Rincon suit seeks more slots; tribe says state is trying to tax casino

By: EDWARD SIFUENTES - Staff Writer | Tuesday, August 14, 2007 9:36 AM PDT ∞

SAN DIEGO -- After more than four years of negotiations with the state, the Rincon Band of Mission Indians asked a federal judge Monday to help settle a dispute about slot machines at its large casino in Valley Center.

Rincon claims the state is illegally requiring tribes to pay fees to the state in exchange for adding or installing new slot machines. The tribe says federal law allows the state to collect fees to help regulate the industry or offset gambling-related problems, but not to help balance its budget.

Lawyers for the state say the fees are fair payment on the part of tribes in exchange for having the exclusive right to operate slot machines.

The tribe's attorneys argued in court Monday that the fees amount to a tax, and federal law does not allow states to tax tribal governments under the Indian Gaming Regulatory Act of 1988. The act sets the rule for gambling on Indian reservations.

"We're not saying that we won't pay any fees," Rincon attorney Scott Crowell told Judge William McCurine.

Crowell said the money the state is asking for amounts to more than a fee.

"This is a tax," Crowell said. "It's a tax. It's a tax."

Attorneys for the state say fees that emerge from negotiations are not a tax.

In negotiations, the state proposed an agreement that would require Rincon to pay 10 percent of its net win revenues from the slot machines it operates and 15 percent on additional slot machine revenues. The money would be paid to the state's general fund.

Peter Kaufman, an attorney for the state, said the payments are not taxes because tribes negotiate the fees with the state and choose to pay them in exchange for the exclusive right to have slot machines.

"These are negotiated agreements between sovereign (governments)," Kaufman said in court Monday.

In 2003, Rincon asked the state to renegotiate a state gambling agreement for its Harrah's Rincon Casino & Resort, where the tribe operates 1,600 slots. But nearby tribes with casinos, including the Pauma and Pala bands, signed amended agreements that allow them to operate as many machines as they want.

Rincon officials say those agreements put its casino at a competitive disadvantage, and they want to install up to 2,500 machines to keep up. The tribe's current agreement, negotiated under Gov. Gray Davis in 1999, allows it up to 2,000 slots.

Rincon filed a lawsuit against the governor in 2004 seeking to overturn five state agreements with tribes, including the Pala, Pauma, and Viejas tribes in San Diego County. Rincon has since withdrawn its request to kill those agreements.

The lawsuit focuses instead on what it says are bad-faith negotiations by the state. Crowell said Rincon wants the court to appoint a mediator to settle the negotiations.

In court documents, Rincon argues that the state closed the door on the tribe, saying there was only a limited number of slot-machine licenses statewide and that no more licenses were available.

But other tribes were excused from the statewide license cap and the 2,000-slot-machines per tribe limit by agreeing to pay additional fees to the state.

Rincon has been willing to negotiate with the state for a flat per-slot fee tied to added costs for regulation and problems caused to neighboring communities, attorneys for the tribe wrote in court documents.

"The state, on the other hand, has been attempting from the outset to obtain fees disproportionate to the grant of additional gaming devices," the tribe argued.

Kaufman said the state's offer is not unfair because other tribes have signed similar agreements. Moreover, he said Rincon is generating an enviable profit on the games it operates.

Rincon's casino is generating more than $242 million in revenue each year, according to court documents. That includes an average of about $381 per slot machine each day.

"They are making $369 to $381 a day on their machines," Kaufman said, adding that there are other tribes "that would love to be in the situation that Rincon is in."

However, Crowell cited a state study that concluded the state would take most of the added revenue generated by the machines.

Kaufman said there are other benefits Rincon would get out of operating more machines, including the ability to expand its facility.

Judge McCurine said the case is "fascinating," but did not issue a ruling Monday.

-- Contact staff writer Edward Sifuentes at (760) 740-3511 or esifuentes@nctimes.com.

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Pre-Registration Comments[-]Go to Top

RWC wrote on Aug 14, 2007 4:27 AM:Government trying to tax casino. The government taxes everybody else. Why should casinos be any exception? Haven't they ever heard of "sin" tax?

