Here come the urban casinos

California may be undergoing the greatest legal expansion of gambling in U.S. history. It’s being driven by a desperate need for development—and greed.

Illustration By B.Z.

For decades, San Pablo has been a sad little town racked by poverty and ignored by the East Bay. Governor Arnold Schwarzenegger’s deal to let the Lytton Band of American Indians open a giant casino there, though cheered by city leaders, means San Pablo now faces the prospect of becoming a sad, malevolent little town—the sort of place the East Bay won’t be able to ignore.

In 2000, when California voters handed the state’s American Indian tribes monopoly rights to build huge, Vegas-like, slot-machine casinos around the state, it was with the understanding there would be no urban casinos. The measure was titled “Gambling on Tribal Lands,” and the League of Women Voters insisted it applied to “tribal lands only.”

To calm critics, who suspected that advisers from Las Vegas were scheming to put casinos in cities, Indian leaders publicly stated that casinos would go only on tribal lands.

Voters overwhelmingly approved Proposition 1A, which replaced 1998’s Proposition 5—a measure that had been tossed out by the courts. What voters did not know was that Proposition 1A and existing federal law created loopholes and trapdoors that would allow the tribes to pry open urban areas and locate new “reservations”—and thus casinos—in cities.

Today, of California’s 107 federally recognized tribes, 56 mostly tiny gaming tribes earn perhaps $8 billion—nobody knows for sure because the tribes needn’t say. Exploding expansion has long since eclipsed an old figure of $5 billion from 2002. Thunder Valley, a casino near Sacramento, just netted $300 million in its first year.

Of the 107 tribes, 30 sued for recognition, most of them in order to open casinos. Now, 54 additional groups—some of them highly questionable “tribes” cobbled together by slick lawyers—are insisting the feds name them as tribes, too. Because newly recognized tribes often don’t have land suitable for a profitable casino, two dozen of the new ones are “reservation shopping,” for land near or inside California cities, according to tribal gaming critic Cheryl Schmit.

If Schwarzenegger’s deal, reported in the San Francisco Chronicle, is consummated, San Pablo’s will be the first “reservation” and casino smack inside an urban core. Schmit says Schwarzenegger “had no choice” because Congress already designated it for the Lytton Band reservation—a sneaky move a few years ago by California Congressman George Miller that was contained in a much bigger omnibus bill.

But let’s be clear: Once San Pablo, a mile-square-city, gets a casino and “reservation,” a psychological wall will tumble down. After that, California voters should gird for more faux reservations and huge urban casinos—unless voters stop it. State legislators and California members of Congress, hoping for tribal campaign cash, are seeking every possible toehold to create “tribal lands” in cities. Remember, the tribes spent $11 million during the Gray Davis recall, much of it to elect our casino expansionist Lt. Governor Cruz Bustamante as governor.

State Assemblyman Mervyn Dymally of Compton has been trying to create a loophole to put a “state-designated” American Indian reservation in his city. Casinos are only allowed on federally designated reservations. This latest twist to put reservations in the cities is a longer-term strategy. Step two is to change the California Constitution to allow casinos on “state reservations”—an angle another legislator quietly is working.

That’s how politicians behave when billions of dollars, and fat contributions, are involved.

The rich Sycuan Band will put a $30 million hotel development in a highly urbanized area near San Diego. A casino is not allowed, but the contract leaves the option open. Again, it’s all about getting a toehold and then working up a new law.

California voters didn’t want this. Voters wanted to see American Indians succeed because of past U.S. treatment of them. Now, the greed and arrogance of rich tribes is wiping out the enormous goodwill tribes enjoyed. It has to be one of the quickest public-relations turnarounds I’ve seen in California.

Unlike famed tribes of the Great Plains and Southwest, some of which have populations of thousands, California tribes are miniscule—usually a few hundred people. Because of gambling profits, certain tiny California tribes are now made up entirely of multimillionaires.

How much money are we talking about? Time magazine reported the San Manuel Band’s roughly 70 adults each grossed $900,000 per year—before things really took off. Santa Barbara County newspapers reported that the Santa Ynez Band’s roughly 160 members each get $27,500 monthly. Riverside County newspapers reported that the Pechanga Resort and Casino in Temecula pays its Pechanga Band members $15,000 per month.

