wagering Business, September 2004, p. 61.
255
I. Nelson Rose, “Gambling and the Law: California Legalizes Internet Gambling,” Gaming Law
Review, Vol. 6, No. 2, 2002, p. 81.
256
Anthony N. Cabot, Eugene Christiansen, “Why the Future of Horseracing is at Risk: The WTO
Decision and Senator Kyl,” Gaming Law Review, Vol. 9, No. 3, 2005, pp. 201-203.
257
California Horse Racing Board, Statistical Report of Operations, 2004 and “Board Approves 2006
California Horse-Racing Calendar,” CHRB News Release, September 22, 2005.
258
Anthony N. Cabot, Eugene Christiansen, “Why the Future of Horseracing is at Risk: The WTO
Decision and Senator Kyl,” Gaming Law Review, Vol. 9, No. 3, 2005, pp. 201-210.
259
California Horse Racing Board at http://www.chrb.ca.gov/mission_statement.htm.
260
Senate Select Committee on California’s Horse Racing Industry, Horse Racing in California, The
Committee, Sacramento, California, 2005, p. 3.
261
Steven Nover, “Gambling at Tracks Grows,” International Gaming & Wagering Business, February
2001, p. 13, 15.
262
American Gaming Association, 2005 AGA Survey of Casino Entertainment, p. 2, at
http://www.americangaming.org/survey/index.cfm
.
263
“VLT: State of the Industry Report,” La Fleur’s Magazine, October 2005, p. 17.
264
“Saratoga Gaming and Raceway; Paving the Way for New York Racinos,” Public Gaming
International, July 2004, p. 10.
265
Anne Burke, “Slots to the Rescue,” International Gaming & Wagering, December 2001, pp. 27-29.
266
Steven Nover, “Gambling at Tracks Grows,” International Gaming & Wagering Business, February
2001, p. 13, 15.
267
California Horse Racing Board, Thirty Fifth Annual Report of the California Horse Racing Board: A
Summary of Fiscal Year 2004-2005 Racing in California, the Board, 2005, p. 58, accessed at
http://www.chrb.ca.gov/annual_report.htm
.
268
California Horse Racing Board, Statistical Report of Operations, 2004, (The Board, 2004), p. iii.
269
Senate Select Committee on California’s Horse Racing Industry, Horse Racing in California, (The
Committee, Sacramento, California, 2005), p. 2.
270
See complete list of fairs at http://www.cdfa.ca.gov/fe/fairlist.asp.
California Research Bureau, California State Library 169
271
California Department of Food & Agriculture, 2004/2005 Expenditure Plan for the Network of
California Fairs, The Department, July 20, 2005, p. 1.
272
California Department of Food & Agriculture, Letter to E. Dotson Wilson, Chief Clerk of the Assembly
by A.G. Kawamura, Secretary, July 20, 2005, p. 2.
273
Mark Balestra, “‘Monitor’ Studies Online Players,” International Gaming & Wagering Business, Vol.
23, No. 1, January 2002, p. 16.
274
Marc N. Potenz, Thomas R. Kosten, and Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
275
William N. Thompson, Gambling in America, ABC-CLIO, Santa Barbara, California, 200, p. 33.
276
Shane Goldmacher, “Card Clubs Draw Full House and Hold’em,” Capitol Weekly, February 17, 2006.
277
John Brochowski, “Stay Power,” International Gaming & Watering Business, July 2005, p. 29.
278
Shane Goldmacher, “California Bingo and Card Club’s Middle East Connection,” Capitol Weekly,
February 23, 2006.
279
Robyn Taylor Parets, “Dicey Prospects,” International Gaming & Wagering Business, June 2001, pp.
31-33.
280
Eugene M. Christiansen, “Supply and Demand for Most Gambling is Now in Balance,” International
Gaming & Wagering Business, September 2004, p. 61.
281
Fredric E. Gushin, Michael Wozniak, “The California Gambling Act and Regulation of Cardrooms,”
Gaming Law Review, Vol. 3., No. 1, 1999, p. 22.
