Revenue Sharing, Cardrooms Among Crucial Issues For California Tribes

February 23, 2024
James Siva, chairman of the California Nations Indian Gaming Association, has called for tribal unity as tribes deal with a range of policy issues from sports-betting legalization to the legality of cardrooms and negotiations over revenue-sharing between gaming and non-gaming tribes.

James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), has called for tribal unity as tribes deal with a range of policy issues from sports-betting legalisation to the legality of cardrooms and negotiations over revenue-sharing between gaming and non-gaming tribes.

In 1999, among the issues discussed while negotiating the original compacts with then-Governor Gray Davis, a Democrat, was what the future of tribal gaming would be in California.

Those negotiations would lead to 58 state-tribal compacts being signed on September 10, 1999 by Indian leaders and Davis, covering slot machines and house-banked card games. Currently, there are 76 compacted tribes in California, with 63 operating 66 casinos throughout the state.

Although there were several key issues at that time, Siva said, one of the most important was the idea to create a fund to share gaming revenues with non-gaming tribes.

“This was the first such revenue sharing in all Indian Country and California leaders took mass criticism from tribal leaders from other states for including these provisions in our compacts,” Siva said.

Since its inception in 1999, the Revenue Sharing Trust Fund (RSTF) has collected $1.5bn through payments it receives from 31 tribes in the state, with payments determined by the number of slot machines operated by tribes.

Compacts signed around 2004 tend to require a flat fee to the RSTF of $2m, with more recent compacts having different models to determine what is paid into the fund.

Under the 1999 compacts, tribes with 350 or fewer slot machines contribute nothing to the fund, while tribes with 351 to 750 machines pay $900 annually per machine, 751 to 1,250 machines require $1,950 per machine, and those with 1,251 to 2,000 slots are required to make an annual payment of $4,350 per machine.

“Let me say that again $1.5bn!" While $1.5bn is no small number, Siva said CNIGA’s membership is “committed to strengthening the RSTF and finding ways to increase revenue for non-gaming tribes,” Siva said.

Siva said the RSTF talks are ongoing and “we are committed to finding a solution that works for all tribes.”

The issue of revenue sharing led a handful of smaller tribes to support a recent failed attempt by Eagle 1 Acquisition Corp. to put a retail and online sports-betting initiative on the 2024 ballot. The measure would have required participating tribes to pay up to 25 percent of sports wagering profits to non-participating tribes.

Legality of Cardroom Games

Among the seminars held over the three-day Western Indian Gaming Conference organized by CNIGA that concluded on Thursday (February 22) was a discussion on Senate Bill 549, which would provide California tribes legal standing for a one-time lawsuit to determine if blackjack and baccarat games offered by the state's commercial cardrooms violate tribal exclusivity rights.

“SB 549, the Tribal Declaratory Relief Act, stalled in the legislature last year but has been revived in this year’s session,” Siva said in his State of the Tribal Nations Speech to conference attendees on Tuesday at the Pechanga Resort in Temecula.

SB 549 was approved unanimously by the Senate last May but was not taken up by the Assembly before adjournment in September. On January 4, the measure was assigned to the Assembly Committee on Governmental Organization, but no hearing has been scheduled yet.

“SB 549 is a simple piece of legislation that authorizes a single court action to determine whether certain controlled games operated by California commercial card clubs are banking card games that violate California law and infringe upon tribal exclusivity. That’s it.”

Siva said the ability to take this issue to court would resolve a decade-plus dispute between tribes and cardroom owners and give legal clarity moving forward. 

“For too long, the state has looked the other way, while commercial cardrooms have ramped up offerings of Class III house-banked card games in blatant violation of the California Constitution,” he added.

“But more importantly … these actions violate our exclusive right to offer those games and by extension is an infringement of our collective tribal sovereignty.”

Siva noted that tribes have taken the legal route but were rebuffed by the courts who ruled that tribes lacked standing to sue. As such, he said, the merits of the tribal case against the commercial cardrooms have never been adjudicated.

“To be clear, there is a risk for tribes in this bill as a decision in our favor is not a preordained outcome,” Siva said.

Sports Betting Legalization

Siva also took time on Tuesday to address the issue of legalizing sports betting in California, calling the failed ballot effort by Eagle 1 Acquisition Corp. a “cynical attempt to enrich themselves and divide tribes in the process.”

The attempt to return the issue to the ballot in 2024 seemed to be out of step with California voters who in November 2022 overwhelmingly defeated two ballot propositions to legalize both retail and mobile sports wagering. More than 83 percent of voters rejected Proposition 27, which would have launched online sports betting.

The other measure, Proposition 26, would have restricted sports betting to in-person wagers at tribal casinos. Californians defeated Prop 26 by more than 70 percent.

Siva reminded those behind the failed attempts to legalize sports betting that “any discussions or decision on the expansion of gaming in California begins and ends with tribes.”

Since the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) in May 2018, Siva said CNIGA has been discussing and planning for the legalization of some form of sports wagering and that work has not stopped.

“We will not be deterred and will not be forced to move in a manner that is detrimental to tribal sovereignty,” he said. “The path forward is long and there is much work to do.”

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