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LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND Nonpartisan In Depth Analysis of PROPOSITION 1A GAMBLING ON TRIBAL LANDS

Legislative Constitutional Amendment

THE QUESTION

Should the California Constitution be modified to allow, on Indian tribal lands only, slot machines, lottery games, and banked and percentage card games under compacts made between the tribes and the Governor?

PROVISIONS

Proposition 1A would amend the state constitution to:

• Give the Governor authority to negotiate compacts with federally recognized Indian tribes permitting specified gambling activities (including slot machines, lottery games, and banking and percentage card games) on tribal lands in California, subject to ratification by the State Legislature and approval by the federal government
• Authorize slot machines, lottery games, and banking and percentage card games only on tribal lands and only under the terms of duly negotiated and ratified compacts

Passage of Proposition 1A would put into effect tribal-state compacts negotiated between the Governor and 57 tribes and approved by the Legislature in September 1999, provided the federal government gives its approval.

Provisions of the September 1999 compacts, according to the Legislative Analyst's Office:

• Slot Machines
• The compacts allow each tribe at least 350 slot machines.

• Tribes may pay for licenses for additional machines, but generally may not operate more than 2,000 machines.

• Revenue Sharing Trust Fund
• Tribes will make quarterly payments into this fund based on the number of licensed slot machines they operate. The money will be used to provide annual payments to non-compact tribes and those tribes operating fewer than 350 machines. These payments could be up to $1.1 million per tribe per year.

• Special Distribution Fund
• Tribes will make quarterly payments into this state fund (beginning in 2002) based on the number of machines they were operating as of September 1, 1999.

• The Legislature could spend monies from the fund for the following statewide purposes: (1) grants for programs to address gambling addiction, (2) grants to the state and local governments affected by tribal gaming, (3) reimbursements of state regulatory costs, (4) payment of shortfalls in the Revenue Sharing Trust Fund, and (5) other purposes specified by the Legislature.

• Banked and Percentage Card Games
• The compact places no limit on the types or quantity of card games tribes could offer.

• Other Provisions
• The compacts authorize casino workers to unionize.

• They set the age for gambling in Indian casinos at 18.

BACKGROUND

See BACKGROUND FOR PROPOSITION 1A AND PROPOSITION 29.

FISCAL EFFECT

The Legislative Analyst states, "Revenues could increase significantly if the measure were to result in a large expansion in gambling operations and a large portion of the new gambling was spending that would have otherwise occurred outside of California (such as in Nevada). On the other hand, if the expansion of gambling were relatively limited or if most of the new gambling represented spending diverted from other areas in the state's economy that are subject to taxation, the fiscal impact would not be significant." It is probable that the expansion of tribal gambling operations in California would produce some increase in the overall economic activity of the state.

Reasons why there might not be an increase in state and local government revenues

• Some of the new gambling and gambling related spending would simply be a diversion from other California activities.
• Certain state taxes do not apply to tribal members and businesses. Tribal businesses do not pay state corporate taxes; tribal member employees who live on Indian land do not pay personal income taxes; wagering taxes which are levied on horse race betting, card rooms, and the state Lottery are not levied against gambling on tribal lands.
• There would be some new regulatory costs to the state and some increase in local law enforcement and infrastructure costs; however, license fees which the tribes would pay to the state could be used to offset some part of the added costs.

Reasons why there might be some increase in state and local government revenues:

• Some spending for gambling-related activities would probably be diverted from out-of-state sources and would generate more California business.
• Some non-gambling transactions that go along with gambling operations are charged state and local sales and use taxes. Non-tribal employees who earn wages at tribal gambling establishments and tribal employees who do not live on tribal land pay personal income taxes.
• There would probably be some savings in welfare payments.

The state would receive tens of millions of dollars in license fees each year if the federal government approved the September 1999 compacts. These funds could be used to cover the regulatory and other gambling-related costs and other purposes as approved by the Legislature.

IMPACT OF YES OR NO VOTE

A YES vote means that the state Constitution would be modified to permit slot machines, lottery games, and banking and percentage card games on tribal lands only, provided that compacts covering these operations are negotiated between the Governor and the tribes, ratified by the legislature and approved by the federal government.

A NO vote means that the state Constitution would not be modified to permit slot machines, lottery games, and banking and percentage card games on tribal lands. Casinos offering these games would be subject to shutdown by federal law enforcers.

SUPPORTERS SAY

• Indian gaming casinos on tribal lands allow California's Native Americans to be self-reliant, replacing welfare with work and hope. If Proposition 1A fails, casinos would face a shutdown.
• Indian gaming provides nearly 50,000 jobs and generates more than $120 million annually in state and local taxes. Gaming revenues will be shared with non-gaming tribes for use in education, housing, health care and other vital services.
• Local communities near Indian casinos will receive revenues to cover state regulatory costs and to provide programs for gambling addiction.

OPPONENTS SAY

• Proposition 1A would dramatically increase the number of slot machines in California, possibly to 113,000. California would be second only to Nevada in the number of slot machines.
• There are about 700,000 problem and pathological gamblers in the state, with another 1.8 million "at risk" who need help to stop--not to start--gambling.
• Instead of business being diverted from Nevada, Nevada gambling companies are being hired to run casinos in California.

SUPPORT AND OPPOSITION

The official ballot arguments in support are signed by Anthony Pico, Tribal Chairman, Viejas Band of Kumeyaay Indians; Paula Lorenzo, Tribal Chairperson, Rumsey Indian Rancheria; Mark Macarro, Tribal Chairman, Pechanga Band of Luiseno Indians ; Carole Goldberg, Professor of Law and American Indian Studies; and Jeff Sedivec, President, California State Firefighters Association.

The official ballot arguments in opposition are signed by Bruce Thompson, Member, California State Assembly; Leo McCarthy, Former Lieutenant Governor of California; and Melanie Morgan, Recovering Gambling Addict.

For more information:

Supporters: Yes on 1A Californians for Indian Self-Reliance, 1-800-258-7471, www.Yeson1A.net

Opponents: Leo McElroy, Stop 1A - No Casinos, email McELCOM@ns.net, www.Stop1A-NoCasinos.org

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Last updated: January 24, 2000
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