California governor claims court victory

Jessica Gresko

Thursday, July 8, 2004 | 8:47 a.m.

SAN DIEGO -- A federal judge on Wednesday denied a request to halt Gov. Arnold Schwarzenegger's new gambling compacts with five Indian tribes.

U.S. District Judge Thomas J. Whelan refused to issue a temporary restraining order sought by the Rincon Band of Luiseno Mission Indians. The San Diego County tribe had challenged Schwarzenegger's authority to strike new compacts.

"Simply put, the governor of California, on behalf of the state, has the constitutional authority to enter into tribal-state compacts with any federally recognized band of Indians," Whelan wrote in his 16-page opinion.

The ruling was a victory for Schwarzenegger, who sought new deals with casinos to help ease a budget crisis and make good on a campaign promise to make tribes pay the state their fair share of gambling profit.

Also Wednesday, Schwarzenegger urged Californians to vote against two gambling initiatives that administration officials say would void his deal with the tribes.

The compacts Schwarzenegger signed last month allow a major expansion of tribal gambling in exchange for billions of dollars in payments to the state over the next quarter-century.

While negotiations were still taking place, Rincon sued the governor in June to prevent the compacts from taking effect. The tribe contends that the compacts allow the five tribes to build mega-casinos that would hurt Rincon's business.

The judge said Schwarzenegger didn't have to worry about Rincon's plight because each tribe was a sovereign power.

"Neither the governor nor the state has any duty -- implied, inherent or otherwise -- to consider any other tribe's interests when negotiating amended compacts," Whelan wrote.

Scott Crowell, an attorney for Rincon, said the tribe was disappointed and was considering an immediate appeal to the 9th U.S. Circuit Court of Appeals. Crowell insisted that when Gov. Gray Davis signed gambling compacts with more than 60 tribes in 1999, the state linked the tribes' fates together.

"For the judge to say in 2004 that a 1999 agreement that forces tribes together does not in any way require the state to work with all of the tribes ... we believe is clear error," Crowell said.

The compacts are expected to bring in at least $1 billion in the next year and annual payments afterward of between $150 million and $200 million in years to come.

Schwarzenegger signed agreements on June 21 with the Pala Band of Mission Indians, the Rumsey Band of Wintun Indians, the United Auburn Indian Community, the Viejas Band of Kumeyaay Indians and the Pauma Band of Mission Indians. Three of the five tribes are in San Diego County.

Rincon has a casino with 1,600 slots and a 200-room hotel in the remote Valley Center area of northern San Diego County. It is building a 470-room high-rise hotel scheduled to be completed in December.

Rincon claims the $350 million it has invested in its hotel and casino could be "virtually worthless" if the current cap of 2,000 slot machines -- set by the 1999 compact -- is lifted. The Department of the Interior's Bureau of Indian Affairs must approve the compacts before they can go into effect.

Rincon isn't the only tribe to challenge the new compacts. The Agua Caliente Band of Cahuilla Indians is sponsoring a November ballot initiative that would expand Indian gambling in return for tribes paying the state 8.8 percent of their profit. Another proposition could allow racetracks and other gambling establishments to operate 30,000 slot machines and pay 33 percent of the revenue to public safety, regulatory and social programs.

If voters approve the measure, the new compacts would likely be void, administration officials say.

"It's a sweetheart deal for the gambling interests behind it, another broken promise to Indian tribes, and a bad deal for the rest of us," Schwarzenegger said in a statement urging a no vote.