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Best of I. Nelson Rose

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March 2000 Election Will Determine Fate of Casinos in California -- and Nevada

7 March 2000

California voters will go to the polls in March 2000 to decide which state will be the casino center of North America in the coming decade: Nevada or California.

Whoever wins will be, thirty years from now, the casino center of the world.

The election is in response to a decision by the California Supreme Court that Proposition 5 violates the State Constitution. Prop. 5 had been approved by California voters in November 1998. It would have allowed the state's tribes to operate unlimited numbers of casinos with unlimited numbers of gaming machines and certain card games, including blackjack.

As this column is being written, the August 23, 1999 decision is not yet final, nor has the exact language of the March 2000 ballot proposal been determined. But the high Court is not going to change its mind about its 6-1 opinion. Nor are the tribes going to back down from their drive to have voters approve a constitutional amendment allowing casinos on Indian land.

The problem revolves around a 1984 initiative which created the State Lottery and added this phrase to the Constitution: "The Legislature has no power to authorize, and shall prohibit casinos of the type currently operating in Nevada and New Jersey."

The Supreme Court based much of its interpretation of this phrase on my 1986 book, Gambling and the Law. The Court ruled that voters wanted to prohibit buildings containing games that were illegal under California law, especially banking table games and slot machines. Putting the prohibition in the Constitution prevented casinos from being made legal by a mere statute.

The Agua Caliente tribe of Palm Springs anticipated this decision and began collecting signatures to put Prop. 5 back on the ballot, but this time as an amendment to the Constitution itself.

The Court's ruling led to intense lobbying and negotiations among the state's 107 tribes, Gov. Gray Davis and the State Legislature. The result may be another proposed amendment allowing tribes to have a limited number of slot machines and banking card games with renegotiations to take place later.

Either way, the March 2000 ballot will have at least one proposal to exempt California's Indian tribes from the prohibition on Nevada- and Atlantic City-style casinos.

It is hard to imagine an election of more importance to the gaming industry. By my count, there are 110 parcels of Indian land throughout the state. More tribes are seeking recognition or are trying to acquire more land.

The overwhelming majority of Californians live relatively near the coast - millions in cities like San Francisco, Los Angeles and San Diego. No matter what Las Vegas or Reno may try, they cannot make themselves closer to these customers than tribes in California.

The number of potential casino patrons is large. California has more than 33 million people. Texas, the second most populous state, has only 20 million. The entire country of Canada has 31 million.

The top two casino gaming markets, Atlantic City and the Las Vegas strip, each win about $4 billion a year. California tribes win at least $1.5 billion a year, without a single legal slot machine.

Gaming tribes are already among the most powerful political players in the state. The tribes spent $63 million on Prop. 5. One tribe alone, the San Manuel, donated $28 million. Gray Davis spent only $26 million beating Dan Lungren for governor.

Tribes gave another $9 million to politicians in 1998. What will their campaign contributions look like in five, ten or 20 years, when the Legislature and Governor have to renegotiate their casino compacts?

Tribal representatives can already trounce the state's naive negotiators. The Governor and Legislature's opening offer, following the Court's invalidation of Prop. 5, was to amend the Constitution to read: "An Indian tribe is permitted to engage in any and all forms of gaming..."

Their most recent offer was to allow 40,000 slot machines in the state, creating some of the largest casinos in the world.

But there will be no negotiating, no compacts and no casinos if the tribes lose in spring. The March 2000 election will not be a replay of November 1998.

The question will be clearer to voters. Prop. 5 involved "players' pool prize systems," unnamed card games and "tribal gaming terminals." Proponents were able to make the debate revolve around Indian rights.

This time if the tribes win they will have the constitutional right to set up as many Nevada-style casinos and slot machines as the market will bear.

In the history of America there have been only three successful campaigns to amend state constitutions to legalize high-stakes casinos.

Proponents of Prop. 5 have always said they proposed that initiative as a statute, not a constitutional amendment, because they were afraid they would be unable to get the higher number of signatures required to make the ballot.

Maybe they also did not want to ask California voters to amend their constitution to specifically allow "casinos of the type currently operating in Nevada and New Jersey."

Recent Articles
Best of I. Nelson Rose
I. Nelson Rose

Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

Gambling and the Law

> More Books By I. Nelson Rose

I. Nelson Rose
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

Gambling and the Law

> More Books By I. Nelson Rose