282
See: http://www.craigslist.org/eby/acc/131002478.html.
283
California Department of Justice, comments emailed to author, January 2006.
284
Roger Dunstan, Gambling in California, (California Research Bureau, California State Library,
Sacramento, California, 1997), pp. V 5-7.
285
American Gaming Association, 2005 AGA Survey of Casino Entertainment, p. 25.
286
Tim O’Leary, “Nontribal Gaming Places Say Regulations That Don’t Apply on Indian Casinos Give the
Competition the Upper Hand, “The Riverside Press Enterprise, August 20, 2005.
287
Roger Dunstan, Gambling in California, California Research Bureau, California State Library,
Sacramento, California, 1997, p. V-11.
288
Phillip Matier, Andrew Ross, “Chances Are Good That Colma’s Luck Has Run Out,” San Francisco
Chronicle, September 7, 2005.
289
Josh Richman, “Casino Owner Plays Big on Political Scene,” Inside Bay Area, March 15, 2006, at
www.insidebayarea.com/portlet/article/html/fragments/print_article.jsp?article+3604
.
290
John Howard, “Artichoke Joe’s vs. Lucky Chances: Card rooms battle,” Capitol Weekly News, May 4,
2006.
291
“Wired for Sound, S.J. Cop Worked Undercover for Nearly Three Years to Infiltrate Gambling Halls,”
San Jose Mercury News, May 21, 2000.
292
“Suspect’s Persona Shows Two Faces; Card-Club Indictment,” San Jose Mercury News, May 7, 2000.
293
Email from Martin Jr. Horan, Division of Gambling Control, January 30, 2006.
294
Little Hoover Commission, Card Clubs in California: A Review of Ownership Restrictions, The
Commission, April 2002, cover letter.
170 California Research Bureau, California State Library
295
Little Hoover Commission, Card Clubs in California: A Review of Ownership Restrictions, The
Commission, April 2002, p. 15.
296
Mark Balestra, “‘Monitor’ Studies Online Players,” International Gaming & Wagering Business, Vol.
23, No. 1, January 2002, p. 1; Joseph Menn, “Billionaire Plays Her Cards Right in Online ‘Gray Market’,”
Los Angeles Times, November 27, 2005, A1.
297
Matt Richtel, “Wall St. Bets on Gambling on the Web,” Wall Street Journal, December 25, 2005 and
Paul Doocey, “Morality, politics and online gaming,” International Gaming & Wagering Business, April
2006, p. 4.
298
Government Accounting Office, Internet Gambling: An Overview of the Issues, GAO-03-89, December
2002, p. 6.
299
Joseph Menn, “Billionaire Plays Her Cards Right in Online ‘Gray Market’,” Los Angeles Times,
November 27, 2005, p. A1.
300
Matt Richtel, “Wall St. Bets on Gambling on the Web,” Wall Street Journal, December 25, 2005.
301
Deloitte, “Online Gaming—in the Spotlight,” Executive Report, Issue 6, July 2005, p. 18.
302
American Gaming Association, Sports Wagering, accessed at http://www.americangaming.org
303
Matt Bradley, “Campuses Slow to Deal With Growth in Gambling,” The Christian Science Monitor,
January 25, 2006.
304
Mark Balestra, “‘Monitor’ Studies Online Players,” International Gaming & Wagering Business, Vol.
23, No. 1, January 2002, p. 16.
305
Antonia Z. Cowan, “The Global Gambling Village: Interstate and Transnational Gambling,” Gaming
Law Review, Vol. 7, No. 4, 2003, p. 254-255.
306
I. Nelson Rose, “Washington State Makes It A Felony To Play Poker Online,” Gambling and the Law,
2006-#4.
307
Lawrence G. Walters, “The Law of Online Gambling in the United States—a Safe Bet, or Risky
Business,” Gaming Law Review, Vol. 7 No. 6, 2003, p. 446.
308
Adrian Parke, Mark Griffiths, “Why Internet Gambling Prohibition Will Ultimately Fail,” Gaming Law
Review, Vol. 8, No.5, 2004, p. 296.
