California Gov. Arnold Schwarzenegger (R) negotiated a Class III gaming compact with the Rincon Band of Luiseno Indians in bad faith, the 9th Circuit Court of Appeals ruled today.

Schwarzenegger unfairly demanded a greater share of gaming revenues from the tribe without offering any meaningful concessions, the court said. That amounted to an illegal tax in violation of the Indian Gaming Regulatory Act, the decision stated.

"Here, the State repeatedly demanded that Rincon agree to pay into the State’s general fund 10-15% of Rincon’s annual net win, and up to 25% of Rincon’s revenue from any new devices Rincon would operate under an amended compact," the court wrote in the 2-1 opinion.

The decision is another setback for the Schwarzenegger administration. In at least three other cases, the state has lost attempts to limit the number of slot machines that can be operated under compacts that were signed in 1999.

Some tribes negotiated newer compacts to break the statewide cap on slot machines in exchange for sharing more revenues. But others have won the right to offer up to 2,000 machines under the 1999 compact.

Get the Story:
Court backs Rincon tribe in gambling revenue dispute (The San Diego Union-Tribune 4/20)

9th Circuit Decision:
Rincon Band v. Schwarzenegger (April 20, 2010)

Earlier Story:
Pauma Band awaits final ruling in gaming compact case (4/19)
Judge indicates he might invalidate Pauma casino compact (4/6)
Another California tribe wins case over slot machine cap (3/31)