Make gambling legal wrote on Aug 14, 2007 6:43 AM:Then see how the Tribes can compete. Its a joke..

Mike wrote on Aug 14, 2007 6:50 AM:If it looks like a duck, and quacks like a duck, . . . Personally I would like to see an end to the state only permitting tribles to operate gambling casinos. The state's historic reasons for outlawing gambling (crime, addiction, etc) make no sense when it turns around and allows tribes to operate casinos.

Randy wrote on Aug 14, 2007 7:26 AM:This petty inter-tribal bickering reflects poorly on sovereign Indian nations!

Chief Sitting BULL wrote on Aug 14, 2007 8:48 AM:As my last name states this is BULL; why do native Americans get to operate casinos with impunity to paying fees to the state. We've made enough reparations to the Indian nation. What gets me is that the casinos give literally nothing back to the rank and file of their own tribes. Somebody's getting filthy rich here and that person is no BULL.

King Dollman wrote on Aug 14, 2007 11:46 AM:It is a license to steal, no matter who is getting the money. Read a book about a mobster once, and his dream was to own a part interest in a casino. It was a legitimate license to steal, State approved and sanctioned.

General George Armstrong Custer wrote on Aug 14, 2007 1:19 PM:The Tribes enjoy an advantage in California, it's called a monopoly! There is nothing like it in Nevada, New Jersey, Missouri or anywhere else gambling is legalized to everyone including indian tribes. If Rincon disagrees with the state becoming a financial partner in their amended compact agreement, then don't sign. You already have a financial partner in your casino, Harrah's casino. Harrah's takes at least 8% of your net gaming revenue. Why not let the State of California take some too in exchange for your monopoly? Custer died for your sins.

Agree with Mike wrote on Aug 14, 2007 2:46 PM:Legalize casino gambling off the reservation and tax as Nevada does. Reduce the 10% income tax, the 7.75% sales tax and provide more and better services. People are gambling anyway. Let them make their own choices, this is still somewhat a free country. You know the saying, California makes Nevada green. For those of you that don't get it, Grreen, as in the color of money.

Greedy wrote on Aug 14, 2007 3:22 PM:The state wants money. The "Indians" want the money. It is never enough. I suggest the state make gambling legal. Let the consumer decide where they want to go. Get the rules straight first before opening anything new.

quinnie wrote on Aug 14, 2007 5:03 PM:the government already taxed the tribes. you are sitting on it.

Agree with Mike too. wrote on Aug 14, 2007 5:06 PM:But, don't forget to add the California Lottery here. The state is really getting quite the deal here. If the Tribes are really sovereign, then why do we need to make deals at all? They should be able to do whatever they want. The fact that they don't shows that the US government still has a hold on them. Legalize it outside of the casinos and tax them all.

Just A Thought wrote on Aug 14, 2007 8:35 PM:Indian Gaming should be like a patent, let them operate the casino’s and make as much as they can for 15 years, then open it up to commercial gaming, permitting the tribes to build and operate off the reservations. This would create more jobs closer to the people and would offer more protection to the employees. Currently employee taxes are taken out, but they have no labor law protection. If the employees are paying taxes, they should be protected under the current state labor laws not federal labor laws. Most casino employees in this state only work on federally recognized land, but don’t live on it. Protect the employees!

RobertM wrote on Aug 16, 2007 8:55 AM:The Indians are just taking back what was stolen from them, one nickel at a time. Gambling and the lottery are themselves taxes on the stupid.

Rod wrote on Jul 11, 2008 3:22 PM:The "sins" of the father follow like a shadow. Greed, theft, murder, and rape are just some of the crimes committed against the Indian in the taking of his land, heritage, and food supply. Promises were made much as they are today.. but not kept. Lies are what the average man on the street is full of..can his government be much different? Now that the courts are forcing government to keep those former promises made on paper... a contract, white america begins to whine and cry. And you call yourself a "christian" nation! You speak words that you do not live... what more do you want to take? When a "spirit" on a nation becomes depraved... the cards all fall down much like the Roman Empire. If you treated your wifes like you do the Original Native Americans, she'd divorce you. Oh, wait... that's already happening with a 70+% divorce rate! And you wonder why!

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