πŸ€‘ California Tribal Casinos: Questions and Answers

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JOHN KANE EXPLAINS THE INDIAN GAMING REGULATORY ACT

What support is provided for local governments affected by casinos? On February 25, , the U. These payments are based on the number of slot machines that the tribes operate. The act requires states to negotiate with tribes that request the opportunity to enter into a compact. Class III. In and , two U. While the compacts allow tribes to operate an unlimited number of slot machines in exchange for certain payments to the state, the compacts allow tribes to operate up to 5, or 7, machines depending on the compact. In this section, we will focus principally on the five proposed compact amendments that we refer to as the compacts, given that they recently have generated the most discussion among legislators and the public. Class I Games. Like the compacts, the compacts would allow tribes to operate more than 2, slot machines. The minimum annual payments under the compacts, by contrast, would go to the General Fund. Department of the Interior. Tribes make payments to several state government accounts under the terms of the tribal-state compacts. The Legislature, however, may amend the law and direct that the funds be used for any other purpose. It is not known when or if the bonds will be sold. According to the California Department of Justice, certain craps, roulette, and dice games are prohibited under the State Constitution and laws. Which state funds receive tribal compact moneys? The laws surrounding the taxability of tribes, tribal members, and related enterprises are complex. Combined, these two revenue sources equaled just over 0. The law ranks other allowable uses of the SDF in descending order after this priority use, as follows:. In addition to funds paid pursuant to the compacts, tribes and their members pay certain state taxes. This court ruling, known as the Cabazon decision, set in motion a series of federal and state actions-including two ballot propositions-that dramatically expanded tribal casino operations in California and other states. Tribes and their members are not subject to several types of taxation due to the lack of authority granted to states for this purpose under federal law. Unlike the compacts, the compacts require payments to the General Fund, as well as payments expected to be used to support a bond that will repay loans made by a state transportation account to the General Fund in and The compacts also require that tribes negotiate with local governments concerning enforceable memoranda of understanding to address environmental, public safety, infrastructure, and other demands related to casinos. In its ruling, the U. Industry estimates indicate that Thunder Valley Casino is one of the highest revenue-generating casinos in the country and the highest-ranked facility by this measure in California. Tribal neutrality required during organization process. This action would further reduce the amount of any future bond. Purpose of the SDF. These moneys help relieve the General Fund of a potential cost to repay the transportation funds. Subsequent compacts and amendments have specified other levels of payments. Over the last several years, the SDF has collected more revenues each year than the Legislature has spent out of the fund. These payments are a percentage of the average slot machine net win a measure of slot machine revenues on machines operated by the tribe on September 1, Most recent compacts or amendments have not required tribal payments into the SDF. The compacts are similar in many respects to the compacts. Legislation implementing the compacts directed a large portion of the revenues that these tribes pay to the state to repay state transportation loans. Purpose of the RSTF. Estimated to average 15 percent of added machines revenue as of What are some key compact provisions concerning labor relations? Property taxes and hotel occupancy taxes, for example, do not apply to reservations. Under IGRA, gambling operations are divided into three categories with varying levels of tribal, state, or federal regulation, as shown in the nearby box. The act provides a statutory structure for tribal gambling operations and declares that Congress seeks to advance three principal goals in authorizing tribal casinos:. Under the various tribal-state compacts, tribes make payments to the RSTF in exchange for licenses to operate up to 2, slot machines. In this report, we answer key questions about tribal casinos in California and their payments to state and local governments. The compacts were among the first in the country to share casino revenues with tribes that do not have compacts. The agreements contain similar language allowing state regulators to inspect casino facilities and machines. As in the case of the state, local government has only a limited ability to tax such enterprises. We also discuss proposed amendments to several tribal-state compacts that-collectively-would expand the industry significantly in Southern California. Through , RSTF funds were insufficient to fund the full annual payment to each non-compact tribe. Compacts with five additional tribes were ratified in and Several amendments to these compacts also have been ratified by the Legislature. As a result, the amount of bond proceeds to be generated from the sale are likely even lower than previously estimated. The tribes would be able to operate the machines at one, two, or three gambling facilities on Indian lands depending on the tribe and the compact amendment involved after negotiating with local government officials on measures to mitigate effects of casino development. In , the new U. California also has dozens of tribes which are not federally recognized. Regulators may inspect a certain number of machines up to four times per year. Continued expansion is likely, even if the Legislature does not ratify several compacts agreed to by the Governor and tribes in State Government Funds: Compact Revenues. Prior to passage of the measure, tribes operated an estimated 20, slot machines at about 40 casinos, despite the unclear legal environment of the time. When do the compacts expire? Balancing state and tribal interests, IGRA generally requires that states and tribes enter into compacts to authorize the types of gambling commonly associated with tribal casinos today-such as slot machines-when state law permits similar gambling operations in any other context. How Are They Similar to the Compacts? Department of the Interior DOI as a body to limit organized crime and corruption, ensure that tribes benefit from gambling revenues, and enforce the honesty and fairness of certain tribal gambling operations. Most notably, the amendments to compacts with five tribes substantially altered the original financial framework of the compacts. Tribes and states regulate Class III games pursuant to tribal ordinances and tribal-state compacts approved by the U. State Government Funds: Taxes. What ability do state regulators have to inspect casino facilities and machines? In this report, we answer key questions related to 1 the history of tribal casino expansion in California and 2 payments from the casinos to state and local governments. By contrast, tribes could operate no more than 2, machines under the compacts. A few local governments receive significant funds directly from tribes under mitigation agreements reached with tribes for such things as traffic and law enforcement costs. Under current law, the administration may use the annual payments to 1 repay the transportation loans or 2 support the planned bond issue that would repay the transportation loans. Payments Into the SDF. Voters have authorized specific forms of gambling:. Games allowed by the amendment include slot machines, lottery games, and banked and percentage card games. Tribal members living on reservations, for example, are not subject to state income tax, and tribal casinos do not pay the corporate income tax. Certain jurisdictional rights were declared to be ones with which no state could interfere. Indian tribes possess a special status under U. Who Regulates? In addition to the funds described above, local governments also receive some revenue from the taxation of certain tribal activities and transactions. Tribal neutrality not required.{/INSERTKEYS}{/PARAGRAPH} Supreme Court decision involving two California tribes set in motion a series of federal and state actions that dramatically expanded tribal casinos here and in other states. The act permits casino operations on Indian lands, which it defines as 1 reservation lands, 2 lands held in trust by the U. Earlier in this report, we compared the compacts and the compacts. We discuss the potential effects on the SDF of compacts pending before the Legislature later in this report. The Legislature has ratified 66 tribal-state compacts. These include slot machines, electronic games of chance, and many banked card games like blackjack. The Cabazon decision relied heavily on the principles underlying tribal sovereignty. Trailer bill language also modified the allocation of future bond sale revenues, providing that they would fund projects under the Traffic Congestion Relief Program. Under the compacts, non-compact tribes are those federally recognized tribes operating or fewer Class III gaming devices. {PARAGRAPH}{INSERTKEYS}In , a U. Regarding the sales and use tax, tribes are generally expected to collect taxes on purchases made by nontribal members for consumption or use off of reservations. Class III games sometimes called Nevada-style games include all other types of gambling. Only Nevada now has a larger casino industry. California outlawed many forms of gambling soon after statehood. Local Government Funds: Taxes. Supreme Court decisions determined that tribes in the U. Class II. Unless the Legislature ratifies additional compacts or amendments early in , state revenues in will grow slightly above the levels.