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Best of I. Nelson Rose

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Will California License Mobsters?

28 March 2000

A little-noticed provision of California's proposed casino law threatens to close down most of the state's Indian gaming. It may also jeopardize the licenses of some non-tribal casinos and suppliers in Nevada and other states. This obscure section of the proposed Tribal-State Gaming Compact would allow tribes to issue licenses to convicted felons and members of organized crime.

In other states, these individuals would be found undesirable and barred from having anything to do with gaming. Under California's proposed Compact, they may work in or even manage tribal casinos.

The Compact will not become law unless Californians approve an amendment to their state Constitution at the ballot box in March. A provision authorizing the licensing of felons and gangsters could obviously have an enormous negative impact on voters. If voters reject this Compact, tribal casinos throughout the state will be faced with federal court orders to get rid of their slot machines or be closed down. If voters approve this Compact, tribes may then license gangsters. Any Nevada gaming company working with a California tribe may face the loss of its license for associating with organized crime.

There can be no doubt that the Compact provision was designed to license felons and members of organized crime. Section 6.4.4.(c) specifically states, "the Tribe may retain in its employ a person whose application for a determination of suitability, or for a renewal of such a determination, has been denied by the State Gaming Agency."

The only requirements are that the person has a gaming license issued by the tribe, does not work for any other gaming operation, has been employed by the tribe for at least three years, and that "the denial of the application by the State is based solely on activities, conduct, or associations that antedates the filing of the person's initial application..."

This means the felony or association with a member of the Mob took place before the person applies for a state license for the first time.

To uncover the true meaning of this Compact provision, we need to know what "activities, conduct, or associations" can be the basis for the state denying a person's "application for a determination of suitability." The grounds for a finding of unsuitability by the state are found primarily in section 19850A of the California Business & Professions Code. Of the seven grounds listed, three cannot apply:

Number (1) -- the applicant fails to prove he is suitable -- obviously cannot be something that "antedates the filing." Ditto for number (2) -- the applicant lies or withholds information during the application process.

Number (7) -- the applicant is less than 21 years of age -- is not an activity, conduct, or association.

But there are four other grounds listed for a finding of unsuitability by the state. The question is why would a tribe want to hire someone who:

(3) Has been convicted of a crime as serious as a felony?

(4) Has been convicted of "any misdemeanor involving dishonesty or moral turpitude"?

(5) Has associated "with criminal profiteering activity or organized crime"?

(6) Has willfully defied an "official investigatory body of any state or of the United States, when that body is engaged in the investigation of crimes relating to gambling; official corruption related to gambling activities; or criminal profiteering activity or organized crime"?

California's Gambling Control Act contains a few other grounds for denying a license. But why would a tribe want to license someone who has violated campaign disclosure or contribution laws? (Section 19960.2A). Or who made an illegal contact with a government licensing official? (Section 19858.7A).

The provision brings the entire Compact into question. It rejects the standards the state uses in denying a license, but does not tell the voters what standards will take their place.

An applicant applying for a state license has the burden of proving he is qualified "having due consideration for the proper protection of the health, safety, and general welfare of the residents of the State of California and the declared policy of this state." (Section 19847A (a)).

The state examines his "general character, integrity, and ability to participate in, engage in, or be associated with, controlled gambling." (Section 19847A (b)). The state must reject an applicant if issuing him a license would be "inimical to public health, safety, or welfare..." (Section 19847A (c)).

I do not know if there is any way to amend this Compact before it is put before the voters in March. But I would strongly suggest doing so, if it can be done.

The final ground for a state finding of unsuitability says it all. The voters of California are not going to like a Compact that contains a provision allowing a tribe to overrule the state in this last case.

How, in fact, can anyone justify allowing an individual to manage a tribal casino after the state has denied his application, declaring that "issuance of the license will undermine public trust that the gambling operations with respect to which the license would be issued are free from criminal and dishonest elements and would be conducted honestly"?

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:

Compulsive 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:

Compulsive Gambling and the Law

> More Books By I. Nelson Rose