309
I. Nelson Rose, “Gambling and the Law: The Future of Internet Gambling,” Villanova Sports and
Entertainment Law Journal, 7 Vill. 29, 2000, p. 5.
310
Matt Richtel, “Wall St. Bets on Gambling on the Web,” Wall Street Journal, December 25, 2005.
311
Keith Furlong, “Gaming Continues as an Internet Success Story, Despite Obstructions from the U.S.
Government: The Industry Uses Self-Regulation to Fill the Void Left by Governmental Inaction,” Gaming
Law Review, Vol. 9, No. 3, 2005, p. 212.
312
Government Accounting Office, “An Overview of the Issues,” Internet Gambling: An Overview of the
Issues, GAO-03-89, December 2002.
313
Adrian Parke, Mark Griffiths, “Why Internet Gambling Prohibition Will Ultimately Fail,” Gaming Law
Review, Vol. 8, No. 5, 2004, p. 298.
314
Antonia Z. Cowan, “The Global Gambling Village: Interstate and Transnational Gambling,” Gaming
Law Review, Vol. 7, No. 4, 2003, p. 267.
315
I. Nelson Rose, “Gambling and the Law: Is it a Crime to Play Poker Online?” Gaming Law Review,
Vol. 7 No. 6, 2003, p. 409.
316
Charles Doyle, Internet Gambling: A Sketch of Legislative Proposals in the 108
th
Congress,
Congressional Research Service, The Library of Congress, November 29, 2004, p. 2.
California Research Bureau, California State Library 171
317
Anthony N. Cabot, Eugene Christiansen, “Why the Future of Horseracing is at Risk: The WTO
Decision and Senator Kyl,” Gaming Law Review, Vol. 9, No. 3, 2005, pp. 201-210.
318
Adrian Parke, Mark Griffiths, “Why Internet Gambling Prohibition Will Ultimately Fail,” Gaming Law
Review, Vol. 8, No. 5, 2004, p. 295.
319
Deloitte, “Online Gaming—in the Spotlight,” Executive Report, Issue 6, July 2005, p. 18.
320
Charles Doyle, Internet Gambling: A Sketch of Legislative Proposals in the 108
th
Congress,
Congressional Research Service, The Library of Congress, November 29, 2004, p. 25.
321
I. Nelson Rose, “Gambling and the Law: The Future of Internet Gambling,” Villanova Sports and
Entertainment Law Journal, 7 Vill. 29, 2000, p. 11.
322
David Collins, Helen Lapsley, “The Social Costs and Benefits of Gambling: An Introduction to the
Economic Issues,” Paper presented at the International Symposium on the Social Costs and Benefits of
Gambling, Canadian Centre on Substance Abuse, September 2000, p. 20.
323
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
324
National Gambling Impact Study Commission, National Gambling Impact Study Commission Report,
April 1999, pp. 4-14 and 4-15.
325
Productivity Commission, Australia’s Gambling Industries: Final Report, Report No. 10, November
26, 1999, p. 2.
326
Phil M. Osanic, “An Examination of the Potential for Finding Government Liability in the Context of
Compulsive Gambling,” Gaming Law Review, Vol. 6, No. 3, 2002, p. 230.
327
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
328
Phil M. Osanic, “An Examination of the Potential for Finding Government Liability in the Context of
Compulsive Gambling,” Gaming Law Review, Vol. 6, No. 3, 2002, p. 230.
329
Arnie Wexler and Sheila Wexler, “The Compulsive Gambler Working in the Gaming Industry,”
Gaming Law Review, Vol. 8, No. 2, 2004, p. 103.
330
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141-142.
331
Scott Hensley, “Parkinson’s Drugs May Increase Risk of Pathological Gambling,” The Wall Street
Journal, February 15, 2006, p. D.5.
332
D.A. Korn & H.J. Shaffner, “Gambling and the Health of the Public: Adopting a Public Health
Perspective,” Journal of Gambling Studies, 1999, pp. 289-365.
333
National Council on Problem Gambling accessed January 2006, at
http://www.ncpgambling.org/about_problem/about_problem_faq.asp
.
