Opinion: California gaming tribes owe state $1B

Friday, January 25, 2008  

"The public is being barraged with ads and television commercials urging support for the unprecedented slot machine expansion for four of the large tribal casinos. Proponents have promised that this expansion will provide a huge amount of much needed revenue to California. It might, therefore, seem reasonable to assume that the gaming tribes have been making payments to the state pursuant to their existing compacts, and have paid everything they owe to date.

Not so. Not even close.

My law firm, Legion Counsel, has sued the California Gambling Control Commission on behalf of California taxpayers to compel the commission, the agency responsible for oversight of the casinos and other state agencies, to collect funds owing by the tribes. This lawsuit should not have been necessary.

The formula for payment by the tribes involves simply applying the percentages specified in the compacts to the "net win" realized from their slot machines. The net win calculation is essentially just this: The money taken in, minus the amount paid out in winnings.

The state has only been willing to release an aggregate amount, reflecting the total amount paid by all the tribes. Using this as a base, our gaming expert, Professor I. Nelson Rose, testified that even using the very conservative figure of a $300 average net win per machine per day, the tribes would have hugely underpaid their obligation. With 30 years of experience regarding comparable volume slot machine operations in Las Vegas, other Indian casinos and elsewhere around the country, he estimated that the real amount of net win would most likely be in the range of $500 a day. This would translate to a possible delinquency to date as high as $1 billion."

Get the Story:
John K. Baldwin: What do the Indian casinos owe California? Maybe $1 billion (The San Francisco Chronicle 1/25)