Rincon reclaims power from state to oversee its gaming 

The Rincon Band of Luiseno Indians, which owns Harrah’s Resort Southern California, has chosen to opt out of having the state of California oversee its gaming operations. Instead it will work directly with the National Indian Gaming Commission (NIGC). It becomes the first California gaming tribe to do so.

Last November the State and Rincon agreed to give the regulatory oversight of  gaming to NIGC and that Rincon would no longer have California provide regulatory oversight. Rincon signed the agreement with NIGC on January 3.

This is a culmination of a dozen years struggle with the State that began during the Governor Arnold Schwarzenegger  administration in 2004. Tribal Chairman Bo Mazzetti has been at the helm of the tribe during that entire period. He has been chairman for 16 years.

In an exclusive interview with The Times-Advocate, Chairman Mazzetti said, “What we’ve done is exert our sovereign jurisdiction as was originally intended by federal IGRA (Indian Gaming Regulatory Act) that authorized Indian gaming. It was always the intent for tribes to run their own casino business but when they passed IGRA they said you need to reach an agreement with your state. That became the compact.” The chairman considers the tribe’s action to be a natural evolution of what started 20 years ago when Indian gaming was legalized in the state. “We are implementing the law as it was intended by IGRA. It goes back to the intent of that law.”

The tribe will be working with a compact, but with the NIGC. “We have secretarial procedures, which is a compact, approved by the Secretary of the Interior, which we have had for a number of years,” said Mazzetti.

For years the tribe and the State have been unable to reach an agreement on the amount being charged for the state’s oversight. That led finally to the agreement last November where the state agreed to “opt out” of overseeing the tribal casino.

Mazzetti explained that “in 1999 we had the standard gaming compact that was involved with gaming. We then had a dispute with the state (Schwarzenegger) in 2004 [three years after Rincon opened its casino.] The dispute was over the fact that they were charging and wanting us to pay for things that were not part of the intent of IGRA. Paying into different funds that were not covered by the law.”

The tribe ended up filing litigation with the State—in a case that went to the U.S. Supreme Court, where in 2011 the tribe prevailed. The high court ruled that California was violating IGRA by demanding casinos pay into the Indian Gaming Special Distribution Fund as a condition for adding more slot machines.

“Our compact was actually approved by the federal government and not the State,” said Mazzetti. “That became known as secretarial procedures. During this process the state could opt in or not to provide oversight for gaming. Which the state did. Even though it was approved by the federal government the state was allowed to provide oversight on gaming.”

Every gaming compact in California has a line of text, said Mazzetti, where “the tribe agrees to pay actual and reasonable oversight costs to the state of California. That’s where the dispute started. We don’t mind paying our costs of oversight to the state. However, the state wouldn’t tell us what we were paying for. They wouldn’t break it down. No household or business would pay a bill not knowing what they were paying for.”

The mechanics for the state “opting out” involved the State of California and the NIGC. That process was disputed. “We have been in dispute for twelve years,” said Mazzetti. “We couldn’t reach an agreement for how much we should be paying and what we were paying for to the state and we said ‘you can opt out.’”

Why would the state resist spelling out what the tribe was paying for?  “For the State to break it down like any normal person would,” he said. “If they do that with our tribe, they have to do it for every tribe in California that’s involved with gaming, for accountability.”

The advantages for Rincon of taking that responsibility from the state means that it removes “the middle man,” said the chairman. “You’ve got to remember, we have our tribal gaming commission, that oversees our operations, and the State, that oversees our operations and the feds, who oversees our operation, three different entities.” However, Rincon’s gaming commission is of a caliber, “that it taught the state of California’s gaming employees about gaming operations. Our commission trained various state staff. We have one of the top notch gaming commissions in the state or even in the country.” He added, “It basically takes the state out of it. We never could never get an actual determination for what we were paying for specifically.”

Mazzetti declined to speculate how much removing the middle man will save the tribe in cash.

“Our tribe stands up for what we believe is right. I’m old enough to not give in. We have stood up for what we believe in. That’s what I think it is all about.” He added, “State officials know me well enough to know that if I believe I’m right, I’m going to stick to that point.”

Will other California gaming tribes follow Rincon’s lead? Mazzetti believes there may be some. “But it will be up to each sovereign tribe. Every tribe that has a gaming operations has its own gaming commission. That’s a requirement,” he said.

The advantage of working directly with the federal government, said Mazzetti, “is that the national commission knows and supports IGRA. They know the intent of the act and they enforce and encourage that. Whereas with the State they try to put in all sorts of state requirements on tribes.”

One big area of dispute was over the treatment of problem gambling, he said. “The State asked UCLA to set up a problem gambling program. “Right off the bat I said ‘We’re not paying additional cost into the problem gambling fund when we have state considers the gold standard for problem gambling, run by Harrah’s?’ Even the State staff calls it the gold standard. Why would we pay for that when we are already having it done? That’s one example.”

The State also wanted Rincon to pay into a fund for economic development for non-gaming tribes, “Which is something we already pay for,” he said. “No other business is required to pay to support other businesses. We already pay $1.3 million a year to the Revenue Sharing Trust Fund that goes into non-gaming tribes. We’re sticking with that and are going to continue to pay that.”

The Times-Advocate asked how the Rincon tribe can oversee its own gaming and still maintain integrity? “Because, we have federal laws that says specifically what you need to do,” said Mazzetti. “We do the same thing the State did and federal government does. We have law we have to follow on money counting, and cards and every aspect of gaming. That’s set aside in federal law and we’ve always followed it. We get audited on federal government to see that we are following the requirements. We go overboard to make sure that we have a good operation. It’s important for our customers to know that everything is safe, well-regulated and proper.”

He added, “We are the face of implementing the law as it was intended. We tried to work with the State for twelve years to get these issues resolved. We just wanted answers. We tried to negotiate and be good partners. We just could not get to that point. Ultimately, the State opted out because Rincon “had become like a burr under their saddle.”

A tribal gaming compact is an agreement approved by the federal government that is required for Class III gaming (Las Vegas style gaming.) Class III gaming includes slot machines, blackjack and electronic games of chance. Under IGRA tribes can operate Class II gaming, e.g. bingo-based gaming without a compact directly under the NIGC.