334
National Gambling Impact Study Commission, The National Gambling Impact Study Commission
Report, The Commission: 1999, pp. 4-1, 7-19.
335
National Gambling Impact Study Commission, National Gambling Impact Study Commission Report,
April 1999, pp. 4-14.
336
B. Grant Stitt, Mark Nichols, Casino Gambling Behavior and Perceptions of Problem Gambling,
Institute for the Study of Gambling and Commercial Gaming, Reno, Nevada; 2002.
337
Productivity Commission, Australia’s Gambling Industries: Final Report, Report No. 10, November
26, 1999, p. 2.
172 California Research Bureau, California State Library
338
Marian Green, “Is Las Vegas in danger of oversupply? Doubtful,” International Gaming & Wagering
Business, April 2006, p. 29.
339
Gallup Poll, Gambling a Common Activity for Americans, Gallup Poll News Services, March 24, 2004.
340
Gallup Poll, “Gaming in America-1999: A Comparison of Adults and Teenagers,” Gallup Poll News
Service, June 22, 1999.
341
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 141.
342
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 142.
343
Commission on Asian & Pacific Islander American Affairs, Annual Report 2005: Rising to the Task:
Facing New Challenges in California’s APIA Communities, Sacramento: 2005, pp. 6, 14.
344
Chet Barfield, “Barona Casino Staking a Claim in L.A. Market,” San Diego Union Tribune, January 14,
2006.
345
Commission on Asian & Pacific Islander American Affairs, Annual Report 2005: Rising to the Task:
Facing New Challenges in California’s APIA Communities, Sacramento: 2005, p. 15.
346
Commission on Asian & Pacific Islander American Affairs, Annual Report 2005: Rising to the Task:
Facing New Challenges in California’s APIA Communities, Sacramento: 2005, pp. 7, 18.
347
Joe Weinert, “One Problem Among Many?” International Gaming and Wagering Business, Vol., 22
No. 3, March 2001, p. 1.
348
Arnie Wexler and Sheila Wexler, “The Compulsive Gambler Working in the Gaming Industry,”
Gaming Law Review, Vol. 8, No. 2, 2004, p. 105.
349
National Gambling Impact Study Commission, 1999, p. 7-23.
350
This was the median value in a survey of prevalence literature. See National Gambling Impact Study
Commission, Report, 1999, p. 7-20.
351
Jeffrey L. Derevensky, Rina Gupta, and Magie Magoon, “Adolescent Problem Gambling: Legislative
and Policy Decisions,” Gaming Law Review, Vol. 8, No. 2, 2004, p. 108.
352
Jeffrey L. Derevensky, Rina Gupta, and Magie Magoon, “Adolescent Problem Gambling: Legislative
and Policy Decisions,” Gaming Law Review, Vol. 8, No. 2, 2004, p. 111.
353
Matt Bradley, “Campuses slow to deal with growth in gambling,” The Christian Science Monitor,
January 25, 2006.
354
Matthew J. Carlson, Thomas L. Moore, “Executive Summary,” Adolescent Gambling in Oregon: A
Report to the Oregon Gambling Addiition Treatment Foundation, the Foundation, December 1, 1998.
355
Jeffrey L. Derevensky, Rina Gupta, and Magie Magoon, “Adolescent Problem Gambling: Legislative
and Policy Decisions,” Gaming Law Review, Vol. 8, No. 2, 2004, p. 109.
356
Jeffrey L. Derevensky, Rina Gupta, and Magie Magoon, “Adolescent Problem Gambling: Legislative
and Policy Decisions,” Gaming Law Review, Vol. 8, No. 2, 2004, p. 107.
357
Diana B. Henriques, “Temptation Near for Military’s Problem Gamblers,” The New York Times,
October 19, 2005, p. 1.
358
Monica Kearns, “Slot Machines and Video Gaming in the States,” Legisbrief, Vol. 11, No. 3, National
Conference of State Legislatures, January 2003, p. 2.
