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Compacts face a tough road

A new push from horse-racing interests and organized labor, coupled with a landmark federal court ruling, has further complicated the road to legislative passage for five gaming-compact deals reached between Gov. Arnold Schwarzenegger and some of the state’s largest gaming tribes last year.

The deals, worth billions of dollars, together would comprise the largest expansion of California gaming since voters first decided to allow slot machines in tribal casinos in 2000. They are expected to easily pass the Senate, but they face a much tougher road in the Assembly, where many Democrats have close ties to labor, and others fear that regulation of tribal casinos may be weakened by a recent federal court ruling.

Other issues have emerged, such as ensuring that state labor safety rules and workers’ compensation insurance standards apply at tribal casinos, that wage orders for spousal support are enforced, and that there are tough audits and aggressive oversight of slots.

“My caucus wants these issues resolved before these compacts are ratified,” said Alberto Torrico, D-Newark, who heads the Assembly Governmental Organization Committee. His committee’s jurisdiction includes gambling.

The National Indian Gaming Commission, the federal agency that regulates tribal casinos, was dealt a legal setback by a federal appeals court late last year after the current compacts were signed.

The case, filed by the Colorado River Indian Tribes of Arizona, challenged the commission’s jurisdiction to enforce minimum internal-control standards–known as MICS–in casinos with slot machines.

When the original gaming compacts were signed in 1999, the state established its own agency to oversee casinos in the state. But the agency, which is housed in the attorney general’s office, has been under-funded, critics charge, in large part because tribes have argued state regulation would be redundant given the federal oversight and the tribes’ own internal auditing of their casinos.

But now that federal regulators are being kept out of tribal casinos, some Democrats have voiced concerns that any new expansion of gaming should go hand in hand with beefed-up state regulation of tribal casinos.

State regulators say they intend to step in to the regulatory role formally played by the federal commission. “We believe the commission has always had the authority to review internal controls,” says Anna Carr, spokesman for the state gambling commission. “Given that NIGC had been performing that function, we didn’t take an active role. But the commission plans to fill the current void and oversee internal controls” of tribal slots.

Past audits of California casinos by federal regulators turned up more than 400 violations, including failures to secure jackpots and sub-standard surveillance.
Tribal representatives say discussion of the regulation issue should not be linked to the compacts, which already have been negotiated with Gov. Schwarzenegger and tribal governments.

“Once the compacts are passed, the Legislature can look at what they want to,” says Patrick Dorinson, a spokesman for the Morongo Band of Mission Indians. “The biggest thing is the fiscal condition of the state. These compacts could bring in as much as $20 billion over the life of the compacts.”

“From a Morongo perspective, these are good jobs, good benefits to these workers. They’re very involved in the community, they’re good neighbors, they negotiated in good faith, and now’s the time for Californians to understand that we can’t pick and choose what revenue what we’re going to take. We’re talking about $500 million per year that the state could use to help pay for” the expected downturn in state revenues, says Dorinson.

Tactically, it appears as if all of the new compacts will originate in the Senate. Democratic leaders, including Senate President Pro Tem Don Perata, D-Oakland, are authoring the compact bills. The Morongo compact was going to be authored by Assemblyman Chuck Calderon, D-Montebello, but Capitol sources say it is now likely that compact also will begin in the Senate.

Senate Governmental Organization chairman Dean Florez, D-Shafter, will hold informational hearings on all the compacts as early as next month, and they could be up for a vote on the Senate floor as soon as May.

The tribes have taken steps to cozy up to Democratic leadership. Three of the tribes with compacts pending–Agua Caliente, San Manuel and Morongo–have each given $100,000 to Perata’s Rebuilding California. And there has been rampant speculation that if the compacts do not clear the Legislature, the tribes could play a role in helping to defeat the effort to extend legislative term limits.

Such a move, while speculative, would not be unprecedented. Last year, a consortium of tribes formed a political action committee, or PAC, named Team 2006, which gave nearly $1 million to Republican controller nominee Tony Strickland. The contributions were seen as retribution to Democrats for failing to pass the compacts last year.

(The PAC also made independent expenditures on behalf of legislative candidates, including about $500,000 each to Democrat Nicole Parra and Republican Sen. Jeff Denham, and more than $300,000 to Republican Assemblywoman Bonnie Garcia.)

But over in the Assembly, the compacts face a much tougher road. Torrico wants more than an informational hearing: He wants actual jurisdiction over the compacts and wants his committee to vote on them.

“The compacts will be voted up or down in the Assembly GO committee,” he said flatly.

And of members who voted against the compact last year, 14 Democrats who voted no are still in the Assembly. Another eight current Assembly members did not vote for last year’s compacts.

Steve Maviglio, spokesman for Speaker Fabian N

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