Some tribes have done good works. For instance, the San Manuel Band members have started behaving like the rich Californians they are. Last year, they gave $1 million to the recovery effort after the October fires, and they made numerous charitable donations. It was modest, given that their casino will double in size by 2006 and that they now own a piece of the lucrative bottled-water industry. But the gifts represent a solid gesture and a reminder that some tribes have begun to realize they must start acting like good neighbors.

Yet, only a few tribes are good neighbors, working closely with nearby cities to avert environmental damage and inappropriate development. It’s no mystery why. After all, how do people act when suddenly faced with an endless supply of more riches than the average American will ever see in his or her lifetime? Unfortunately, most people act like fools.

Tribes now coldly eject members, sometimes so that fewer members can split the buckets of money. Some tribes claim they are “disenrolling” members for reasons often unrelated to the huge monthly checks each member receives. This can stretch credulity. Though some non-tribal members do try to get on the gravy train, other people appear to be kicked out on questionable grounds.

As Schmit points out, in Redding, the Rancheria tribal government disenrolled a family whose members actually exhumed their mother and grandmother to prove they were from the tribe. In a raucous battle, the Pechanga Band kicked out more than 100 people. The Enterprise Rancheria tribe kicked out 75 members during the struggle for control of its government as it pursues a casino on non-tribal land. The Buena Vista Band has been split by a vicious battle over control of its government and thus control of its casino profits.

All this because voters wanted to help the tribes help themselves.

Yet, the tribes can ignore what voters envisioned. Proposition 1A clearly stated that slot machines and other gambling applied to “tribal lands only.” But University of California, Los Angeles, law professor Carole Goldberg, who approves of the big jump in tribes designated by the feds in California and who dismisses opposition to urban casinos as “religious-based,” says California voters did not formally vote in 2000 on whether reservations and casinos could be allowed in the cities.

“The idea of Indian reservations being set up inside of California cities was not addressed in the measure at all,” she said. “Opponents said it meant there can be a casino in every backyard, and supporters said, ‘No, there are restrictions in federal law.’”

Goldberg feels California’s situation is healthy because federal law prevents new American Indian reservations without local support—which basically means the governor must sign off on them. Goldberg oversees a center at UCLA dedicated to understanding tribal law and culture, which recently got $4 million from the San Manuel Band—another indicator of the reach of gaming money.

In fact, it’s been so easy to erect casinos that California is undergoing what some call the greatest legal expansion of gambling in U.S. history. It’s often driven less by local support for gaming than by a desperate need for development in places like Barstow and Needles. It’s also driven by greed.

Desperation and greed can make people do bad things. Organized crime in Las Vegas and New Jersey are a good reference point for what’s to come if urban locales end up with secretive tribal governments and lucrative casinos.

Each new American Indian “reservation” creates a wealthy, closed government in direct conflict with California notions of healthy civic life. American Indian-gaming critic Jan Golab notes in his writings that tribal governments are exempt from requirements such as freedom of the press, there’s no right to inspect government records, and there’s no such thing as protecting “whistleblowers” who report corruption. In fact, you may see the opposite from some tribes.

Under such conditions, Dymally’s choice of Compton for a future “reservation” and ultimately a casino is almost humorously bad. For years, Compton has been racked by corruption, including now-convicted city officials who stuffed bribes in their pockets and used city funds like personal accounts.

And San Pablo, desperate for funds, is likely to learn an unfortunate lesson when its casino and Lytton Band “reservation” morph into the town’s closed-door, backroom, replacement government.

Some Californians who thought Indian gaming was about healing the tribes economically are catching on to how poisonous the salve is turning out to be. But so far, Schwarzenegger seems far too excited about expanding Indian gaming—as if it’s just another industry that pays into the treasury.

It’s hardly that. It’s the only industry operated inside a government jurisdiction that is not open and whose leaders get rich from the very industry they oversee. If Schwarzenegger and the Legislature don’t move to ban urban casinos now, you may indeed want to worry about one in your backyard.