359
Joshua McCrory, “Video Poker and the Skill Versus Chance Debate,” Gaming Law Review, Vol. 6, No.
3, 2002, p. 224.
California Research Bureau, California State Library 173
360
Ernie Foss, Edward A. Morse, The Impact of Casino Gambling on Individual Bankruptcy Rates from
1990 to 2002, August 2005, p. 19.
361
Marc Coooper, “Sit and Spin,” The Atlantic Monthly, December 2005, p. 123.
362
Thomas L. Moore, Gambling Treatment Programs Evaluation Update—2002, State of Oregon,
Department of Health Services, 2003, p. iii.
363
Rachel A. Volberg, Lori Rugle, Richard J. Rosenthal, Tim Fong, Situational Assessment of Problem
Gambling in California, Office of Program Gambling, California Department of Alcohol and Drug
Programs, March 2005, p. iii.
364
Ann Burke, “Cashing In,” Indian Gaming Business, Spring 2006, p. 14.
365
National Gambling Study Impact Commission, Report, 1999, pp. 7-14, 1-15.
366
Edmund Mander, “The Cashless Horizon,” International Gaming & Wagering Business, August 2000,
p. 6.
367
Alexander Blaszcynski, Christian Marfels, “A Protocol for Determining Gambling-Related Suicides in
Psychological Autopsy Studies,” Gaming Law Review, Vol. 7 No. 5, 2003, p. 354.
368
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 143.
369
The National Gambling Impact Study Commission, Report, 1999, pp. 7-26, 7-27.
370
Commission on Asian & Pacific Islander American Affairs, Annual Report 2005, Rising to the Task:
Facing New Challenges in California’s APIA Communities, Sacramento, California, p. 15.
371
Marc N. Potenz, Thomas R. Kosten, Bruce J. Rounsaville, “Pathological Gambling,” Journal of the
American Medical Association (JAMA), July 11, 2001, p. 143.
372
National Gambling Impact Study Commission, Report, 1999, p. 1-16.
373
Commission on Asian & Pacific Islander American Affairs, Annual Report 2005, Rising to the Task:
Facing New Challenges in California’s APIA Communities, Sacramento, California, p. 21.
374
Rachel A. Volberg, Lori Rugle, Richard J. Rosenthal, Tim Fong, Situational Assessment of Problem
Gambling in California, Office of Program Gambling, California Department of Alcohol and Drug
Programs, March 2005, pp. iii-iv.
375
Matt Bradley, “Campuses slow to deal with growth in gambling,” The Christian Science Monitor,
January 25, 2006.
376
Thomas L. Moore, Gambling Treatment Programs Evaluation Update—2002, State of Oregon,
Department of Health Services, 2003, p. iii.
377
Rachel A. Volberg, Lori Rugle, Richard J. Rosenthal, Tim Fong, Situational Assessment of Problem
Gambling in California, Office of Program Gambling, California Department of Alcohol and Drug
Programs, March 2005, p. iii.
378
California Council on Problem Gambling, Inc., Helpline Statistical Report, 2004, pp. 9-10.
379
California Gambling Control Commission, “Proposed Problem Gambling Regulations—Discussion of
Draft to Begin Formal Administrative Procedure Act Notice and Comment Period,” March 19, 2006.
380
“Council Released Gambling Code,” International Gaming & Wagering Business, Vol. 23, No. 1,
January 2002, p. 6.
381
National Gambling Impact Study Commission, Report, June 1999, p. 1-4.
382
John Warren Kindt, “Follow the Money: Gambling, Ethics and Subpoenas,” Annals of the American
Academy of Political and Social Sciences, 556 Annals 124, March 1998, p. 85.
174 California Research Bureau, California State Library
383
Juliet Williams, “Political Scandal Clouds Meeting of Tribal Gambling Leaders,” San Francisco
Chronicle, January 12, 2006.
384
Cleta Mitchell, “Close the Tribal Loophole in McCain-Feingold,” Roll Call, January 23, 2006.
385
Colin S. Campbell, “Lawlessness: Gaming Policies in British Columbia, Canada,” Paper presented at:
3
rd
National Gambling Conference, Sydney, Australia, May 2000.
