With fewer discretionary dollars in their pocketbooks and more sensitivity at the gas pump, recession-era gamblers want to spend their quarters closer to home.
Proximity to patrons explains why the region’s five Indian casinos have continued to grow since 2008, though at an anemic 1 percent annually.
Getting more people through casino doors obviously is the goal, which is why amenities such as hotels have become the norm. But package deals and clever marketing can only compel so many consumers.
That’s one reason many tribes and investors across the nation are looking at another option: an obscure section of the 1988 Indian Gaming Regulatory Act (IGRA) that deals with “off-reservation gaming.” So-called Section 20 exemptions in the gaming act create a path for tribes to build casinos on land miles away from their reservations.
The subject is coming to a head locally as two proposed casinos await action by Gov. Jerry Brown, who soon must decide whether to accept a decision by the Bureau of Indian Affairs (BIA) to approve land acquisitions for the projects.
The North Fork Rancheria of Mono Indians (North Fork) is proposing a 2,500-slot-machine casino and 200-room hotel in Madera, while the Estom Yumeka Maidu Tribe of the Enterprise Rancheria (Enterprise) is proposing a 1,700-slot-machine casino and 170-room hotel near Marysville. Neither tribe has a casino on its current site, and both have compelling arguments for building gaming facilities off their reservations.
When enacted, the gaming act stipulated that tribes could build casinos only on reservations established and recognized before Oct. 17, 1988. Section 20 of the act, however, allows circumstantial exceptions, one of which applies to lands restored to tribes since 1988. Another provides for a so-called “two-part determination” wherein the BIA can decide that a proposed gaming site outside reservation land would benefit the tribe and not harm the local community. If the BIA determines that a site meets the two-part requirement — as it has in the case of North Fork and Enterprise — the governor can concur with the BIA in order for the land deal to proceed. No concurrence, no deal.
If Brown goes along with the BIA on the North Fork and Enterprise projects, opponents say it could create a dangerous precedent and open the floodgates to “reservation shopping” and casinos on every corner.
Opponents also say the two proposals violate the spirit of the agreement made when voters passed Proposition 1A and Proposition 5 in 2000 and tribes agreed to build casinos only on their own territories.
“Section 20 of the IGRA was never meant to be utilized as it is today,” says Cheryl Schmit, director of Stand Up for California, a statewide organization focused on gambling issues. “It was meant for tribes that didn’t have land or federal recognition as of 1988, but what we’re seeing is large tribes trying to buy big parcels of land that they can use any way they want.”
Supporters, however, argue the North Fork and Enterprise projects are model examples of how Section 20 should be used.
The data suggests that interest in Section 20 exemptions has grown since last November, when the BIA jettisoned a Bush-era requirement that new lands had to be within a so-called “commutable distance” to qualify for exemption. Eliminating that standard restored IGRA to its original 1988 criteria, and today 137 applications for land transfers from California tribes are pending with the BIA.
Charles Altekruse, community relations director for the Enterprise and North Fork Rancherias, says that, regardless of the number of applications, two-part exemptions under Section 20 are costly to pursue and rarely approved by the BIA. Only five two-part exemptions have been approved nationwide since 1988.
“The North Fork and Enterprise projects are exactly the kind of projects Section 20 was created for,” Altekruse says, pointing out that, when the federal government restored the North Fork land, it was put in trust for individual Indians and not the whole tribe. Moreover, the Rancheria is in an environmentally sensitive area, providing additional cause to find an alternative site for a gaming complex.
“It’s also important to remember both of these projects survived BIA review while the commutability standard was in effect,” Altekruse says. “No one should assume these projects are scofflaws — if they were, BIA would have weeded them out already.”
It would be easy to assume that local tribes with operating casinos would be eager to seek their own Section 20 exemptions, enabling them to build new casinos closer to population centers. So far, however, that has not been the case, as many tribes oppose the practice based on the principles of propositions 1A and 5.
“The gaming tribes have played by the rules for the past 12 years, building their casinos in the remote locales where the feds put them,” says Doug Elmets, a consultant for several Indian casinos, including Jackson Rancheria and Thunder Valley Casino Resort.
Elmets’ view is shared by Stand Up for California and Keep Indian Gaming on Indian Lands, a coalition opposed to the North Fork casino. Altekruse, however, says those views are based on an incomplete reading of the measures’ language.
“These propositions supported Indian gaming on Indian lands in accordance with federal law,” he says. “Federal law under IGRA and Section 20 has always allowed gaming on newly acquired lands. Opposition to these projects based on a Prop. 1A/Prop. 5 argument couldn’t be more wrong.”
Unquestionably, concerns about competition form a significant undercurrent of the debate. The Cachil Dehe Band of Wintun Indians, which operates Colusa Casino, warned that it could lose 60 percent of its business if the Enterprise Rancheria project is developed in Marysville. As evidence, the tribe points to the 23 percent hit the casino took when Thunder Valley Casino opened 50 miles away; the new Enterprise development would be only 30 miles away.
For opponents like Schmit, however, bigger concerns loom over the lack of influence local residents have over how Indian lands in trust under Section 20 are ultimately used.
“Land put in trust is off the tax roles and outside the regulatory authority of the state,” Schmit says. “Land could be developed without regard to local ordinances or general plans for the area, and there’s nothing anyone can do about it.”
Ultimately, a concurrence by Gov. Brown does not guarantee a project would be built; a long bureaucratic road remains to be trod, and community support is vital. Opponents note concerns about potential negative effects casinos can have on communities, while supporters highlight the benefits, including jobs and opportunities for local businesses.
Pros and cons aside, one issue rarely discussed is whether the tribes are simply buying back what was once theirs, piece by piece.
“Take a look at the Agua Caliente tribe in San Diego, which is continuing to add parcels of land to make its holding bigger and bigger,” Schmit says. “I can envision them one day owning all of Riverside County.”
Red Hawk Casino opened in December, just weeks after economic woes sent the stock market plunging. The launch of the new venue just off Highway 50 coincided with a sharp drop in gross gaming revenue at Nevada’s Lake Tahoe casinos, and California casinos also felt the sting as gamblers gave Red Hawk a try.