Gaming-compact foes form uneasy alliance

For more than three years, the Pala Band of Mission Indians and the United Auburn Indian Community have been locked in a legal struggle with racetrack owners over the validity of gaming deals the tribes signed with Gov. Arnold Schwarzenegger.

But now, even as their internecine legal battle continues, the courtroom combatants have joined forces in an effort to repeal four new compacts ratified by the Legislature earlier this year.

The legal fight is largely motivated by one man’s struggle to bring slot machines to the racetracks his company owns and operates. Terry Fancher is the managing partner of Stockbridge Capital Group, the parent company of Hollywood Park and Bay Meadows racetracks. Since September 2004, Fancher and the racetracks he runs have sought to have the Pala and Auburn compacts ruled invalid by the courts.

A Sacramento trial court threw out Fancher’s case against the tribes, but Steven Mayer, an attorney for the racetracks, says the legal battle continues.
“There will an appeal,” he said. “We are going to a higher court.”

The lawsuit stems from the 2004 compacts signed by Schwarzenegger. Those agreements gave five tribes, including United Auburn, the right to have an unlimited number of slot machines at their casinos. In exchange, the tribes pay a per-machine fee for each slot added to the casino floor.

The state planned on using the revenues from the new slots to secure $1 billion worth of transportation bonds. In exchange, the tribes secured the right to maintain a gaming monopoly for the remaining 18 years of the compact.

That language was challenged in separate cases by card clubs and racetracks, which have long sought to supplement their gambling interests with slot machines. The lawsuits have blocked the sale of the bonds. But, in the meantime, California voters have passed $19 billion worth of transportation bonds.

The lawsuit has been long and contentious.

But now, in a relationship of convenience, forces on both sides of that legal question are fighting against the 2006 compacts signed by Schwarzenegger for some of the state’s largest gaming tribes.

Hollywood Park and Bay Meadows have combined to contribute nearly $3 million to an effort to repeal four additional compacts signed by the governor last year. Those compacts–for the Agua Caliente, Sycuan, Morongo and Pechanga tribes–were approved by the Legislature earlier this year.

Opponents of those compacts include a coalition of Fancher’s racetracks, organized labor and two of the tribes that signed 2004 compacts. All oppose the deals for very different reasons.

For Fancher, the referendum campaign marks a continuation of his struggle to stop the spread of Indian gaming until racetracks are allowed to run slot machines of their own. Service-employee unions have opposed these compacts, which unlike the 2004 deals do not give unions the right to so-called “card check” elections, which they say would make it easier to unionize casino workers. And the tribal opposition comes from two tribes, Auburn and Pala, who say the new deals give competitors an unfair advantage and set a dangerous precedent for future gaming deals.

In 2004, Fancher led the charge for Proposition 68, which would have allowed racetracks and card clubs to have up to 30,000 slot machines statewide. That measure was opposed by Schwarzenegger and Indian tribes, and was resoundingly defeated by voters.

The temporary alliance of Fancher and the tribes he is currently suing is emblematic of some of the history and bitter rivalries that underlie the current referendum fight.

The history between the Pala band and some of the 2006 compact tribes runs deep. In 1998, Pala became the first tribal nation to enter into a compact agreement with Gov. Pete Wilson. One of the tribes that signed a new compact in 2006, the Agua Caliente Band of Cahuilla Indians, led a drive to repeal that compact through a referendum campaign. Pechanga also supported the repeal effort, arguing that Pala’s original compact placed too many restrictions on the types of casino tribes could run.

In the end, the tribes opted to drop the referendum, opting instead to back Proposition 5, which paved the way for gaming expansion throughout California.
But Pala’s opposition to the four new compacts is not just about history. It is also about geography. The San Diego County-based Pala casino is just 9 miles from the Pechanga casino in Temecula. Pechanga would be permitted to expand its casino from 2,000 slots to as many as 7,500 slots.

But the opposition from United Auburn has confounded some observers, who note that the tribe’s Thunder Valley casino is more than 300 miles away from any of the four tribal casinos that earned the right to expand under the new compacts.
A spokesman for United Auburn says there is no direct competitive issue with the four Southern California tribes, who all received revised compact deals. But Doug Elmets says his clients, which operate the Thunder Valley Casino in Lincoln, are concerned about the precedent the new compacts set for potential Auburn competitors.

“The primary motivation for Auburn is the Shingle Springs casino on Highway 50,” says Elmets. “Shingle Springs has a 1999 compact, but they’re back in the governor’s office trying to renegotiate it. With these compacts, the governor has established a new guideline, which creates a potential problem for Auburn. What we’ve said all along is there ought to be a consistent policy when it comes to compacts.”

Now, signature gatherers are on the streets hoping to qualify four separate referendums, which would undo the deals for the Pechanga, Agua Caliente, Scuyan and Morongo tribes. The coalition fighting to repeal the deals has raised about $5 million so far–$3 million from Fancher’s tracks, $1 million from the hotel and restaurant employee unions and $500,000 each from Pala and Auburn.
Referendum proponents say they have until October 8 to submit signatures to county election officials in hopes of qualifying all four referendums for the February 5 ballot.