386
United National, Office on Drugs and Crime, Law on Prevention of Money Laundering, the Office,
accessed at www.unodc.org/unodc/en/legal_library
.
387
Jeffrey L. Derevensky, Rina Gupta, and Magie Magoon, “Adolescent Problem Gambling: Legislative
and Policy Decisions,” Gaming Law Review, Vol. 8, No. 2, 2004, p. 113.
388
William J. Miller, Martin D. Schwartz, “Gambling: Socioeconomic Impacts and Public Policy: Casino
Gambling and Street Crime,” The Annals of the American Academy of Political and Social Science, 556
Annals 124, March 1998.
389
Earl L. Grinols, David B. Mustard, Cynthia Hunt Dilley, Casinos, Crime and Community Costs, June
2000, pp. 1-24.
390
William N. Evans, Julie H. Topoleski, The Social and Economic Impact of Native American Casinos,
Working Paper 9198, National Bureau of Economic Research, September 2002, p. 43.
391
Richard C. Gazel, Dan S. Rickman, William N. Thompson, “Casino Gambling and Crime: A Panel
Study of Wisconsin Counties,” Managerial and Decision Economics, Jan-May 2001; 22, pp. 66, 71.
392
Richard C. Gazel, Dan S. Rickman, William N. Thompson, “Casino Gambling and Crime: A Panel
Study of Wisconsin Counties,” Managerial and Decision Economics, Jan-May 2001; 22, p. 73.
393
William N. Thompson, Ricardo Gazel, Dan Rickman, Casinos and Crime in Wisconsin: What’s The
Connection? Milwaukee: Wisconsin Policy Research Institute, 1996, p. 18.
394
Earl L. Grinols, David B. Mustard, Cynthia Hunt Dilley, Casinos, Crime and Community Costs, June
2000, p. 4.
395
Tim Yeoman, Mark Griffiths, “Adolescent Machine Gambling and Crime,” Journal of Adolescence,
1996, pp. 99-194.
396
Earl L. Grinols, David B. Mustard, Cynthia Hunt Dilley, Casinos, Crime and Community Costs, June
2000, p. 26.
397
William N. Thompson, Ricardo Gazel, Dan Rickman, Casinos and Crime in Wisconsin: What’s The
Connection? Milwaukee: Wisconsin Policy Research Institute, 1996, p. 19.
398
David Snook, “Predators Gathering at the Gate,” International Gaming & Wagering Business, Vol. 23,
No. 2, p. 23.
399
American Gaming Association, Sports Wagering, accessed at http://americangaming.org
400
William J. Miller, Martin D. Schwartz, “Gambling: Socioeconomic Impacts and Public Policy: Casino
Gambling and Street Crime,” The Annals of the American Academy of Political and Social Science, 556
Annals 124, March 1998.
401
National Gambling Impact Study Commission, Report, the Commission, 1999, p. 3-10.
402
Deloitte, “Online gaming—in the spotlight,” Executive Report, Issue 6, July 2005, p. 18.
403
Eric Stern, “Gambling on rooster fights not so funny,” Modesto Bee, July 14, 2005.
404
“Cockfighting due tougher penalties from state, feds,” Inland Valley Daily Bulletin, August 17, 2005.
405
Dave Palermo, “Vegas Shuns Pure Air Systems,” International Gaming & Wagering Business, July
2000, p. 49.
California Research Bureau, California State Library 175
406
Michael R. Pakko, No Smoking at the Slot Machines: The Effects of Smoke-Free Laws on Gaming
Revenues, Working Paper 2005-054A, Federal Reserve Bank of St. Louis, June 2005.
407
William N. Thompson, Ricardo Gazel, Dan Rickman, Casinos and Crime in Wisconsin: What’s The
Connection? Milwaukee: Wisconsin Policy Research Institute, 1996, p. 18.
408
Eugene Martin Christiansen, “Gambling and the American Economy,” Annals of the American
Academy of Political and Social Science, 556 Annals 124, March 1998, p. 36.
409
William R. Eadington, “Contributions of Casino-Style Gambling to Local Economies,” Annals of the
American Academy of Political and Social Science, 556 Annals 124, March 1998, p. 61.
410
Ricardo Gazel, “The Economic Impacts of Casino Gambling at the State and Local Levels,” Annals of
the American Academy of Political and Social Sciences, 556 Annals 124, March 1998, p. 83.
411
Government Accountability Office, Impact of Gambling: Economic Effects More Measurable Than
Social Effects, Washington, D.C.: GAO/GGC-00-78, April 2000, p. 3.
412
National Gambling Impact Study Commission, Report, The Commission, 1999, pp. 7-6-7-8.
413
Coopers & Lybrand L.L.P., Gaming Industry Employee Impact Survey, (Las Vegas, Nevada: October
1997), pp. 1-5.
414
PricewaterhouseCoopers, “Executive Summary,” 2003 Gaming Industry Diversity Snapshot, p. 2.
415
Government Accountability Office, Impact of Gambling: Economic Effects More Measurable Than
Social Effects, Washington, D.C.: GAO/GGC-00-78, April 2000, p. 17.
416
Government Accountability Office, Impact of Gambling: Economic Effects More Measurable Than
Social Effects, Washington, D.C.: GAO/GGC-00-78, April 2000, p. 17.
417
Eadington, Grinols, and Omorov, cited in U.S. Department of the Treasury, A Study of the Interaction
of Gambling and Bankruptcy,” The Department: Washington, D.C., July 1999, pp. i24.
418
“Gaming Aids City’s Economy,” Gambling Magazine, accessed at
www.gamblingmazagine.com/articles/26/26-71.htm
. Also see Shannon Bybee, Karl Mayer, “Gaming and
the Economy,” International Gaming and Wagering Business, pp. 15, 24-27.
419
Denise von Herrman, Robert Ingram, William C. Smith, Gaming in the Mississippi Economy, The
University of Southern Mississippi, June 30, 2000.
420
Gary Rivlin, “Bright Spot on Gulf as Casinos Rush to Rebuild,” New York Times, December 14, 2005.
421
Government Accountability Office, Impact of Gambling: Economic Effects More Measurable Than
Social Effects, Washington, D.C.: GAO/GGC-00-78, April 2000, p. 3.
422
Gary Rivlin, “Bright Spot on Gulf as Casinos Rush to Rebuild,” New York Times, December 14, 2005.
423
U.S. Department of the Treasury, A Study of the Interaction of Gambling and Bankruptcy,” The
Department: Washington, D.C., July 1999, pp. i-ii.
424
William N. Evans, Julie H. Topoleski, The Social and Economic Impact of Native American Casinos,
Working Paper 9198, National Bureau of Economic Research, September 2002, p. 41.
425
California Council on Problem Gambling, Inc., Helpline Statistical Report, 2004, p. 12.
426
Thomas A. Garrett, Mark W. Nichols, Do Casinos Export Bankruptcy? Working Paper Series, Working
Paper 2005-019a, The Federal Reserve Bank of St. Louis, March 2005, p. 6.
427
Ernie Goss, Edward A. Morse, The Impact of Casino Gambling on Individual Bankruptcy Rates from
1990 to 2002, August 2005, p. 15.
176 California Research Bureau, California State Library
428
SMR Research Corporation, The Personal Bankruptcy Crisis, 1997, as cited in U.S. Department of the
Treasury, A Study of the Interaction of Gambling and Bankruptcy,” The Department: Washington, D.C.,
July 1999, pp 41.
429
U.S. Department of the Treasury, A Study of the Interaction of Gambling and Bankruptcy,” The
Department: Washington, D.C., July 1999, pp. 45-46.
430
U.S. Department of the Treasury, A Study of the Interaction of Gambling and Bankruptcy,” The
Department: Washington, D.C., July 1999, p. 54.
431
U.S. Department of the Treasury, A Study of the Interaction of Gambling and Bankruptcy,” The
Department: Washington, D.C., July 1999, pp. i-ii.
